Capitol Medical Center v.
Meris, 470 SCRA present sufficient and convincing evidence
125:
FACTS: Dr. Cesar Meris (Dr. Meris), one of
the stockholders of Capitol Medical Center,
Inc. (Capitol), is in charge of the Industrial
Service Unit (ISU). He was later fired by the
Hospital. He received a notice advising him
of the management’s decision to close or
abolish the ISU and the consequent
termination of his services as Chief in view of
the almost extinct demand for direct medical
services by the private and semi-
government corporations in providing
health care for their employees.
ISSUE: W/N Dr. Meris was illegally
terminated
HELD: Yes. The right to close the operation
of an establishment or undertaking is
explicitly recognized under the Labor Code
as one of the authorized causes in
terminating employment of workers, the
only limitation being that the closure must
not be for the purpose of circumventing the
provisions on termination of employment
embodied in the Labor Code.
Art. 283 of the Labor code provides for
Closure of establishment and reduction of
personnel.
The records of the case, however, fail to
impress that there was indeed extinct
demand for the medical services rendered
by the ISU. Capitol failed, however, to
to support such claim of extinct demand.
Danilo P. Javier v. Flyace Corp. G.R. No.
19255:
FACTS: Javier renders hauling services for Fly
Ace for grocery items transportation. He
filed a complaint with the NLRC against Fly
Ace for underpayment of salaries and for
other benefits. Fly Ace denied the existence
of an employer-employee (ER-EE)
relationship between them and Javier. Fly
Ace alleged that Javier was only called about
5 to 6 times in a month whenever the vehicle
of its contracted hauler was not available.
ISSUE: Who has the burden of proving ER-EE
relationship?
HELD: The Employee has the burden of
proving ER-EE Rel. The rule of thumb
remains: the onus probandi falls on
petitioner to establish or substantiate such
claim by the requisite quantum of evidence.
Whoever claims entitlement to the benefits
provided by law should establish his or her
right thereto x x x. Sadly, Javier failed to
adduce substantial evidence as basis for the
grant of relief.
In this case, all that Javier presented were his
self-serving statements purportedly showing
his activities as an employee of Fly Ace.
Clearly, Javier failed to pass the
substantiality requirement to support his
claim. No other proof was submitted to
fortify his claim. The lone affidavit executed
by one Bengie Valenzuela was unsuccessful
in strengthening Javier’s cause.
Bernard A. Tenasaz v. R. Villegas Taxi
Transport GR NO. 192998
FACTS: Bernard A. Tenazas (Tenazas) and
Jaime M. Francisco (Francisco) filed a
complaint for illegal dismissal against R.
Villegas Taxi Transport and/or Romualdo
Villegas (Romualdo) and Andy Villegas
(Andy) (respondents). Tenazas alleged that
the taxi unit assigned to him was sideswiped
by another vehicle, causing a dent on the left
fender near the driver seat. Upon reporting
the incident to the company, he was scolded
by respondents Romualdo and Andy and was
told to leave the garage for he is already
fired. Francisco, on the other hand, averred
that his dismissal was brought about by the
company’s unfounded suspicion that he was
organizing a labor union. Endraca, for his
part, alleged that his dismissal was instigated
by an occasion when he fell short of the
required boundary for his taxi unit.
For their part, the respondents admitted
that Tenazas and Endraca were employees
of the company, the former being a regular
driver and the latter a spare driver. The
respondents, however, denied that
Francisco was an employee of the company
or that he was able to drive one of the
company’s units at any point in time. The
respondents further alleged that Tenazas
was never terminated by the company. As
regards Endraca, the respondents alleged
that they hired him as a spare driver in
February 2001. They allow him to drive a taxi
unit whenever their regular driver will not be
able to report for work.
ISSUE: Who has the burden of proving the
existence of an employer-employee
relationship?
HELD: It is an oft-repeated rule that in labor
cases, as in other administrative and quasi-
judicial proceedings, "the quantum of proof
necessary is substantial evidence, or such
amount of relevant evidence which a
reasonable mind might accept as adequate
to justify a conclusion." "The burden of proof
rests upon the party who asserts the
affirmative of an issue." Corollarily, as
Francisco was claiming to be an employee of
the respondents, it is incumbent upon him to
proffer evidence to prove the existence of
said relationship.
In determining the presence or absence of
an employer-employee relationship, the
Court has consistently looked for the
following incidents, to wit: (a) the selection
and engagement of the employee; (b) the
payment of wages; (c) the power of
dismissal; and (d) the employer’s power to
control the employee on the means and
methods by which the work is accomplished.
The last element, the so-called control test,
is the most important element." Any
competent and relevant evidence to prove
the relationship may be admitted. and unbecoming of respondent by having an
Identification cards, cash vouchers, social illicit relationship with Napoleon’s sister,
security registration, appointment letters or Thelma G. Palma.
employment contracts, payrolls,
organization charts, and personnel lists, ISSUE: W/N the Cooperative adequately
serve as evidence of employee status. proved that Bandiola indeed engaged in
extra-marital affairs, an act which petitioner
In this case, however, Francisco failed to considers as would bring discredit to the
present any proof substantial enough to cooperative?
establish his relationship with the
respondents. He failed to present HELD: Yes. Only Substantial Evidence is
documentary evidence like attendance required in Admin Proceedings; there was
logbook, payroll, SSS record or any substantial evidence (Sworn Affidavits of
personnel file that could somehow depict his family and friends).
status as an employee. Anent his claim that
he was not issued with employment records, The employer’s evidence consists of sworn
he could have, at least, produced his social statements of either relatives or friends of
security records which state his Thelma and respondent. They either had
contributions, name and address of his direct personal knowledge of the illicit
employer, as his co-petitioner Tenazas did. relationship or revealed circumstances
He could have also presented testimonial indicating the existence of such relationship.
evidence showing the respondents’ exercise There is also no reason to doubt the
of control over the means and methods by statement of Melanie Gao-ay, the wife of
which he undertakes his work. Napoleon, who witnessed the embarrassing
"encounter", to borrow the term she used,
Alilem Credit Cooperative v. Bandiola, GR between [respondent] and Thelma in her
No. 173489 own boarding house.
FACTS: Bandiola have been dismissed from
employment for violation of the Price v. Innodata Phils., 567 SCRA 122
cooperative’s Personnel Policy, specifically FACTS: Respondent Innodata Philippines,
"the commission of acts that bring discredit Inc./Innodata Corporation (INNODATA) was
to the cooperative organization, especially, a domestic corporation engaged in the data
but not limited to conviction of any crime, encoding and data conversion business.
illicit marital affairs, scandalous acts inimical Petitioners were employed as formatters for
to established and accepted social mores" a Fixed Period of one year. Petitioners filed a
upon reports alleging the immoral conduct Complaint for illegal dismissal and damages
against respondents claiming that they
should be considered regular employees
since their positions as formatters were
necessary and desirable to the usual
business of INNODATA.
Respondents asserted that petitioners were
not illegally dismissed, for their employment
was terminated due to the expiration of
their terms of employment. Petitioners’
contracts of employment with INNODATA
were for a limited period only, commencing
on 6 September 1999 and ending on 16
February 2000.10 Respondents further
argued that petitioners were estopped from
asserting a position contrary to the contracts
which they had knowingly, voluntarily, and
wilfully agreed to or entered into. There
being no illegal dismissal, respondents
likewise maintained that petitioners were
not entitled to reinstatement and
backwages.
ISSUE: Whether petitioners were hired by
INNODATA under valid fixed-term
employment contracts.
HELD: No. There were no valid fixed-term
contracts and petitioners were regular
employees of the INNODATA who could not
be dismissed except for just or authorized
cause.
The employment status of a person is
defined and prescribed by law and not by
what the parties say it should be. Equally
important to consider is that a contract of
employment is impressed with public
interest such that labor contracts must yield
to the common good. Thus, provisions of
applicable statutes are deemed written into
the contract, and the parties are not at
liberty to insulate themselves and their
relationships from the impact of labor laws
and regulations by simply contracting with
each other.
Regular employment has been defined by
Article 280 of the Labor Code. Based on the
afore-quoted provision, the following
employees are accorded regular status: (1)
those who are engaged to perform activities
which are necessary or desirable in the usual
business or trade of the employer,
regardless of the length of their
employment; and (2) those who were
initially hired as casual employees, but have
rendered at least one year of service,
whether continuous or broken, with respect
to the activity in which they are employed.
However, it is also true that while certain
forms of employment require the
performance of usual or desirable functions
and exceed one year, these do not
necessarily result in regular employment
under Article 280 of the Labor Code. Under
the Civil Code, fixed-term employment
contracts are not limited, as they are under
the present Labor Code, to those by nature
seasonal or for specific projects with
predetermined dates of completion; they
also include those to which the parties by
free choice have assigned a specific date of
termination.
The decisive determinant in term
employment is the day certain agreed upon
by the parties for the commencement and
termination of their employment
relationship, a day certain being understood
to be that which must necessarily come,
although it may not be known when.
Seasonal employment and employment for
a particular project are instances of
employment in which a period, where not
expressly set down, is necessarily implied. A
fixed-term employment is valid only under
certain circumstances.
In the case at bar, the Court is convinced that
the terms fixed therein were meant only to
circumvent petitioners’ right to security of
tenure and are, therefore, invalid.
The contracts of employment submitted by
respondents are highly suspect for not only
being ambiguous, but also for appearing to
be tampered with.
The Court here reiterates the rule that all
doubts, uncertainties, ambiguities and
insufficiencies should be resolved in favor of
labor. It is a well-entrenched doctrine that in
illegal dismissal cases, the employer has the
burden of proof. This burden was not
discharged in the present case.
BPI v. BPI Employees Union, GR No. 175678
FACTS: Respondent BPIEU-MM and
petitioner BPI have an existing Collective
Bargaining Agreement which took effect on
April 2001. The CBA provides for loan
benefits and relatively low interest rates.
Thereafter, petitioner issued a "no negative
data bank policy" for the
implementation/availment of the
manpower loans which the respondent
objected to, thus, resulting into labor-
management dialogues. The parties raised it
to the Voluntary Arbitrator.
ISSUE: Whether or not the “no negative data
bank policy” issued by petitioner BPI violates
the Collective Bargaining Agreement (CBA)
HELD: Yes. The CBA in this case contains no
provision on the "no negative data bank
policy" as a prerequisite in the entitlement
of the benefits it set forth for the employees.
Although it can be said that petitioner is
authorized to issue rules and regulations
pertinent to the availment and
administration of the loans under the CBA,
the additional rules and regulations,
however, must not impose new conditions
which are not contemplated in the CBA and
should be within the realm of
reasonableness. The "no negative data bank
policy" is a new condition which is never
contemplated in the CBA and at some points,
unreasonable to the employees because it
provides that before an employee or his/her
spouse can avail of the loan benefits under
the CBA. If the petitioner, indeed, intended The Court did not agree with petitioner’s
to include a "no negative data bank policy" insistence. What is rather decidedly
in the CBA, it should have presented such controlling is the fact that the spouse, child,
proposal to the union during the or parent is actually dependent for support
negotiations. upon the employee.

Philippine Journalist Inc. v. Journal The argument of petitioner that the grant of
Employees Union, GR No. 192601 the funeral and bereavement benefit was
FACTS: Both the Labor Arbiter and NLRC not voluntary but resulted from its mistaken
found that the dismissal of Michael Alfante interpretation as to who was considered a
was legal. On appeal the CA modified NLRC’s legal dependent of a regular employee
decision insofar as the funeral and deserves scant consideration. The
bereavement aid is concerned but voluntariness of the grant of the benefit
nevertheless declared his dismissal legal. PJI, became even manifest from petitioner’s
on the other hand, maintained that the legal admission that, despite the memorandum it
dependent who should be given funeral and issued in 2000 in order to "correct" the
bereavement aid must be consistent with interpretation of the term legal dependent,
the definition of legal dependent as provided it still approved in 2003 the claims for funeral
by SSS. It argues that the its earlier granting and bereavement aid of two employees,
of claims for funeral and bereavement aid based on its supposedly mistaken
without regard to the foregoing definition of interpretation.
the legal dependents of married or single
regular employees did not ripen into a The 2001-2004 CBA still contained the same
company policy whose unilateral withdrawal provision granting funeral or bereavement
would constitute a violation of Article 100 of aid in case of the death of a legal dependent
the Labor Code. of a regular employee without
differentiating the legal dependents
ISSUE: Whether or not PJI’s denial of according to the employee's civil status as
respondents’ claims for funeral and married or single even after being corrected
bereavement aid violates the labor code by the memorandum issued in 2000. The
continuity in the grant of the funeral and
HELD: Yes. Petitioner insists that bereavement aid to regular employees for
notwithstanding the silence of the CBA, the the death of their legal dependents has
term legal dependent should follow the undoubtedly ripened into a company policy.
definition of it under Republic Act (R.A.) No.
8282 (Social Security Law).
National Union of Workers in Hotel
Restaurant and Allied Industries
(NUWHRAIN) - Philippine Plaza Chapter v
Philippines Plaza Inc.
FACTS: The Union is the collective bargaining
agent of the rank-and-file employees of
respondent Philippine Plaza Holdings, Inc.
(PPHI). PPHI and the Union executed the
Third Rank-and-File Collective Bargaining
Agreement as Amended (CBA). The CBA
provided, among others, for the collection,
by the PPHI, of a ten percent (10%) service
charge on the sale of food, beverage,
transportation, laundry and rooms.
Thereafter, issues arose regarding the
collection of service charges. The Union
charged the PPHI with unfair labor practice
(ULP) under Article 248 of the Labor Code,
i.e., for violation of their collective
bargaining agreement.
ISSUE: How should the CBA provisions be
interpreted?
HELD: A collective bargaining agreement, as
used in Article 252 (now Article 262) of the
Labor Code, is a contract executed at the
request of either the employer or the
employee’s exclusive bargaining
representative with respect to wages, hours
of work and all other terms and conditions of
employment, including proposals for
adjusting any grievances or questions under
such agreement. Jurisprudence settles that a
CBA is the law between the contracting
parties who are obliged under the law to
comply with its provisions.
Thus, if the terms of the CBA are plain, clear
and leave no doubt on the intention of the
contracting parties, the literal meaning of its
stipulations, as they appear on the face of
the contract, shall prevail. Only when the
words used are ambiguous and doubtful or
leading to several interpretations of the
party’s agreement that a resort to
interpretation and construction is called for.
En contra: Mitsubishi Motors Phils. Salaried
Employees Union (MMPSEU) v MItsubishi
Motors Phils
FACTS: The parties’ CBA provides for the
hospitalization insurance benefits for the
covered dependents. Three members of
MMPSEU filed claims for reimbursement of
hospitalization expenses of their
dependents. MMPC paid only a portion of
their hospitalization insurance claims, not
the full amount.
Claiming that under the CBA, they are
entitled to hospital benefits, thus, they
asked for reimbursement from MMPC.
However, MMPC denied the claims
contending that double insurance would
result if the said employees would receive
from the company the full amount of
hospitalization expenses despite having
already received payment of portions
thereof from other health insurance
providers.
MMPSEU alleged that there is nothing in the
CBA which prohibits an employee from
obtaining other insurance or declares that
medical expenses can be reimbursed only
upon presentation of original official
receipts. On the other hand, MMPC argued
that the reimbursement of the entire
amounts being claimed by the covered
employees, including those already paid by
other insurance companies, would
constitute double indemnity or double
insurance, which is circumscribed under the
Insurance Code.
ISSUE: W/N the CBA is correct
HELD: Yes. The condition that payment
should be direct to the hospital and doctor
implies that MMPC is only liable to pay
medical expenses actually shouldered by the
employees’ dependents. It follows that
MMPC’s liability is limited, that is, it does not
include the amounts paid by other health
insurance providers. It is well to note at this
point that the CBA constitutes a contract
between the parties and as such, it should be
strictly construed for the purpose of limiting
the amount of the employer’s liability. The
terms of the subject provision are clear and
provide no room for any other
interpretation. As there is no ambiguity, the
terms must be taken in their plain, ordinary
and popular sense.
Best Wear Garments v De Lemos
FACTS: Petitioner Best Wear Garments is a
sole proprietorship which hired respondents
on piece-rate basis. De Lemos & Ocubillo
filed a complaint for illegal dismissal alleging
that they were arbitrarily transferred to
other areas of operation of petitioner’s
garments company., which amounted to
constructive dismissal as it resulted in less
earnings for them. Petitioners denied having
terminated the employment of respondents
who supposedly committed numerous
absences without leave (AWOL). It explained
asserted that respondents are piece-rate
workers and hence they are not paid
according to the number of hours worked.
ISSUE: Whether the transfer of the
respondents to other areas of operation
amounted to constructive dismissal?
HELD: NO. Being piece-rate workers
assigned to individual sewing machines,
respondents’ earnings depended on the
quality and quantity of finished products.
Under these circumstances, it cannot be said
that the transfer was unreasonable,
inconvenient or prejudicial to the
respondents. Such deployment of sewers to
work on different types of garments as
dictated by present business necessity is
within the ambit of management
prerogative which, in the absence of bad
faith, ill motive or discrimination, should not
be interfered with by the courts.
The constitutional policy of providing full
protection to labor is not intended to
oppress or destroy management. While the
Constitution is committed to the policy of
social justice and the protection of the
working class, it should not be supposed that
every labor dispute will be automatically
decided in favor of labor. Management also
has its rights which are entitled to respect
and enforcement in the interest of simple
fair play. Thus, where management
prerogative to transfer employees is validly
exercised, as in this case, courts will decline
to interfere.
Toyota Motors Phils. Workers v NLRC
FACTS: The Union filed a petition for
certification election among the Toyota rank
and file employees with the National
Conciliation and Mediation Board (NCMB).
The Med-Arbiter denied the petition, but, on
appeal, the DOLE Secretary granted the
Union’s prayer, and, through an Order,
directed the immediate holding of the
certification election.
After Toyota’s plea for reconsideration was
denied, the certification election was
conducted. The Med-Arbiter’s Order
certified the Union as the sole and exclusive
bargaining agent of all the Toyota rank and
file employees.
Toyota challenged said Order via an appeal
to the DOLE Secretary.
In the meantime, the Union submitted its
CBA proposals to Toyota, but the latter
refused to negotiate in view of its pending
appeal. Consequently, the Union filed a
notice of strike with the NCMB based on
Toyota’s refusal to bargain
In connection with Toyota’s appeal, Toyota
and the Union were required to attend a
hearing on before the Bureau of Labor
Relations (BLR). The February 21, 2001
hearing was cancelled and reset to February
22. This resulted to several strikes by the
union.
ISSUE: Whether the mass actions committed
by the Union on different occasions are
illegal strikes; and
HELD: YES, THERE IS ILLEGAL STRIKE
A strike means any temporary stoppage of
work by the concerted action of employees
as a result of an industrial or labor dispute. A
labor dispute, in turn, includes any
controversy or matter concerning terms or
conditions of employment or the association
or representation of persons in negotiating,
fixing, maintaining, changing, or arranging
the terms and conditions of employment,
regardless of whether the disputants stand
in the proximate relation of the employer
and the employee
Applying pertinent legal provisions and
jurisprudence, we rule that the protest
actions undertaken by the Union officials
and members on February 21 to 23 are not
valid and proper exercises of their right to
assemble and ask government for redress of
their complaints, but are illegal strikes in
breach of the Labor Code. The Union’s
position is weakened by the lack of permit
from the City of Manila to hold “rallies.”
Shrouded as demonstrations, they were in
reality temporary stoppages of work
perpetrated through the concerted action of
the employees who deliberately failed to
report for work on the convenient excuse
that they will hold a rally at the BLR and
DOLE offices on February 21 to 23. The
purported reason for these protest actions
was to safeguard their rights against any
abuse which the med-arbiter may commit
against their cause. However, the Union
failed to advance convincing proof that the
med-arbiter was biased against them.
Tirazona v Phil. Eds Techno-Service
FACTS: Tirazona, being the Administrative
Manager of Philippine EDS Techno-Service,
Inc. (PET), was a managerial employee who
held a position of trust and confidence, she
claimed that she was denied due process;
that she admitted to reading a confidential
letter addressed to PET officers/directors
containing the legal opinion of the counsel of
PET regarding her case; and that she was
validly terminated from her employment on
the ground that she willfully breached the
trust and confidence reposed in her by her
employer. In the end, we concluded that:
Tirazona, in this case, has given PET more
than enough reasons to distrust her. The
arrogance and hostility she has shown
towards the company and her stubborn,
uncompromising stance in almost all
instances justify the company’s termination
of her employment. Moreover, Tirazona’s
reading of what was supposed to be a
confidential letter between the counsel and
directors of the PET, even if it concerns her,
only further supports her employer’s view
that she cannot be trusted. In fine, the Court
cannot fault the actions of PET in dismissing
TIRAZONA.
On 29 April 2008, Tirazona moved for
reconsideration of our afore-mentioned
Decision. She argued therein that the Court
failed to consider the length of her service to
PET in affirming her termination from
employment. She prayed that her dismissal
be declared illegal. Alternatively, should the
Court uphold the legality of her dismissal,
Tirazona pleaded that she be awarded
separation pay and retirement benefits, out
of humanitarian considerations.
MOTION FOR RECONSIDERATION: In our
Resolution dated 23 June 2008, we denied
Tirazona’s Motion for Reconsideration, as
the same did not present any substantial
arguments that would warrant a
modification of our previous ruling.
On 21 August 2008, Tirazona filed the instant
Motion for Leave to File [a] Second Motion
for Reconsideration, with the Second
Motion for Reconsideration incorporated
therein, raising essentially the same
arguments and prayers contained in her first
Motion for Reconsideration.
ISSUE: W/N TIRAZONA should be given
separation pay for equitable reasons.
HELD:
NO. TIRAZONA is not entitled by such
benefit.
As a general rule, an employee who has been
dismissed for any of the just causes
enumerated under Article 282 of the Labor
Code is not entitled to separation pay. In Sy
v. Metropolitan Bank & Trust Company,14
we declared that only unjustly dismissed
employees are entitled to retirement
benefits and other privileges including
reinstatement and backwages.
Although by way of exception, the grant of
separation pay or some other financial
assistance may be allowed to an employee
dismissed for just causes on the basis of
equity,15 in Philippine Long Distance
Telephone Company v. National Labor
Relations Commission,16 we set the limits
for such a grant and gave the following ratio
for the same:
Separation pay shall be allowed as a
measure of social justice only in those
instances where the employee is validly
dismissed for causes other than serious
misconduct or those reflecting on his moral
character. x x x.
A contrary rule would, as the TIRAZONA
correctly argues, have the effect, of
rewarding rather than punishing the erring
employee for his offense. And we do not
agree that the punishment is his dismissal
only and that the separation pay has nothing
to do with the wrong he has committed. Of
course it has. Indeed, if the employee who
steals from the company is granted
separation pay even as he is validly
dismissed, it is not unlikely that he will
commit a similar offense in his next
employment because he thinks he can
expect a like leniency if he is again found out.
This kind of misplaced compassion is not
going to do labor in general any good as it
will encourage the infiltration of its ranks by
those who do not deserve the protection
and concern of the Constitution.
The policy of social justice is not intended to
countenance wrongdoing simply because it
is committed by the underprivileged. At best
it may mitigate the penalty but it certainly
will not condone the offense. Compassion
for the poor is an imperative of every
humane society but only when the recipient
is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted
to be [a] refuge of scoundrels any more than
can equity be an impediment to the
punishment of the guilty. Those who invoke
social justice may do so only if their hands
are clean and their motives blameless and
not simply because they happen to be poor.
This great policy of our Constitution is not
meant for the protection of those who have
proved they are not worthy of it, like the
workers who have tainted the cause of labor
with the blemishes of their own character.
(Emphasis ours.)
In accordance with the above
pronouncements, Tirazona is not entitled to
the award of separation pay.
In sum, we hold that the award of separation
pay or any other kind of financial assistance
to Tirazona, under the guise
compassionate justice, is not warranted in
this case. To hold otherwise would only
cause a disturbance of the sound
jurisprudence on the matter and
perversion of the noble dictates of social
justice.
While the Court commiserates with the
plight of Tirazona, who has recently
manifested23 that she has since been
suffering from her poor health condition, the
Court cannot grant her plea for the award of
financial benefits based solely on this
unfortunate circumstance. For all
conceded merit, equity is available only in
the absence of law and not as its
replacement. Equity as an exceptional
extenuating circumstance does not favor,
nor may it be used to reward, the indolent24
or the wrongdoer, for that matter. This Court
will not allow a party, in the guise of equity,
to benefit from its own fault.
Reynaldo Moya v First Solid Rubber
Industries
FACTS: Moya filed before the NLRC-National
Capital Region a complaint for illegal
dismissal against First Solid Rubber
Industries, Inc. (First Solid) and its President.
He contended that his termination fell short
of any of the just causes of serious
misconduct, gross and habitual neglect of
duties and willful breach of trust. He pointed
out that the company failed to prove that his
act fell within the purview of improper or
of wrong misconduct, and that a single act of
negligence as compared to eleven (11) years
of service of good record with the company
will not justify his dismissal.
a
Opposing the story of Moya, the company
countered that Moya, who was exercising
supervision and control over the employees
as a department head, failed to exercise the
diligence required of him to see to it that the
machine operator, Melandro Autor,
properly operated the machine. This act is
considered as a gross and habitual neglect of
duty which caused actual losses to the
its company.
ISSUE: Whether or not petitioner employee
is entitled to separation pay based on his
length of service.
HELD: NO. Petitioner is not entitled to
separation pay. Payment of separation pay
cannot be justified by his length of service.
It must be stressed that Moya was not an
ordinary rank-and-file employee. He was
holding a supervisory rank being an Officer-
in-Charge of the Tire Curing Department.
The position, naturally one of trust, required
of him abiding honesty as compared to
ordinary rank-and-file employees. When he
made a false report attributing the damage
of five tires to machine failure, he breached
the trust and confidence reposed upon him
by the company.
Republic of the Philippines represented by
the Social Security Commission and Social
Security Services v Asiapro Cooperative
FACTS: Respondent Asiapro Cooperative
entered into several service contracts with
Stanfilco. Sometime later, the cooperative
owners-members requested Stanfilco’s help
in registering them with SSS and remitting
their contributions. Petitioner SSS informed
Asiapro that being actually a manpower
contractor supplying employees to Stanfilco,
it must be the one to register itself with SSS
as an employer and remit the contributions.
Respondent continuously ignoring the
demand of SSS the latter filed before the
SSC. Asiapro alleges that there exists no
employer-employee relationship between it
and its owners-members. SSC ruled in favor
of SSS. On appeal, CA reversed the decision.
ISSUE: Whether or not there is employer-
employee relationship between Asiapro and
its owners-members.
HELD: YES. In determining the existence of
an employer-employee relationship, the
following elements are considered: (1) the
selection and engagement of the workers;
(2) the payment of wages by whatever
means; (3) the power of dismissal; and (4)
the power to control the worker‘s conduct,
with the latter assuming primacy in the
overall consideration. All the aforesaid
elements are present in this case.
First. It is expressly provided in the Service
Contracts that it is the respondent
cooperative which has the exclusive
discretion in the selection and engagement
of the owners-members as well as its team
leaders who will be assigned at Stanfilco.
Second. It cannot be doubted then that
those stipends or shares in the service
surplus are indeed wages, because these are
given to the owners-members as
compensation in rendering services to
respondent cooperative‘s client, Stanfilco.
Third. It is also stated in the above-
mentioned Service Contracts that it is the
respondent cooperative which has the
power to investigate, discipline and remove
the owners-members and its team leaders
who were rendering services at Stanfilco.
Fourth. In the case at bar, it is the
respondent cooperative which has the sole
control over the manner and means of
performing the services under the Service
Contracts with Stanfilco as well as the means
and methods of work. Also, the respondent
cooperative is solely and entirely responsible
for its owners-members, team leaders and
other representatives at Stanfilco. All these
clearly prove that, indeed, there is an
employer-employee relationship between
the respondent cooperative and its owners-
members.
Legend Hotel [Manila], owned by Titanium
Corporation et. al. v Hernani S. Realuyo
FACTS: REALUYO is a pianist employed to
perform in the restaurant of LEGEND HOTEL.
Relauyo filed a complaint for alleged unfair
labor practice, constructive illegal dismissal,
and averred that he had worked as a pianist
at the Legend Hotel’s Tanglaw Restaurant
from September 1992 with an initial rate of
P400.00/night that was given to him after
each night’s performance; that his rate had
increased to P750.00/night; and that during
his employment, he could not choose the
time of performance, which had been fixed
from 7:00 pm to 10:00 pm for three to six
times/week. He added that the Legend
Hotel’s restaurant manager had required
him to conform with the venue’s motif; that
he had been subjected to the rules on
employees’ representation checks and chits,
a privilege granted to other employees; that
on July 9, 1999, the management had
notified him that as a cost-cutting measure
his services as a pianist would no longer be
required effective July 30, 1999.
LEGEND HOTEL denied the existence of an
employer-employee relationship with
respondent, insisting that he had been only
a talent engaged to provide live music at
Legend Hotel’s Madison Coffee Shop for
three hours/day on two days each week; and
stated that the economic crisis that had hit
the country constrained management to
dispense with his services.
ISSUE: Whether or not there exist an
employer-employee relationship
HELD: YES. Employer-employee relationship
existed between the parties
A review of the circumstances reveals that
respondent was, indeed, petitioner’s
employee. He was undeniably employed as a
pianist in petitioner’s Madison Coffee
Shop/Tanglaw Restaurant from September
1992 until his services were terminated on
July 9, 1999.
First of all, petitioner actually wielded the
power of SELECTION at the time it entered
into the service contract dated September 1,
1992 with respondent. The power of
selection was firmly evidenced by, among
others, the express written
recommendation dated January 12, 1998 by
Christine Velazco, petitioner’s restaurant
manager, for the increase of his
remuneration.
Secondly, Respondent was paid P400.00 per
three hours of performance from 7:00 pm to
10:00 pm, three to six nights a week. Such
rate of remuneration was later increased to
P750.00 upon restaurant manager Velazco’s
recommendation. There is no denying that
the remuneration denominated as talent
fees was fixed on the basis of his talent and
skill and the quality of the music he played
during the hours of performance each night,
considering the prevailing rate for similar
talents in the entertainment industry.
Clearly, respondent received compensation
for the services he rendered as a pianist in
petitioner’s hotel. Petitioner cannot use the
service contract to rid itself of the
consequences of its employment of
respondent. There is no denying that
whatever amounts he received for his
performance, howsoever designated by
petitioner, were his wages.
Thirdly, the power of the employer to
control the work of the employee is
considered the most significant determinant
of the existence of an employer-employee
relationship. This is the so-called control
test, and is premised on whether the person
for whom the services are performed
reserves the right to control both the end
achieved and the manner and means used to
achieve that end.
Petitioner submits that it did not exercise
the power of control over respondent. A
review of the records shows, however, that
respondent performed his work as a pianist
under petitioner’s supervision and control.
Hacienda Leddy et. al. v Paquito Villegas
FACTS: Villegas is an employee at the
Hacienda Leddy as early as 1960. The
hacienda was then succeeded by Gamboa.
Villegas performed sugar farming job 8 hours
a day, 6 days a week work, continuously for
not less than 302 days a year.
Gamboa went to Villegas' house and told
him that his services were no longer needed
without prior notice or valid reason. Hence,
Villegas filed the instant complaint for illegal
dismissal.
Gamboa, on the other hand, denied having
dismissed Villegas but admitted in his earlier
position paper that Villegas indeed worked
with the said farm owned by his father,
doing casual and odd jobs until the latter's
death in 1993. He was even given the benefit
of occupying a small portion of the land
where his house was erected. He, however,
maintained that Villegas ceased working at
the farm as early as 1992, contrary to his
allegation that he was dismissed.
ISSUE: Whether there exists an employer-
employee relationship between petitioner
and Villegas
HELD: Yes. If we are to follow the length of
time that Villegas had worked with the
Gamboas, it should be more than 20 years of
service.
Article 280 of the Labor Code, describes a
regular employee as one who is either (1)
engaged to perform activities which are
necessary or desirable in the usual business
or trade of the employer; and (2) those
casual employees who have rendered at
least one year of service, whether
continuous or broken, with respect to the
activity in which he is employed.
While length of time may not be the
controlling test to determine if Villegas is
indeed a regular employee, it is vital in
establishing if he was hired to perform tasks
which are necessary and indispensable to
the usual business or trade of the employer.
If it was true that Villegas worked in the
hacienda only in the year 1993, specifically
February 9, 1993 and February 11, 1993,
why would then he be given the benefit to
construct his house in the hacienda? More
significantly, petitioner admitted that
Villegas had worked in the hacienda until his
father's demise. Clearly, even assuming that
Villegas' employment was only for a specific
duration, the fact that he was repeatedly re-
hired over a long period of time shows that
his job is necessary and indispensable to the
usual business or trade of the employer.
People’s Broadcasting (Bombo Radyo Phils) v
Secretary of Labor (GR No. 179652; 2009)
FACTS: Private respondent Juezan filed a
complaint against petitioner with the DOLE
Regional VII, Cebu City, for illegal deduction,
nonpayment of service incentive leave, 13th
month pay, premium pay for holiday and
rest day and illegal diminution of benefits,
delayed payment of wages and noncoverage
of SSS, PAG-IBIG and Philhealth. After the
conduct of summary investigations, and
after the parties submitted their position
papers, the DOLE Regional Director found
that private respondent was an employee of
petitioner, and was entitled to his money
claims.
Petitioner Bombo Radyo sought
reconsideration of the Directors Order, but
failed. The Acting DOLE Secretary dismissed
petitioners appeal on the ground that
petitioner submitted a Deed of Assignment
of Bank Deposit instead of posting a cash or
surety bond.
When the matter was brought before the
CA, where petitioner Bombo Radyo claimed
that it had been denied due process, it was
held that petitioner Bombo Radyo was
accorded due process as it had been given
the opportunity to be heard, and that the
DOLE Secretary had jurisdiction over the
matter, as the jurisdictional limitation
imposed by Article 129 of the Labor Code on
the power of the DOLE Secretary under Art.
128(b) of the Code had been repealed by RA Meteoro et. al. v Creative Creatures
7730. (GR No. 171275; 2009)
FACTS: Respondent is a domestic
In the Decision of this Court, the CA Decision corporation engaged in the business of
was reversed and set aside, and the producing, providing, or procuring the
complaint against petitioner was dismissed. production of set designs and set
From this Decision, the PAO filed a Motion construction services for television
for Clarification of Decision (with Leave of exhibitions, concerts, theatrical
Court). The PAO sought to clarify as to when performances, motion pictures and the like.
the visitorial and enforcement power of the On the other hand, petitioners were hired by
DOLE be not considered as co-extensive with respondent on various dates as artists,
the power to determine the existence of an carpenters and welders. They were tasked to
employer-employee relationship. design, create, assemble, set-up and
dismantle props, and provide sound effects
ISSUE: Whether or not there exists an to respondent’s various TV programs and
employer-employee (ER-EE) relationship? movies.

HELD: No. In the present case, the finding of
the DOLE Regional Director that there was
an employer-employee relationship has
been subjected to review by this Court, with
the finding being that there was no
employer-employee relationship between
petitioner and private respondent, based on
the evidence presented. Private respondent
presented self-serving allegations as well as
self-defeating evidence. The findings of the
Regional Director were not based on
substantial evidence, and private
respondent failed to prove the existence of
an employer-employee relationship.
The DOLE had no jurisdiction over the case,
as there was no employer-employee
relationship present. Thus, the dismissal of
the complaint against petitioner is proper.
Petitioners filed their respective complaints
for non-payment of night shift differential
pay, overtime pay, holiday pay, 13th month
pay, premium pay for Sundays and/or rest
days, service incentive leave pay, paternity
leave pay, educational assistance, rice
benefits, and illegal and/or unauthorized
deductions from salaries against
respondent, before the Department of Labor
and Employment (DOLE), National Capital
Region (NCR).
In its position paper, respondent argued that
the DOLE-NCR had no jurisdiction over the
complaint of the petitioners because of the
absence of an employer-employee
relationship. It added that petitioners were
free-lance individuals, performing special
services with skills and expertise inherently
exclusive to them like actors, actresses,
directors, producers, and script writers, such
that they were treated as special types of
workers.
ISSUE: Whether or not DOLE was divested of
jurisdiction.
HELD: Yes. The case falls within the
jurisdiction of NLRC. To resolve the issue
raised by respondent, that is, the existence
of an employer-employee relationship,
there is need to examine evidentiary
matters. The following elements constitute
the reliable yardstick to determine such
relationship: (a) the selection and
engagement of the employee; (b) the
payment of wages; (c) the power of
dismissal; and (d) the employers power to
control the employees conduct. There is no
hard and fast rule designed to establish the
aforesaid elements. Any competent and
relevant evidence to prove the relationship
may be admitted. Identification cards, cash
vouchers, social security registration,
appointment letters or employment
contracts, payrolls, organization charts, and
personnel lists, serve as evidence of
employee status. These pieces of evidence
are readily available, as they are in the
possession of either the employee or the
employer; and they may easily be looked
into by the labor inspector (in the course of
inspection) when confronted with the
question of the existence or absence of an
employer-employee relationship.
In the case at bar, whether or not petitioners
were independent contractors/project
employees/freelance workers is a question
of fact that necessitates the examination of
evidentiary matters not verifiable in the
normal course of inspection. Indeed, the
contracts of independent services, as well as
the check vouchers, were kept and
maintained in or about the premises of the
workplace and were, therefore, verifiable in
the course of inspection. However,
respondent likewise claimed that petitioners
were not precluded from working outside
the service contracts they had entered into
with it (respondent); and that there were
instances when petitioners abandoned their
service contracts with the respondent,
because they had to work on another project
with a different company. Undoubtedly, the
resolution of these issues requires the
examination of evidentiary matters not
verifiable in the normal course of inspection.
Verily, the Regional Director and the
Secretary of Labor are divested of
jurisdiction to decide the case.
More importantly, the key requirement for
the Regional Director and the DOLE
Secretary to be divested of jurisdiction is
that the evidentiary matters be not
verifiable in the course of inspection. Where
the evidence presented was verifiable in the
normal course of inspection, even if
presented belatedly by the employer, the
Regional Director, and later the DOLE
Secretary, may still examine it; and these
officers are not divested of jurisdiction to
decide the case.
In sum, respondent contested the findings of
the labor inspector during and after the
inspection and raised issues the resolution of
which necessitated the examination of
evidentiary matters not verifiable in the
normal course of inspection. Hence, the
Regional Director was divested
jurisdiction and should have endorsed the
case to the appropriate Arbitration Branch of
the NLRC. Considering, however, that an
illegal dismissal case had been filed by
petitioners wherein the existence
absence of an employer-employee
relationship was also raised, the CA correctly
ruled that such endorsement was no longer
necessary.
Indophil Textile Mills v Adviento
(GR No.171212; 2014)
FACTS: Petitioner hired respondent Engr.
Salvador Adviento as Civil Engineer to
maintain its facilities in Lambakin, Marilao,
Bulacan. Respondent consulted a physician
due to recurring weakness and dizziness.
Few days later, he was diagnosed with
Chronic Poly Sinusitis, and thereafter, with
moderate, severe and persistent Allergic
Rhinitis. Accordingly, respondent was
advised by his doctor to totally avoid house
dust mite and textile dust as it will transmute
into health problems.
Respondent filed a complaint against
petitioner with the National Labor Relations
Commission (NLRC) for alleged illegal
dismissal and for the payment of backwages,
separation pay, actual damages and
attorney’s fees.
Subsequently, respondent filed another
Complaint with the Regional Trial Court
of (RTC) of Aparri, Cagayan, alleging that he
contracted such occupational disease by
reason of the gross negligence of petitioner
to provide him with a safe, healthy and
workable environment.
or
Petitioner filed a Motion to Dismiss on the
ground that the RTC has no jurisdiction over
the subject matter of the complaint because
the same falls under the original and
exclusive jurisdiction of the Labor Arbiter
(LA) under Article 217(a)(4) of the Labor
Code.
The RTC issued a Resolution denying the
aforesaid Motion and sustaining its
jurisdiction over the instant case. It held that
petitioner’s alleged failure to provide its
employees with a safe, healthy and workable
environment is an act of negligence, a case
of quasi-delict. As such, it is not within the
jurisdiction of the LA under Article 217 of the
Labor Code.
In its attempt to overturn the assailed
Decision and Resolution of the CA, petitioner
argues that respondents claim for damages
is anchored on the alleged gross negligence
of petitioner as an employer to provide its
employees, including herein respondent,
with a safe, healthy and workable
environment; hence, it arose from an
employer-employee relationship. The fact of
respondent’s employment with petitioner as
a civil engineer is a necessary element of his
cause of action because without the same,
respondent cannot claim to have a right to a
safe, healthy and workable environment.
Thus, exclusive jurisdiction over the same
should be vested in the Labor Arbiter and the
NLRC.
ISSUE: Whether or not the RTC has
jurisdiction over the subject matter
HELD: Yes. While we have upheld the
present trend to refer worker-employer
controversies to labor courts in light of the
aforequoted provision, we have also
recognized that not all claims involving
employees can be resolved solely by our
labor courts, specifically when the law
provides otherwise. For this reason, we have
formulated the "reasonable causal
connection rule," wherein if there is a
reasonable causal connection between the
claim asserted and the employer-employee
relations, then the case is within the
jurisdiction of the labor courts; and in the
absence thereof, it is the regular courts that
have jurisdiction. Such distinction is apt since
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 jurisdiction of the regular
courts of justice, were intended by the
legislative authority to be taken away from
the jurisdiction of the courts and lodged with
Labor Arbiters on an exclusive basis.
It is obvious from the complaint that the
plaintiffs have not alleged any unfair labor
practice. Theirs is a simple action for
damages for tortious acts allegedly
committed by the defendants. Such being
the case, the governing statute is the Civil
Code and not the Labor Code.
Indeed, jurisprudence has evolved the rule
that claims for damages under Article
217(a)(4) of the Labor Code, to be cognizable
by the LA, 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 damages be considered as arising from
employer-employee relations.
True, the maintenance of a safe and healthy
workplace is ordinarily a subject of labor
cases. More, the acts complained of appear
to constitute matters involving employee-
employer relations since respondent used to
be the Civil Engineer of petitioner. However,
it should be stressed that respondent’s claim
for damages is specifically grounded on
petitioner’s gross negligence to provide a
safe, healthy and workable environment for
its employees −a case of quasi-delict. This is
easily ascertained from a plain and cursory
reading of the Complaint, which enumerates
the acts and/or omissions of petitioner
relative to the conditions in the workplace.
As it is, petitioner does not ask for any relief
under the Labor Code. It merely seeks to
recover damages based on the parties'
contract of employment as redress for
respondent's breach thereof. Such cause of
action is within the realm of Civil Law, and
jurisdiction over the controversy belongs to
the regular courts. More so must this be in
the present case, what with the reality that
the stipulation refers to the post-
employment relations of the parties.
Smart Communications v Astorga
(542 SCRA 434; 2008)
FACTS:
Regina M. Astorga (Astorga) was employed
by respondent Smart Communications,
Incorporated (SMART) as District Sales
Manager of the Corporate Sales Marketing
Group/ Fixed Services Division (CSMG/FSD).
SMART launched an organizational
realignment to achieve more efficient
operations. This was made known to the
employees on February 27, 1998.[6]Part of
the reorganization was the outsourcing of
the marketing and sales force. Thus, SMART
entered into a joint venture agreement with
NTT of Japan, and formed SMART-NTT
Multimedia, Incorporated (SNMI). Since
SNMI was formed to do the sales and
marketing work, SMART abolished the
CSMG/FSD, Astorgas division.
SNMI agreed to absorb the CSMG personnel
who would be recommended by SMART.
SMART then conducted a performance
evaluation of CSMG personnel and those
who garnered the highest ratings were
favorably recommended to SNMI. Astorga
landed last in the performance evaluation,
thus, she was not recommended by SMART.
SMART, nonetheless, offered her a
supervisory position in the Customer Care
Department, but she refused the offer
because the position carried lower salary
rank and rate.
Despite the abolition of the CSMG/FSD,
Astorga continued reporting for work. But
on March 3, 1998, SMART issued a
memorandum advising Astorga of the
termination of her employment on ground
of redundancy, effective April 3, 1998.
Astorga received it on March 16, 1998.
Astorga to filed a Complaint[8] for illegal
dismissal, non-payment of salaries and other
benefits with prayer for moral and
exemplary damages against SMART and Ann
Margaret V. Santiago (Santiago). She
claimed that abolishing CSMG and,
consequently, terminating her employment
was illegal for it violated her right to security
of tenure. She also posited that it was illegal
for an employer, like SMART, to contract out
services which will displace the employees,
especially if the contractor is an in-house
agency.
SMART responded that there was valid
termination. It argued that Astorga was
dismissed by reason of redundancy, which is
an authorized cause for termination of
employment, and the dismissal was effected
in accordance with the requirements of the
Labor Code. The redundancy of Astorgas
position was the result of the abolition of
CSMG and the creation of a specialized and
more technically equipped SNMI, which is a
valid and legitimate exercise of management
prerogative.
SMART sent a letter to Astorga demanding
that she pay the current market value of the
Honda Civic Sedan which was given to her
under the companys car plan program, or to
surrender the same to the company for
proper disposition.[11] Astorga, however,
failed and refused to do either, thus
prompting SMART to file a suit for replevin.
Pending the resolution of Astorga’s motion
to dismiss the suit for replevin, the Labor
Arbiter rendered its decision.
Labor Arbiter: The dismissal from
employment illegal. SMARTs right to abolish
any of its departments. should be exercised
in good faith and for causes beyond its
control. The Arbiter found the abolition of
CSMG done neither in good faith nor for
causes beyond the control of SMART, but a
ploy to terminate Astorgas employment. The
Arbiter also ruled that contracting out the
functions performed by Astorga to an in-
house agency like SNMI was illegal, citing
Section 7(e), Rule VIII-A of the Rules
Implementing the Labor Code.
Subsequently, the RTC denied Astorga’s
motion to dismiss the replevin suit. The CA
reversed this ruling stating that the case is
intertwined with the complaint for illegal
dismissal; thus its labor tribunal has the
jurisdiction over the complaint.
Meanwhile, SMART also appealed the
unfavorable ruling of the Labor Arbiter to the
NLRC.
NLRC: Reversed the Labor Arbiter decision
and sustained Astorga’s dismissal. NLRC
declared the abolition of CSMG and the
creation of SNMI to do the sales and
marketing services for SMART a valid
organizational action.
CA: affirmed NLRC with modification
The reorganization
undertaken by SMART resulting in the
abolition of CSMG was a legitimate exercise
of management prerogative. However, the
CA found that SMART failed to comply with
the mandatory one-month notice prior to
the intended termination.
The CA also set aside the NLRCs order for the
return of the company vehicle holding that
this issue is not essentially a labor concern,
but is civil in nature, and thus, within the
competence of the regular court to decide.
ISSUE: whether or not the replevin suit over
the company vehicle is a civil or labor
dispute? Who has jurisdiction over such
case?
HELD: It is a civil dispute. The regular courts
has jurisdiction.
Replevin is an action whereby the owner or
person entitled to repossession of goods or
chattels may recover those goods or chattels
from one who has wrongfully distrained or
taken, or who wrongfully detains such goods
or chattels. It is designed to permit one
having right to possession to recover
property in specie from one who has
wrongfully taken or detained the property.
Contrary to the CAs ratiocination, the RTC
rightfully assumed jurisdiction over the suit
and acted well within its discretion in
denying Astorgas motion to dismiss. SMARTs
demand for payment of the market value of
the car or, in the alternative, the surrender
of the car, is not a labor, but a civil, dispute.
It involves the relationship of debtor and
creditor rather than employee-employer
relations. As such, the dispute falls within
the jurisdiction of the regular courts.
Grandteq Industrial Steel Products v Edna
Margallo (GR No. 181393; 2009)
FACTS: Grandteq is a domestic corporation
engaged in the business of selling welding
electrodes, alloy steels, aluminum and
copper alloys. Gonzales is the
President/Owner of Grandteq. Grandteq
employed Margallo as Sales Engineer
beginning 3 August 1999.
Margallo claimed that on an unstated date,
she availed herself of the car loan program
offered to her by Grandteq as a reward for
being Salesman of the Year. She paid the
down payment on a brand new Toyota
Corolla, amounting to P201,000.00, out of
her own pocket. The monthly amortization
for the car was P10,302.00, of which
P5,302.00 was to be her share and P5,000.00
was to be the share of Grandteq.
Margallo received a letter signed by
Gonzales indicating that the former is
working with JVM Industrial Supply and
Allied Services while being employed with
Grandteq. Margallo then averred that in
January 2004, De Leon asked her to just
resign, promising that if she did, she would
still be reimbursed her car loan payments.
Relying on De Leons promise, Margallo
tendered her irrevocable resignation,
effective immediately.
After Margallos resignation however,
Grandteq sold her car to Annaliza Estrella,
another employee, for P550,000.00. These
events prompted her to file before the Labor
Arbiter a Complaint against Grandteq and
Gonzales, for recovery of car loan payment. It is also uncontroverted that after the
Grandteq and Gonzales opposed Margallos [respondent Margallo]s negotiated
claims. that Margallo had no right to the resignation, her car was resold to another
refund of her car loan payments under the employee for the original price. Under the
car loan agreement she executed with circumstances, the above-quoted
Grandteq, which expressly provided that in contractual provision is null and void for
the event that Margallo resigned or was being contrary to morals, good customs, and
terminated for cause during the effectivity of public policy. The law overrides contracts
said agreement, her car loan payments which are prepared by employers to
would be forfeited in favor of Grandteq, and circumvent the rights of their employees.
Grandteq would regain possession of the
car. Truly, the contracting parties may establish
such stipulations, clauses, terms and
ISSUE: conditions as they want, and their
Is a car benefit a labor or civil dispute? agreement would have the force of law
between them. However, those terms and
HELD: A LABOR DISPUTE. Although not conditions agreed upon must not be
strictly a labor contract, the car loan contrary to law, morals, customs, public
agreement herein involves a benefit policy or public order. Precisely, the law
extended by the employers, Grandteq and overrides such conditions which are
Gonzales, to their employee, Margallo. It prejudicial to the interest of the worker. The
should benefit, and not unduly burden, law affords protection to an employee, and
Margallo. The Court cannot, in any way, it will not countenance any attempt to
uphold a car loan agreement that threatens subvert its spirit and intent. The sheer
the employee with the forfeiture of all the inequality that characterizes employer-
car loan payments he/she had previously employee relations, where the scales
made, plus loss of the possession of the car, generally tip against the employee, often
should the employee wish to resign; scarcely provides him real and better
otherwise, said agreement can then be used options. Moreover, in controversies
by the employer as an instrument to either between a laborer and his master, doubts
hold said employee hostage to the job or reasonably arising from the evidence, or in
punish him/her for resigning. the interpretation of agreements and
writing should be resolved in the formers
It is uncontroverted that the car loan favor.
program was offered to the complainant as
a reward for being the Salesman of the Year.
The principle that no person may unjustly
enrich oneself at the expense of another
(Nemo cum alteris detrimento locupletari
potest) is embodied in Article 22 of the New
Civil Code. As can be gleaned from the
foregoing, there is unjust enrichment when
(1) a person is unjustly benefited, and (2)
such benefit is derived at the expense of or
with damages to another. The main
objective of the principle of unjust
enrichment is to prevent one from enriching
oneself at the expense of another. It is
commonly accepted that this doctrine
simply means that a person shall not be
allowed to profit or enrich himself
inequitably at anothers expense. One
condition for invoking this principle is that
the aggrieved party has no other action
based on a contract, quasi-contract, crime,
quasi-delict, or any other provision of law.
The principle against unjust enrichment
obliges Grandteq and Gonzales to refund to
Margallo the car loan payments she had
made, since she has not actually acquired
the car. To relieve Grandteq and Gonzales of
their obligation to reimburse Margallo
would, indeed, be to sanction unjust
enrichment in favor of the first two and
cause unjust poverty to the latter.
Domondon vs NLRC 471 SCRA 559 (2009)
FACTS: On November 20, 1998, petitioner
Roberto T. Domondon filed a case against
private respondent Van Melle Phils., Inc.
(VMPI) and its President and General
Manager, private respondent Niels H.B.
Have.
He claimed illegal dismissal and prayed for
reinstatement, payment of full backwages
inclusive of allowances, 14th month pay, sick
and vacation leaves, share in the profits,
moral and exemplary damages and
attorneys fees.
Domondon alleged that VMPI, a
manufacturing company engaged in the
production and distribution of
confectionaries and related products, hired
him as Materials Manager through its then
President and General Manager Victor M.
Endaya. He was tasked to supervise the
Inventory Control, Purchasing, and
Warehouse and Distribution Sections of the
company.
He was given a guaranteed monthly salary of
ninety-eight thousand (P98,000.00) pesos
for fourteen (14) months with annual merit
adjustment, profit sharing bonus from 0-2
months based on individual, company and
corporate performance, and a brand new
1600cc Honda VTEC with 300 liters monthly
gas allowance
Things worked out well for him in the
beginning until Endaya was transferred to
China in August 1997 and was replaced by
private respondent Have, a Dutch national.
According to Domondon private respondent
Have immediately set a one-on-one meeting
with him and requested his courtesy
resignation. Alleging that the decision came
from the Asia Regional Office, private
respondent Have wanted to reorganize and
put his people in management. Petitioner
refused to resign and life got difficult for him.
His decisions were always questioned by
private respondent Have. He was subjected
to verbal abuse. His competence was
undermined by baseless and derogatory
memos, which lay the bases for his removal
from the company. He also did not receive
his 14th month pay.
Private respondents stated that Domondon
informed them about his intention to resign
and requested a soft landing financial
support in the amount of three hundred
thousand (P300,000.00) pesos on top of
accrued benefits due him upon resignation.
Private respondents granted the request.
Subsequently, however, petitioner proposed
the transfer of ownership of the car assigned
to him in lieu of the financial assistance from
the company. Since company policy
prohibits disposition of assets without
valuable consideration, the parties agreed
that petitioner shall pay for the car with the
P300,000.00 soft landing financial assistance
from private respondent VMPI.
However, Private respondents averred that
petitioner, who was then in charge of the
disposition of the assets of the company,
effected the registration of the car in his
name.
On July 30, 1998, P300,000.00 was credited
to petitioners payroll account but he did not
use it to pay for the car as agreed upon.
Repeated demands for payment were
unheeded. In its letter of demand dated
October 28, 1998, private respondent VMPI
gave petitioner an option to apply the
P169,368.32 total cash conversion of his sick
and vacation leave credits, 13th and 14th
months pay less taxes as partial
payment for the car and pay the balance of
P130,631.68, or return the car to the
company.
Petitioner did not exercise either option.
Instead, on November 20, 1998, he filed a
complaint for illegal dismissal against private
respondents.
Where the Labor Arbiter ruled in favor of
respondents VMPI. NLRC affirmed
Domondon questioned the the jurisdiction
of the Labor Arbiter to resolve the issue of
the transfer of car-ownership by private
respondents.
ISSUE:
Whether or not a counterclaim involving the
transfer of ownership of company cars falls
within the ambit of the Labor Arbiter
HELD: Yes. The Labor Arbiter has jurisdiction.
The jurisdiction of Labor Arbiters is provided
under Article 217(a) of the Labor Code, as
amended, viz:
(a) Except as otherwise provided under this
Code the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the
submission of the case by the parties for
decision without extension, even in the
absence of stenographic notes, the following
cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for
reinstatement, those cases that workers
may file involving wages, rates of pay, hours
of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and
other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of Article
264 of this Code, including questions
involving the legality of strikes and lockouts;
6. Except claims for Employees
Compensation, Social Security, Medicare
and maternity benefits, all other claims,
arising from employer-employee relations,
including those of persons in domestic or
household service, involving an amount
exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a
claim for reinstatement.
In all these instances, the matrix is the
existence of an employer-employee
relationship. In the case at bar, there is no
dispute that petitioner is an employee of the
respondents.
Without doubt, the transfer of the
ownership of the company car to petitioner
is connected with his resignation and arose
out of the parties employer-employee
relations. Accordingly, private respondents
claim for damages falls within the
jurisdiction of the Labor Arbiter.
Prudential Bank v Clarita Reyes
(352 SCRA 316)
FACTS:The case stems from NLRC NCR Case
No.00-06-03462-92, which is a complaint for
illegal suspension and illegal dismissal with
prayer for moral and exemplary damages,
gratuity, fringe benefits and attorney's fees
filed by Clarita Tan Reyes against Prudential
Bank and Trust Company (PRUDENTIAL)
before the labor arbiter.
Prior to her dismissal, REYES HELD: the
position of Assistant Vice President in the
foreign department of PRUDENTIAL, tasked
with the duties, among others, to collect
checks drawn against overseas banks
payable in foreign currency and to ensure
the collection of foreign bills or checks
purchased, including the signing of
transmittal letters covering the same.
The auditors of PRUDENTIAL discovered that
two checks, No.011728-7232-146, in the
amount of US$109,650.00, and No. 011730-
7232-146, in the amount of US$115,000.00,
received by PRUDENTIAL on April 6, 1989,
drawn, by the Sanford Trading against
Hongkong and Shanghai Banking
Corporation, Jurong Branch, Singapore, in
favor of Filipinas Tyrom, were not sent out
for collection to Hongkong Shanghai Banking
Corporation on the alleged order of CLARITA
T. REYES until the said checks became stale.
PRUDENTIAL created a committee to
investigate the findings of the auditors
involving the two checks which were not
collected and became stale.
CLARITA T. REYES failed to attend and
participate in the formal investigation
conducted by the Committee on May 24,
1991, despite due notice, the Committee
proceeded with its hearings and heard the
testimonies of several witnesses.
After a review of the Committee's findings,
the Board of Directors of PRUDENTIAL
resolved not to re-elect CLARITA T. REYES
any longer to the position of assistant
president pursuant to PRUDENTIAL's By-
laws.
In her position paper, CLARITA T. REYES
alleged that the real reason for her dismissal
was her filing of the criminal cases against
PRUDENTIAL president, the vice president
and the auditors of PRUDENTIAL, such filing
not being a valid ground for her dismissal.
Furthermore, she alleged that it would be
self-serving for the PRUDENTIAL to state that
she was found guilty of gross misconduct in
deliberately withholding the clearing of the
two dollar checks. She further alleged that
she was not afforded due process as she was
not given the chance to refute the charges
mentioned in the letter of dismissal. Hence,
she was illegally dismissed.
On the other hand, NLRC argues that there
were substantial bases for PRUDENTIAL to
lose its trust and confidence on CLARITA T.
REYES and, accordingly, had just cause for
terminating her services.
Labor Arbiter: Labor Arbiter Cornelio L.
Linsangan finds the dismissal of CLARITA T.
REYES to be without factual and legal basis,
judgment is hereby rendered ordering the
PRUDENTIAL to pay her back wages for three
(3) years. In lieu of reinstatement,
PRUDENTIAL is also ordered to pay CLARITA
T. REYES separation pay equivalent to one
month salary for every year of service.
NLRC: reversed the Labor Arbiter's decision
in its Resolution dated 24 March 1997. REYES
sought reconsideration which, however, was
denied by the NLRC in its Resolution of 28
July 1998.
Petition for certiorari before the Supreme
Court. The subject petition was referred to
the Court of Appeals for appropriate action
and disposition per resolution of this Court
dated November 25, 1998, in accordance
with the ruling in St. Marlin Funeral Homes
vs. NLRC.
CA: Court of Appeals found that the NLRC
committed grave abuse of discretion in
ruling that the dismissal of Reyes is valid. In
effect, the Court of Appeals reinstated the
judgment of the labor arbiter.
Bank also contends that "from the
beginning, prudential has consistently
asserted in all its pleadings at all stages of
the proceedings that REYES held the position
of Assistant Vice President, an elective
position which she held by virtue of her
having been elected as such by the Board of
Directors. CLARITA T. REYES's tenure was
subject to the discretion of the Board of
Directors and that her non-reelection was a
mere expiration of her term. PRUDENTIAL
insists that CLARITA T. REYES was elected
Assistant Vice President sometime in 1990 to
serve as such for only one year.
ISSUE: W/N REYES was only holding an
elective thus not a regular employee of
PRUDENTIAL.
HELD: NO. REYES is a regular employee and
PRUDENTIAL’s contention is untenable.
It appears that CLARITA T. REYES was
appointed Accounting Clerk by PRUDENTIAL
on July 14, 1963. From that position she rose
to become supervisor. Then in 1982, she was
appointed Assistant Vice-President which
she occupied until her illegal dismissal on
July 19, 1991.
PRUDENTIAL's contention that she merely
holds an elective position and that in effect
she is not a regular employee is belied by the
nature of her work and her length of service
with PRUDENTIAL. As earlier stated, she rose
from the ranks and has been employed with
PRUDENTIAL since 1963 until the
termination of her employment in 1991.
As Assistant Vice President of the foreign
department of PRUDENTIAL, she is tasked,
among others, to collect checks drawn
against overseas banks payable in foreign
currency and to ensure the collection of
foreign bills or checks purchased, including
the signing of transmittal letters covering
the same.
It has been stated that "the primary
standard of determining regular
employment is the reasonable connection
between the particular activity performed
by the employee in relation to the usual
trade or business of the employer.
Additionally, "an employee is regular
because of the nature of work and the length
of service, not because of the mode or even
the reason for hiring them."
As Assistant Vice-President of the Foreign
Department of PRUDENTIAL she performs
tasks integral to the operations of
PRUDENTIAL and her length of service with
PRUDENTIAL totaling 28 years speaks
volumes of her status as a regular employee
of PRUDENTIAL. In fine, as a regular
employee, she is entitled to security of
tenure; that is, her services may be
terminated only for a just or authorized
cause.
This being in truth a case of illegal dismissal,
it is no wonder then that PRUDENTIAL
endeavored to the very end to establish loss
of trust and confidence and serious
misconduct on the part of CLARITA T. REYES
but to no avail.
Arsenio Z. Locsin v Nissan Lease Phils. Inc.
and Luis Banson (GR No. 185567;2010)
FACTS:
In 1992, Locsin was elected as Executive Vice
President and Treasurer of Nissan Lease. He
held this position for 13 years until 2005
when he was elected as chairman of the
board of directors. 7 months after, there was
a re-election of officers but Locson was not
re-elected nor reinstated in his previous
position as Treasurer.
Aggrieved, Locsin alleges he is an employee
of Nissan, and thus he filed a complaint for
illegal dismissal with prayer for re
instatement, damages, and for Atty’s fees
with the Labor Arbiter against Nissan Lease
and Banson (President). Nissan Lease filed a
Motion to Dismiss, on the ground that the
Labor Arbiter did not have jurisdiction over
the case since the issue of Locsin’s removal
as EVP/Treasurer involves an intra-corporate
dispute.
The Labor Arbiter ruled that she has
jurisdiction to arbitrate and/or decide the
instant complaint finding that the case
involves an employer-employee
relationship. The element of control in the
performance of duties was the basis of the
Labor Arbiter in deciding that Locsin was an
employee of Nissan.
Nissan elevated the case to the CA alleging
that the Labor Arbiter committed grave
abuse of discretion under Rule 65.
The CA ruled that Locsin was a corporate
officer; the issue of his removal as
EVP/Treasurer is an intra-corporate dispute
under the RTC’s jurisdiction. The CA defined
corporate officers as those officers of a
corporation who are given that character
either by the Corporation Code or by the
corporations’ by-laws. The CA concluded
that Locsin does not have any recourse with
the Labor Arbiter or the NLRC since the
removal of a corporate officer, whether
elected or appointed, is an intra-corporate
controversy over which the NLRC has no
jurisdiction. Instead, according to the CA,
Locsin’s complaint for "illegal dismissal"
should have been filed in the Regional Trial
Court (RTC)
ISSUES:
1. Is Locsin an employee of Nissan or a
corporate officer?
RULING: No. Locsin was undeniably
Chairman and President, and was elected to
these positions by the Nissan board
pursuant to its By-laws. As such, he was a
corporate officer, not an employee. The CA
reached this conclusion by relying on the
definition of corporate officers as "those
officers of a corporation who are given that
character either by the Corporation Code or
by the corporation’s by-laws. Likewise,
Section 25 of Batas Pambansa Blg. 69, or the
Corporation Code of the Philippines
(Corporation Code) provides that corporate
officers are the president, secretary,
treasurer and such other officers as may be
provided for in the by-laws. Even as
Executive Vice-President/Treasurer, Locsin
already acted as a corporate officer because
the position of Executive
President/Treasurer is provided for in
Nissan’s By-Laws.
Renato Real v Sangu Philippines Inc.
(GR No. 168757; 2011)
FACTS: Petitioner Renato Real was the
Manager of respondent corporation Sangu
Philippines, Inc., a corporation engaged in
the business of providing manpower for
general services, like janitors, janitresses and
other maintenance personnel, to various
clients. In 2001, petitioner, together with 29
others, all employed by respondent
corporation, filed their respective
Complaints for illegal dismissal against the
latter and respondent Kiichi Abe, the
corporation’s Vice-President and General
Manager.
These complaints were later on
consolidated. With regard to petitioner, he
was removed from his position as Manager
through Board Resolution2 001-03 adopted
by respondent corporation’s Board of
Directors. Petitioner 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 letter dated
March 26, 2001 stating that he has been
terminated from service effective March 25,
2001 for the following reasons: (1)
continuous absences at his post at Ogino
Philippines Inc. for several months which
Vice- was detrimental to the corporation’s
operation; (2) loss of trust and confidence;
and, (3) to cut down operational expenses to
reduce further losses being experienced by
respondent corporation. Respondents, on
the other hand, refuted petitioner’s claim of
illegal dismissal by alleging that after
petitioner was appointed Manager, he
committed gross acts of misconduct
detrimental to the company since 2000.
According to them, petitioner would almost
always absent himself from work without
informing the corporation of
whereabouts and that he would come to the
office only to collect his salaries. As he was
almost always absent, petitioner neglected
to supervise the employees resulting in
complaints from various clients about
employees’ performance. In one instance,
petitioner together with a few others, while
apparently drunk, went to the premises of
one of respondents’ clients, Epson Precision
(Phils.) Inc., and engaged in a heated
argument with the employees therein.
Because of this, respondent Abe allegedly
received a complaint from Epson’s
Personnel Manager concerning petitioner’s
conduct.
Respondents likewise averred
petitioner established a company engaged in
the same business as respondent
corporation’s and even submitted proposals
for janitorial services to two of the latter’s
clients. Because of all these, the Board of
Directors of respondent corporation met on
March 24,2001 and adopted
Resolution No. 2001-03 removing petitioner
as Manager. Petitioner was thereafter
informed of his removal through a letter
dated March 26, 2001 which he, however,
refused to receive. Further, in what
respondents believed to be an act of
retaliation, petitioner allegedly encouraged
the employees who had been placed in the
manpower pool to file a complaint for illegal
dismissal against respondents. Worse, he
later incited those assigned in Epson
his Precision (Phils.) Inc., Ogino Philippines
Corporation, Hitachi Cable Philippines Inc.
and Philippine TRC Inc. to stage a strike on
April 10 to 16, 2001. Not satisfied, petitioner
together with other employees also
barricaded the premises of respondent
corporation. Such acts respondents posited
constitute just cause for petitioner’s
dismissal and that same was validly effected.
The Labor Arbiter in a Decision declared
petitioner and his co-complainants as having
been illegally dismissed. Respondents thus
appealed to the National Labor Relations
Commission (NLRC). The NLRC however,
modified the appealed decision of the Labor
Arbiter dismissing the complaint for lack of
that jurisdiction.
ISSUE
Whether or not petitioners complaint for
illegal dismissal constitutes an intra-
corporate controversy and thus, beyond the
jurisdiction of the Labor Arbiter
Board
HELD:
No. With the elements of intra-corporate
controversy being absent in this case, we
thus hold that petitioners complaint for
illegal dismissal against respondents is not
intra-corporate. Rather, it is a termination
dispute and, consequently, falls under the
jurisdiction of the Labor Arbiter pursuant to
Section 217 of the Labor Code.
No intra-corporate relationship between the
parties
As earlier stated, petitioners status as a
stockholder and director of respondent
corporation is not disputed. What the
parties disagree on is the finding of the NLRC
and the CA that petitioner is a corporate
officer. An examination of the complaint for
illegal dismissal, however, reveals that the
root of the controversy is petitioners
dismissal as Manager of respondent
corporation, a position which respondents
claim to be a corporate office. Hence,
petitioner is involved in this case not in his
capacity as a stockholder or director, but as
an alleged corporate officer. In applying the
relationship test, therefore, it is necessary to
determine if petitioner is a corporate officer
of respondent corporation so as to establish
the intra-corporate relationship between
the parties. And albeit respondents claim
that the determination of whether
petitioner is a corporate officer is a question
of fact which this Court cannot pass upon in
this petition for review on certiorari, we shall
nonetheless proceed to consider the same
because such question is not the main issue
to be resolved in this case but is merely
collateral to the core issue earlier
mentioned.
Present controversy does not relate to intra-
corporate dispute
We now go to the nature of controversy test.
As earlier stated, respondents terminated
the services of petitioner for the following
reasons: (1) his continuous absences at his
post at Ogino Philippines, Inc; (2)
respondents loss of trust and confidence on
petitioner; and, (3) to cut down operational
expenses to reduce further losses being
experienced by the corporation. Hence,
petitioner filed a complaint for illegal
dismissal and sought reinstatement,
backwages, moral damages and attorneys
fees. From these, it is not difficult to see that
the reasons given by respondents for
dismissing petitioner have something to do
with his being a Manager of respondent
corporation and nothing with his being a
director or stockholder. For one, petitioners
continuous absences in his post in Ogino
relates to his performance as Manager.
Second, respondents loss of trust and
confidence in petitioner stemmed from his
alleged acts of establishing a company
engaged in the same line of business as
respondent corporations and submitting
proposals to the latters clients while he was
still serving as its Manager. While we note
that respondents also claim these acts as
constituting acts of disloyalty of petitioner as
director and stockholder, we, however, think
that same is a mere afterthought on their
part to make it appear that the present case
involves an element of intra-corporate
controversy. Cosare sent a confidential memo to Arevalo
to inform him of the following anomalies
which were allegedly being committed by
26. Raul C. Cosare v Broadcom Asia, Inc. and Abiog (the VP for sales, Cosare’s superior)
Dante Arevalo against the company. Apparently, Arevalo
G.R. No. 201298 February 5, 2014 failed to act on Cosare’s accusations. Cosare
claimed that he was instead called for a
RAUL C. COSARE, Petitioner, meeting by Arevalo wherein he was asked to
vs. tender his resignation in exchange for
BROADCOM ASIA, INC. and DANTE "financial assistance" in the amount of
AREVALO, Respondents. ₱300,000.00. Cosare refused.

TOPIC: “Corporate Officer or Employee?” Cosare received a memo signed by Arevalo,

charging him of serious misconduct and
FACTS: willful breach of trust. He was also
"suspended from having access to any and
The case stems from a complaint for all company files/records and use of
constructive dismissal, illegal suspension company assets effective immediately."
and monetary claims filed with the by Cosare Thus, Cosare claimed that he was precluded
against the respondents. from reporting for work and was totally
barred from entering the company
Cosare claimed that he was employed as a premises,
salesman by Arevalo, who was then in the
business of selling broadcast equipment Cosare filed the subject labor complaint,
needed by television networks and claiming that he was constructively
production houses. In December 2000, dismissed from employment by the
Arevalo set up the company Broadcom, still respondents. He further argued that he was
to continue the business of trading illegally suspended, as he placed no serious
communication and broadcast equipment. and imminent threat to the life or property
Cosare was named an incorporator of of his employer and co-employees.
Broadcom, having been assigned 100 shares
of stock and was later promoted to the Respondents argued that Cosare was neither
position of Assistant Vice President for Sales illegally suspended nor dismissed from
(AVP for Sales) and Head of the Technical employment. They also contended that
Coordination. Cosare committed the following acts inimical
to the interests of Broadcom: (a) he failed to
sell any broadcast equipment since the year
2007; (b) he attempted to sell a Panasonic
HMC 150 Camera which was to be sourced
from a competitor; and (c) he made an
unauthorized request in Broadcom’s name
for its principal, Panasonic USA, to issue an
invitation for Cosare’s friend, one Alex
Paredes, to attend the National Association
of Broadcasters’ Conference in Las Vegas,
USA.16 Furthermore, they contended that
Cosare abandoned his job17 by continually
failing to report for work beginning April 1,
2009, prompting them to issue on April 14,
2009 a memorandum18 accusing Cosare of
absence without leave beginning April 1,
2009.
LA: dismissing the complaint on the ground
of Cosare’s failure to establish that he was
dismissed, constructively or otherwise, from
his employment. For the LA, what transpired
on March 30, 2009 was merely the
respondents’ issuance to Cosare of a show-
cause memo, giving him a chance to present
his side on the charges against him. He
explained:
It is obvious that [Cosare] DID NOT wait for
respondents’ action regarding the charges
leveled against him in the show-cause
memo. What he did was to pre-empt that
action by filing this complaint just a day after
he submitted his written explanation.
Moreover, by specifically seeking payment
of "Separation Pay" instead of
reinstatement, [Cosare’s] motive for filing
this case becomes more evident.20
It was also HELD: that Cosare failed to
substantiate by documentary evidence his
allegations of illegal suspension and non-
payment of allowances and commissions.
Unyielding, Cosare appealed the LA decision
to the NLRC.
NLRC: REVERSED and the Respondents are
found guilty of Illegal Constructive Dismissal,
explained that "due weight and credence is
accorded to [Cosare’s] contention that he
was constructively dismissed by Respondent
Arevalo when he was asked to resign from
his employment."23 The fact that Cosare
was suspended from using the assets of
Broadcom was also inconsistent with the
respondents’ claim that Cosare opted to
abandon his employment.
During the pendency of the CA appeal, they
raised a new argument, i.e., the case
involved an intra-corporate controversy
which was within the jurisdiction of the RTC,
instead of the LA. They argued that the case
involved a complaint against a corporation
filed by a stockholder, who, at the same
time, was a corporate officer.
CA: Dismissed LABOR COMPLAINT for lack of
jurisdiction: the case involved an intra-
corporate controversy which, pursuant to
Presidential Decree No. 902-A, as amended,
was within the exclusive jurisdiction of the
RTC. It reasoned: Record shows that [Cosare]
was indeed a stockholder of [Broadcom],
and that he was listed as one of its directors.
Moreover, he HELD: the position of [AVP] for
Sales which is listed as a corporate office.
Generally, the president, vice-president,
secretary or treasurer are commonly
regarded as the principal or executive
officers of a corporation, and modern
corporation statutes usually designate them
as the officers of the corporation. However,
it bears mentioning that under Section 25 of
the Corporation Code, the Board of Directors
of [Broadcom] is allowed to appoint such
other officers as it may deem necessary.
Indeed, [Broadcom’s] By-Laws provides:
Article IV
Officer
Section 1. Election / Appointment –
Immediately after their election, the Board
of Directors shall formally organize by
electing the President, the Vice-President,
the Treasurer, and the Secretary at said
meeting.
The Board, may, from time to time, appoint
such other officers as it may determine to be
necessary or proper. x x x
We hold that [the respondents] were able to
present substantial evidence that [Cosare]
indeed HELD: a corporate office, as
evidenced by the General Information Sheet
which was submitted to the Securities and
Exchange Commission (SEC) on October 22,
2009.27 (Citations omitted and emphasis
supplied)
ISSUE:
(1) whether or not the case instituted by
Cosare was an intra-corporate dispute that
was within the original jurisdiction of the
RTC, and not of the LAs; and
(2) whether or not Cosare was constructively
and illegally dismissed from employment by
the respondents.
HELD:
ISSUE #1: Jurisdiction over the controversy
As regards the issue of jurisdiction, the Court
has determined that contrary to the ruling of
the CA, it is the LA, and not the regular
courts, which has the original jurisdiction
over the subject controversy.
An intra-corporate controversy, which falls
within the jurisdiction of regular courts, has
been regarded in its broad sense to pertain
to disputes that involve any of the following
relationships:
(1) between the corporation, partnership or
association and the public;
(2) between the corporation, partnership or
association and the state in so far as its
franchise, permit or license to operate is
concerned;
(3) between the corporation, partnership or
association and its stockholders, partners,
members or officers; and
(4) among the stockholders, partners or
associates, themselves.
Settled jurisprudence, however, qualifies
that when the dispute involves a charge of
illegal dismissal, the action may fall under
the jurisdiction of the LAs upon whose
jurisdiction, as a rule, falls termination
disputes and claims for damages arising from
employer-employee relations as provided in
Article 217 of the Labor Code. Consistent
with this jurisprudence, the mere fact that
Cosare was a stockholder and an officer of
Broadcom at the time the subject
controversy developed failed to necessarily
make the case an intra-corporate dispute.
In Matling Industrial and Commercial
Corporation v. Coros, the Court
distinguished between a "regular employee"
and a "corporate officer" for purposes of
establishing the true nature of a dispute or
complaint for illegal dismissal and
determining which body has jurisdiction
over it. Succinctly, it was explained that
"[t]he determination of whether the
dismissed officer was a regular employee or
corporate officer unravels the conundrum"
of whether a complaint for illegal dismissal is
cognizable by the LA or by the RTC. "In case
of the regular employee, the LA has
jurisdiction; otherwise, the RTC exercises the
legal authority to adjudicate.
Applying the foregoing to the present case,
the LA had the original jurisdiction over the
complaint for illegal dismissal because
Cosare, although an officer of Broadcom for
being its AVP for Sales, was not a "corporate
officer" as the term is defined by law.
We emphasized in Real v. Sangu Philippines,
Inc. the definition of corporate officers for
the purpose of identifying an intra-corporate
controversy. Citing Garcia v. Eastern
Telecommunications Philippines, Inc.,33 we
HELD:
" ‘Corporate officers’ in the context of
Presidential Decree No. 902-A are those
officers of the corporation who are given
that character by the Corporation Code or by
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, cashier, auditor or general
manager. The number of corporate officers
is thus limited by law and by the
corporation’s by-laws."34 (Emphasis ours)
In Tabang v. NLRC,35 the Court also made
the following pronouncement on the nature
of corporate offices:
It has been HELD: that an "office" is created
by the charter of the corporation and the
officer is elected by the directors and
stockholders. On the other hand, an
"employee" usually occupies no office and
generally is employed not by action of the
directors or stockholders but by the
managing officer of the corporation who
also determines the compensation to be
paid to such employee.36 (Citations
omitted)
As may be deduced from the foregoing,
there are two circumstances which must
concur in order for an individual to be
considered a corporate officer, as against an
ordinary employee or officer, namely: (1) the
creation of the position is under the
corporation’s charter or by-laws; and (2) the
election of the officer is by the directors or
stockholders. It is only when the officer
claiming to have been illegally dismissed is
classified as such corporate officer that the
issue is deemed an intra-corporate dispute
which falls within the jurisdiction of the trial
courts.
To support their argument that Cosare was a
corporate officer, the respondents referred
to Section 1, Article IV of Broadcom’s by-
laws, which reads:
ARTICLE IV
OFFICER
Section 1. Election / Appointment –
Immediately after their election, the Board
of Directors shall formally organize by
electing the President, the Vice-President,
the Treasurer, and the Secretary at said
meeting.
The Board may, from time to time, appoint
such other officers as it may determine to be
necessary or proper. Any two (2) or more
compatible positions may be HELD:
concurrently by the same person, except
that no one shall act as President and
Treasurer or Secretary at the same time.37
(Emphasis ours)
This was also the CA’s main basis in ruling
that the matter was an intra-corporate
dispute that was within the trial courts’
jurisdiction.
The Court disagrees with the respondents
and the CA. As may be gleaned from the
aforequoted provision, the only officers who
are specifically listed, and thus with offices
that are created under Broadcom’s by-laws
are the following: the President, Vice-
President, Treasurer and Secretary.
Although a blanket authority provides for
the Board’s appointment of such other
officers as it may deem necessary and
proper, the respondents failed to sufficiently
establish that the position of AVP for Sales
was created by virtue of an act of
Broadcom’s board, and that Cosare was
specifically elected or appointed to such
position by the directors. No board
resolutions to establish such FACTS form
part of the case records. Further, it was
HELD: in Marc II Marketing, Inc. v. Joson38
that an enabling clause in a corporation’s by-
laws empowering its board of directors to
create additional officers, even with the
subsequent passage of a board resolution to
that effect, cannot make such position a
corporate office. The board of directors has
no power to create other corporate offices
without first amending the corporate by-
laws so as to include therein the newly
created corporate office.39 "To allow the
creation of a corporate officer position by a
simple inclusion in the corporate by-laws of
an enabling clause empowering the board of
directors to do so can result in the
circumvention of that constitutionally well-
protected right [of every employee to
security of tenure]."40
The CA’s heavy reliance on the contents of
the General Information Sheets41, which
were submitted by the respondents during
the appeal proceedings and which plainly
provided that Cosare was an "officer" of
Broadcom, was clearly misplaced. The said
documents could neither govern nor
establish the nature of the office HELD: by
Cosare and his appointment thereto.
Furthermore, although Cosare could indeed
be classified as an officer as provided in the
General Information Sheets, his position
could only be deemed a regular office, and
not a corporate office as it is defined under
the Corporation Code. Incidentally, the
Court noticed that although the Corporate
Secretary of Broadcom, Atty. Efren L.
Cordero, declared under oath the truth of
the matters set forth in the General
Information Sheets, the respondents failed
to explain why the General Information
Sheet officially filed with the Securities and
Exchange Commission in 2011 and
submitted to the CA by the respondents still
indicated Cosare as an AVP for Sales, when
among their defenses in the charge of illegal
dismissal, they asserted that Cosare had
severed his relationship with the
corporation since the year 2009.
Finally, the mere fact that Cosare was a
stockholder of Broadcom at the time of the
case’s filing did not necessarily make the
action an intra- corporate controversy. "Not
all conflicts between the stockholders and
the corporation are classified as intra-
corporate. There are other FACTS to
consider in determining whether the dispute
involves corporate matters as to consider
them as intra-corporate controversies."42
Time and again, the Court has ruled that in
determining the existence of an intra-
corporate dispute, the status or relationship
of the parties and the nature of the question
that is the subject of the controversy must
be taken into account.43 Considering that
the pending dispute particularly relates to
Cosare’s rights and obligations as a regular
officer of Broadcom, instead of as a
stockholder of the corporation, the
controversy cannot be deemed intra-
corporate. This is consistent with the
"controversy test" explained by the Court in
Reyes v. Hon. RTC, Br. 142,44 to wit:
Under the nature of the controversy test, the
incidents of that relationship must also be
considered for the purpose of ascertaining
whether the controversy itself is intra-
corporate. The controversy must not only be
rooted in the existence of an intra-corporate
relationship, but must as well pertain to the
enforcement of the parties’ correlative
rights and obligations under the Corporation
Code and the internal and intra-corporate
regulatory rules of the corporation. If the
relationship and its incidents are merely
incidental to the controversy or if there will
still be conflict even if the relationship does
not exist, then no intra-corporate
controversy exists.45 (Citation omitted)
It bears mentioning that even the CA’s
finding46 that Cosare was a director of
Broadcom when the dispute commenced
was unsupported by the case records, as
even the General Information Sheet of 2009
referred to in the CA decision to support
such finding failed to provide such detail.
All told, it is then evident that the CA erred
in reversing the NLRC’s ruling that favored
Cosare solely on the ground that the dispute
was an intra-corporate controversy within
the jurisdiction of the regular courts.
ISSUE #2: The charge of constructive
dismissal
Towards a full resolution of the instant case,
the Court finds it appropriate to rule on the
correctness of the NLRC’s ruling finding
Cosare to have been illegally dismissed from
employment.
In filing his labor complaint, Cosare
maintained that he was constructively
dismissed, citing among other circumstances
the charges that were hurled and the
suspension that was imposed against him via
Arevalo’s memo dated March 30, 2009. Even
prior to such charge, he claimed to have
been subjected to mental torture, having
been locked out of his files and records and
disallowed use of his office computer and
access to personal belongings.47 While
Cosare attempted to furnish the
respondents with his reply to the charges,
the latter refused to accept the same on the
ground that it was filed beyond the 48-hour
period which they provided in the memo.
Cosare further referred to the circumstances
that allegedly transpired subsequent to the
service of the memo, particularly the
continued refusal of the respondents to
allow Cosare’s entry into the company’s
premises. These incidents were cited in the
CA decision as follows:
On March 31, 2009, [Cosare] reported back
to work again. He asked Villareal if he could
retrieve his personal belongings, but the
latter said that x x x Arevalo directed her to
deny his request, so [Cosare] again waited at
the receiving section of the office. On April 1,
2009, [Cosare] was not allowed to enter the
office premises. He was asked to just wait
outside of the Tektite (PSE) Towers, where
[Broadcom] had its offices, for further
instructions on how and when he could get
his personal belongings. [Cosare] waited
until 8 p.m. for instructions but none were
given. Thus, [Cosare] sought the assistance
of the officials of Barangay San Antonio,
Pasig who advised him to file a labor or
replevin case to recover his personal
belongings. x x x.48 (Citation omitted)
It is also worth mentioning that a few days
before the issuance of the memo dated
March 30, 2009, Cosare was allegedly
summoned to Arevalo’s office and was asked
to tender his immediate resignation from
the company, in exchange for a financial
assistance of ₱300,000.00.49 The directive
was said to be founded on Arevalo’s choice
to retain Abiog’s employment with the
company.50 The respondents failed to
refute these claims.
Given the circumstances, the Court agrees
with Cosare’s claim of constructive and
illegal dismissal. "[C]onstructive dismissal
occurs when there is cessation of work
because continued employment is rendered
impossible, unreasonable, or unlikely as
when there is a demotion in rank or
diminution in pay or when a clear
discrimination, insensibility, or disdain by an
employer becomes unbearable to the
employee leaving the latter with no other
option but to quit."51 In Dimagan v.
Dacworks United, Incorporated,52 it was
explained:
The test of constructive dismissal is whether
a reasonable person in the employee’s
position would have felt compelled to give
up his position under the circumstances. It is
an act amounting to dismissal but is made to
appear as if it were not. Constructive
dismissal is therefore a dismissal in disguise.
The law recognizes and resolves this
situation in favor of employees in order to
protect their rights and interests from the
coercive acts of the employer.53 (Citation
omitted)
It is clear from the cited circumstances that
the respondents already rejected Cosare’s
continued involvement with the company.
Even their refusal to accept the explanation
which Cosare tried to tender on April 2, 2009
further evidenced the resolve to deny
Cosare of the opportunity to be heard prior
to any decision on the termination of his
employment. The respondents allegedly
refused acceptance of the explanation as it
was filed beyond the mere 48-hour period
which they granted to Cosare under the
memo dated March 30, 2009. However,
even this limitation was a flaw in the memo
or notice to explain which only further
signified the respondents’ discrimination,
disdain and insensibility towards Cosare,
apparently resorted to by the respondents in
order to deny their employee of the
opportunity to fully explain his defenses and
ultimately, retain his employment. The Court
emphasized in King of Kings Transport, Inc. v.
Mamac54 the standards to be observed by
employers in complying with the service of
notices prior to termination:
[T]he first written notice to be served on the
employees should contain the specific
causes or grounds for termination against
them, and a directive that the employees are
given the opportunity to submit their written
explanation within a reasonable period.
"Reasonable opportunity" under the
Omnibus Rules means every kind of
assistance that management must accord to
the employees to enable them to prepare
adequately for their defense. This should be
construed as a period of at least five (5)
calendar days from receipt of the notice to
give the employees an opportunity to study
the accusation against them, consult a union
official or lawyer, gather data and evidence,
and decide on the defenses they will raise
against the complaint. Moreover, in order to
enable the employees to intelligently
prepare their explanation and defenses, the
notice should contain a detailed narration of
the FACTS and circumstances that will serve
as basis for the charge against the
employees. A general description of the
charge will not suffice. Lastly, the notice
should specifically mention which company
rules, if any, are violated and/or which
among the grounds under Art. 282 is being
charged against the employees.55 (Citation
omitted, underscoring ours, and emphasis
supplied)
In sum, the respondents were already
resolute on a severance of their working
relationship with Cosare, notwithstanding
the FACTS which could have been
established by his explanations and the
respondents’ full investigation on the
matter. In addition to this, the fact that no
further investigation and final disposition
appeared to have been made by the
respondents on Cosare’s case only negated
the claim that they actually intended to first
look into the matter before making a final
determination as to the guilt or innocence of
their employee. This also manifested from
the fact that even before Cosare was
required to present his side on the charges
of serious misconduct and willful breach of
trust, he was summoned to Arevalo’s office
and was asked to tender his immediate
resignation in exchange for financial
assistance.
The clear intent of the respondents to find
fault in Cosare was also manifested by their
persistent accusation that Cosare
abandoned his post, allegedly signified by his
failure to report to work or file a leave of
absence beginning April 1, 2009. This was April 1, 2009. However[,] the show-cause
even the subject of a memo56 issued by letter dated March 3[0], 2009 (Annex "F",
Arevalo to Cosare on April 14, 2009, asking ibid) suspended [Cosare] from using not only
him to explain his absence within 48 hours the equipment but the "assets" of
from the date of the memo. As the records Respondent [Broadcom]. This insults
clearly indicated, however, Arevalo placed rational thinking because the Respondents
Cosare under suspension beginning March tried to mislead us and make [it appear] that
30, 2009. The suspension covered access to [Cosare] failed to report for work when they
any and all company files/records and the had in fact had [sic] placed him on
use of the assets of the company, with suspension. x x x.58
warning that his failure to comply with the
memo would be dealt with drastic NLRC decision is AFFIRMED.
management action. The charge of
abandonment was inconsistent with this 27. Manliguez v CA (232 SCRA 427)
imposed suspension. "Abandonment is the
deliberate and unjustified refusal of an PURIFICACION Y. MANLIGUEZ, ANTONINA Y.
employee to resume his employment. To LUIS and BENJAMIN C. YBANEZ, petitioners,
constitute abandonment of work, two vs. THE COURT OF APPEALS, ET AL.,
elements must concur: ‘(1) the employee respondents. | G.R. No. 92598 | May 20,
must have failed to report for work or must 1994 | PUNO, J.:
have been absent without valid or justifiable FACTS:
reason; and (2) there must have been a clear On May 25, 1988, petitioners filed with the
intention on the part of the employee to RTC of Cebu City, 7th Judicial Branch, a
sever the employer- employee relationship Complaint3 which sought the lifting of the
manifested by some overt act.’"57 Cosare’s levy over, and annulment of the sale of, the
failure to report to work beginning April 1, Tipolo properties. Petitioners therein
2009 was neither voluntary nor indicative of alleged that: they are the owners of the Lot
an intention to sever his employment with 109; they entered into a lease agreement
Broadcom. It was illogical to be requiring him with Inductocast Cebu over Lot 109; the
to report for work, and imputing fault when lease contract provided that, except for
he failed to do so after he was specifically machineries and equipment, all
denied access to all of the company’s assets. improvements introduced in the leased
As correctly observed by the NLRC: premises shall automatically be owned by
the Lessor (petitioners) upon the
[T]he Respondent[s] had charged [Cosare] of expiration/termination of the contract;4 the
abandoning his employment beginning on lease agreement was terminated by
petitioners in November, 1980 due to non-
payment of rentals by Inductocast Cebu;5
thereafter, petitioners took actual
possession of and occupied the Tipolo
properties. Petitioners likewise alleged in
their Complaint that they became aware of
the labor dispute involving Inductocast only
after the impugned public auction sale.6
Atty. Danilo Pilapil, claiming to be the John
Doe named in the Complaint, filed a motion
to dismiss on the ground that the trial court
had no jurisdiction over the case. The buyers
of the Tipolo properties, as intervenors, also
filed a motion to dismiss on the same
ground. Both motions, which were opposed
by petitioners, were denied.
The intervenors, however, moved for
reconsideration of the denial. It HELD: it had
no jurisdiction over the case since the levy
and sale "are connected with the case within
the exclusive jurisdiction of the Department
of Labor and Employment."8
CA: Denied the petition.
ISSUE:
Whether RTC has jurisdiction over the case.
HELD:
Yes. It is at once evident that it is not a labor
case. No employer-employee relationship
exists between petitioners and the other
parties, and no issue is involved which may
be resolved by reference to the Labor Code,
other labor statutes, or any collective
bargaining agreement. Neither can we
characterize petitioner's action before the
trial court as arising out of a labor dispute. It
was not brought to reverse or modify the
judgment of the Department of Labor and
Employment (DOLE). Neither did it question
the validity of, or pray for, the quashal of the
writ of execution against Inductocast.
What is to be litigated is the issue of
ownership over the Tipolo properties.
Clearly, it is the RTC and not the labor
department which can take cognizance of
the case, as provided by B.P. Blg. 129 ("An
Act Reorganizing the Judiciary,
Appropriating Funds Therefor, and For Other
Purposes"), thus:
Sec. 19. Jurisdiction in civil case. — Regional
Trial Courts shall exercise exclusive original
jurisdiction: xxx xxx xxx
(2) In all civil actions which involve the title
to, or possession of real property, or any
interest therein, except actions for forcible
entry into and unlawful detainer of lands or
buildings, original jurisdiction over which is
conferred upon Metropolitan Trial Courts,
Municipal Trial Courts, and Municipal Circuit
Trial Courts; xxx xxx xxx
The action taken by petitioners before the
RTC asserting their ownership over the
levied properties is mandated by Section 17,
Rule 39 of the Revised Rules of Court. Time
and again, we have HELD: that:
Under Section 17, Rule 39, a third person
who claims property levied upon on
execution may vindicate such claim by
action. . . . The right of a person who claims
to be the owner of property levied upon on
execution to file a third-party claim with the
sheriff is not exclusive, and he may file an
action to vindicate his claim even if the
judgment creditor files an indemnity bond in
favor of the sheriff to answer for any
damages that may be suffered by the third-
party claimant. By "action", as stated in the
Rule, what is meant is a separate and
independent action.10
28. Georg Grotjahn GMBH v Isnani
(235 SCRA 216)
FACTS
Petitioner Grotjahn is a multinational
company organized and existing under the
laws of the Federal Republic of Germany. It
filed an application with the Securities and
Exchange Commission (SEC) for the
establishment of a regional or area
headquarters in the Philippines, pursuant to
Presidential Decree No. 218.
Private respondent Romana R. Lanchinebre
was a sales representative of petitioner from
1983 to mid-1992. She subsequently secured
a loan of P25,000.00 from petitioner. She
made additional cash advances and despite
demand, private respondent Romana failed
to settle her obligation with petitioner.
Respondent Lanchinebre filed with the
Arbitration Branch of the NLRC in Manila, a
Complaint for illegal suspension, dismissal
and non-payment of commissions against
petitioner. Subsequently, petitioner in turn
filed against private respondent a Complaint
for damages amounting to P120,000.00 also
with the NLRC Arbitration Branch Manila.
Furthermore, petitioner filed another
Complaint for collection of sum of money
against private respondents spouses
Romana and Teofilo Lanchinebre which was
docketed as Civil Case No. 92-2486.
ISSUES
1. Whether or not regular courts have
jurisdiction over disputes between an
employer and an employee involving the
application of purely general civil law (YES)
2. Whether or not petitioner Grotjahn
has no capacity to sue and be sued in the
philippines despite the fact that petitioner is
duly licensed by the securities and exchange
commission to set up and operate a regional
or area headquarters in the country (NO)
HELD:
1. Yes. Where the principal relief sought
is to be resolved not by reference to the
Labor Code or other labor relations statute
or a collective bargaining agreement but by
the general civil law, the jurisdiction over the
dispute belongs to the regular courts of
justice and not to the labor arbiter and the
NLRC.
In such situations, resolution of the dispute
requires expertise, not in labor management
relations or in wage structures and other
terms and conditions of employment, but
rather in the application of the general civil
law. Clearly, such claims fall outside the area
of competence or expertise ordinarily
ascribed to labor arbiters and the NLRC and
the rationale for granting jurisdiction over
such claims to these agencies disappears.
The civil case involved here is a simple
collection of a sum of money brought by
petitioner, as creditor, against private
respondent Romana Lanchinebre, as debtor.
The fact that they were employer and
employee at the time of the transaction does
not negate the civil jurisdiction of the trial
court. The case does not involve
adjudication of a labor dispute but recovery
of a sum of money based on our civil laws on
obligation and contract.
2. No. There is no general rule or
governing principle as to what constitutes
"doing" or "engaging in" or "transacting"
business in the Philippines. Each case must
be judged in the light of its peculiar
circumstances. In the case at bench,
petitioner does not engage in commercial
dealings or activities in the country because
it is precluded from doing so by P.D. No. 218,
under which it was established.
Nonetheless, it has been continuously, since
1983, acting as a supervision,
communications and coordination center for
its home office's affiliates in Singapore, and
in the process has named its local agent and
has employed Philippine nationals like
private respondent Romana Lanchinebre.
From this uninterrupted performance by
petitioner of acts pursuant to its primary
purposes and functions as a regional/area
headquarters for its home office, it is clear
that petitioner is doing business in the
country.
29. Eviota v CA
(407 SCRA 394)
FACTS: Sometime on January 26, 1998, the
respondent Standard Chartered Bank and
petitioner Eduardo G. Eviota executed a
contract of employment under which the
petitioner was employed by the respondent
bank as Compensation and Benefits
Manager, VP (M21). Petitioner came up with
many proposals which the bank approved
and made preparations of. He was also given
privileges like car, renovation of the office,
and even a trip to Singapore at the
company’s expense. However, the petitioner
abruptly resigned from the respondent bank
barely a month after his employment and
rejoined his former employer. On June 19,
1998, the respondent bank filed a complaint
against the petitioner with the RTC of Makati
City for damages brought about his abrupt
resignation.
Though petitioner reimbursed part of the
amount demanded by Standard, he was not
able to pay it full. Standard alleged that
assuming arguendo that Eviota had the right
to terminate his employment with the Bank
for no reason, the manner in and
circumstances under which he exercised the
same are clearly abusive and contrary to the
rules governing human relations, governed
by the Civil Code. Further, Standard alleged
that petitioner also violated the Labor Code
when he terminated his employment
without one (1) notice in advance. This
stipulation was also provided in the
employment contract of Eviota with
Standard, which would also constitute
breach of contract.
The petitioner filed a motion to dismiss the
complaint on the ground that the action for
damages of the respondent bank was within
the exclusive jurisdiction of the Labor Arbiter
under paragraph 4, Article 217 of the Labor
Code of the Philippines, as amended. The
petitioner averred that the respondent
bank’s claim for damages arose out of or
were in connection with his employer-
employee relationship with the respondent
bank or some aspect or incident of such
relationship.
The respondent bank opposed the motion,
claiming that its action for damages was
within the exclusive jurisdiction of the trial
court. Although its claims for damages
incidentally involved an employer-employee
relationship, the said claims are actually
predicated on the petitioner’s acts and
omissions which are separately, specifically
and distinctly governed by the New Civil
Code.
ISSUE
W/N RTC has jurisdiction over the case
HELD:
Yes. Not every controversy or money claim
by an employee against the employer or
vice-versa is within the exclusive jurisdiction
of the labor arbiter.
Case law has it that the nature of an action
and the subject matter thereof, as well as
which court has jurisdiction over the same,
are determined by the material allegations
of the complaint and the reliefs prayed for in
relation to the law involved. A money claim
by a worker against the employer or vice-
versa is within the exclusive jurisdiction of
the labor arbiter only if there is a reasonable
causal connection between the claim
asserted and employee-employer relation.
Absent such a link, the complaint will be
cognizable by the regular courts of justice.
Actions between employees and employer
where the employer-employee relationship
is merely incidental and the cause of action
precedes from a different source of
obligation is within the exclusive jurisdiction
of the regular court. In Georg Grotjahn
GMBH & Co. v. Isnani, we HELD: that the
jurisdiction of the Labor Arbiter under Article
217 of the Labor Code, as amended, is
limited to disputes arising from an employer-
employee relationship which can only be
resolved by reference to the Labor Code of
the Philippines, other labor laws or their
collective bargaining agreements. In
Singapore Airlines Limited v. Pao, the
complaint of the employer against the
employee for damages for wanton justice
and refusal without just cause to report for
duty, and for having maliciously and with
bad faith violated the terms and conditions
of their agreement for a course of
conversion training at the expense of the
employer, we ruled that jurisdiction over the
action belongs to the civil court.
30. Asian Alcohol Corp vs. NLRC
Topic: management prerogative to contract
out of service
FACTS:
The Parsons family, who originally owned
the controlling stocks in Asian Alcohol, were
driven by mounting business losses to sell
their majority rights to prior Holdings, Inc.
The next month, Prior Holdings took over its
management and operation.
To thwart further losses, Prior Holdings
implemented a reorganizational plan and
other cost-saving measures. Some one
hundred seventeen (117) employees out of
a total workforce of three hundred sixty
(360) were separated. Seventy two (72) of
them occupied redundant positions that
were abolished. Of these positions, twenty
one (21) were HELD: by union members and
fifty one (51) by non-union members.
The six (6) private respondents are among
those union members whose positions were
abolished due to redundancy. Private
respondents Carias, Martinez, and Sendon
were water pump tenders; Amacio was a
machine shop mechanic; Verayo was a
briquetting plant operator while Tormo was
a plant helper under him. They were all
assigned at the Repair and Maintenance
Section of the Pulupandan plant.
The six (6) private respondents files with the
NLRC Regional Arbitration Branch VI,
Bacolod City, complaints for illegal dismissal
with a prayer for reinstatement with
backwages, moral damages and attorneys
fees. They alleged that Asian Alcohol used
the retrenchment program as a subterfuge
for the union busting. They claimed that they
were singled out for separation by reason for
their active participation in the union. They
also asseverated that Asian Alcohol was not
bankrupt as it has engaged in an aggressive
scheme of contractual hiring.
ISSUE:
Whether the availment of the services of an
independent contractor to replace the
services of the terminated employee is valid.
(YES)
Ruling:
The right of management to dismiss workers
during periods of business recession and to
install labor saving devices to prevent losses
is governed by Art. 283 of the Labor Code, as services of workers to preserve the viability
amended. It provides, viz.: of the business. In exercising its right,
however, management must faithfully
Art. 283. Closure of establishment and comply with the substantive and procedural
reduction of personnel.--The employer may requirements laid down by law and
also terminate the employment of any jurisprudence.
employee due to the installation of labor
saving devices, redundancy, retrenchment The requirements for valid retrenchment
to prevent losses or the closing or cessation which must be proved by clear and
of operation of the establishment or convincing evidence are:
undertaking unless the closing is for the
purpose of circumventing the provisions of 1. that the retrenchment is reasonably
this Title, by serving a written notice on the necessary and likely to prevent business
workers and the Ministry of Labor and losses which, if already incurred, are not
Employment at least one (1) month before merely de minimis, but substantial, serious,
the intended date thereof. In case of actual and real, or if only expected, are
termination due to the installation of labor reasonably imminent as perceived
saving devices or redundancy, the worker objectively and in good faith by the
affected thereby shall be entitled to a employer;
separation pay equivalent to at least his one
(1) month pay or to at least one (1) month 2. that the employer served written
pay for every year of service, whichever is notice both to the employees and to the
higher. In case of retrenchment to prevent Department of Labor and Employment at
losses and in case of closures or cessation of least one month prior to the intended date
operations of establishment or undertaking of retrenchment;
not due to serious business losses or
financial reverses, the separation pay shall 3. that the employer pays the
be equivalent to one (1) month pay or at retrenched employees separation pay
least one-half (1/2) month pay for every year equivalent to one month pay or at least
of service, whichever is higher. A fraction of month pay for every year of service,
at least six (6) months shall be considered whichever is higher;
one (1) whole year.
4. that the employer exercises its
Under the foregoing provisions, prerogative to retrench employees in good
retrenchment and redundancy are just faith for the advancement of its interest and
causes for the employer to terminate the
not to defeat or circumvent the employees
right to security of tenure; and
5. that the employer used fair and
reasonable criteria in ascertaining who
would be dismissed and who would be
retained among the employees, such as
status (i.e., whether they are temporary,
casual, regular or managerial employees),
efficiency, seniority, physical fitness, age,
and financial hardship for certain workers.
The condition of business losses is normally
shown by audited financial documents like
yearly balance sheets and profit and loss
statements as well as annual income tax
returns. It is our ruling that financial
statements must be prepared and signed by
independent auditors. Unless duly audited,
they can be assailed as self-serving
documents. But it is not enough that only the
financial statements for the year during
which retrenchment was undertaken, are
presented in evidence. For it may happen
that while the company has indeed been
losing, its losses may be on a downward
trend, indicating that business is picking up
and retrenchment, being a drastic move,
should no longer be resorted to. Thus, the
failure of the employer to show its income or
loss for the immediately preceding year or to
prove that it expected no abatement of such
losses in the coming years, may bespeak the
weakness of its cause. It is necessary that the
employer also show that its losses increased
through a period of time and that the
condition of the company is not likely to
improve in the near future.
In the instant case, private respondents
never contested the veracity of the audited
financial documents proffered by Asian
Alcohol before the Executive Labor Arbiter.
Neither did they object their admissibility.
They show that petitioner has accumulated
losses amounting to P306,764,349.00 and
showing nary sign of abating in the near
future. The allegation of union busting is
bereft of proof. Union and non-union
members were treated alike. The records
show that the positions of fifty one (51)
other non-union members were abolished
due to business losses.
It should be observed that Article 283 of the
Labor Code uses the phrase retrenchment to
prevent losses. In its ordinary connotation,
this phrase means that retrenchment must
be undertaken by the employer before
losses are actually sustained.[39] We have,
however, interpreted the law to mean that
the employer need not keep all his
employees until after his losses shall have
materialized. Otherwise, the law could be
vulnerable to attack as undue taking of
property for the benefit of another.
In the case at bar, Prior Holdings took over
the operations of Asian Alcohol in October
1991. Plain to see, the last quarter losses in
1991 were already incurred under the new
management. There were no signs that
these losses would abate. Irrefutable was
the fact that losses have bled Asian Alcohol
incessantly over a span of several years.
They were incurred under the management
of the Parsons family and continued to be
suffered under the new management of
Prior Holdings. Ultimately, it is Prior Holding
that will absorb all the losses, including those
incurred under the former owners of the
company. The law gives the new
management every right to undertake
measures to save the company from
bankruptcy.
Redundancy exist when the service
capability of the work is in excess of what is
reasonably needed to meet the demands on
the enterprise. A redundant position is one
rendered superfluous by any number of
factors, such as overhiring of workers,
decreased volume of business, dropping of a
particular product line previously
manufactured by the company or phasing
out of a service activity priorly undertaken
by the business.[43] Under these conditions,
the employer has no legal obligation to keep
in its payroll more employees than are
necessary for the operation of its business.
For the implementation of a redundancy
program to be valid, the employer must
comply with the following requisites:
1. written notice served on both the
employees and the Department of Labor and
Employment at least one moth prior to the
intended date of retrenchment;
2. payment of separation pay
equivalent to at least one month pay or at
least one month pay for every year of service
whichever is higher;
3. good faith in abolishing the
redundant positions; and
4. fair and reasonable criteria in
ascertaining what positions are to be
declared redundant and accordingly
abolished.
In the case at bar, private respondent Carias,
Martinez and Sendon were water pump
tenders. They tended the water wells of
Asian Alcohol located in Ubay, Pulupandan,
Negros Occidental. However, Asian Alcohol
did not own the land where the wells stood.
It only leased them.
The lease contract which also provided for a
right of way leading to the site of the wells,
was terminated. Also, the water from the
wells had become salty due to extensive
prawn farming nearby and could no longer
be used by Asian Alcohol for its purpose. The
wells had to be closed and needless to say,
the services of Carias, Martinez and Sendon
had to be terminated on the twin grounds of
redundancy and retrenchment.
Private respondent Verayo was the
briquetting plant operator in charge of the
coal-fired boiler. Private respondent Tormo
was one of the three briquetting helpers. To
enhance production efficiency, the new
management team shifted to the use of
bunker fuel by about seventy percent (70%)
to fire its boiler. The shift meant substantial
fuel cost savings. In the process, however
the need for a briquetting plant operator
ceased as the services of only two (2) helpers
were all that was necessary to attend to the
much lesser amount of coal required to run
the boiler. Thus, the positions of private
respondent Verayo had to be abolished. Of
the three (3) briquetting helpers, Tormo,
was the oldest, being already 41 years old.
The other two, Rudy Javier Jr. and Eriberto
Songaling, Jr., were younger, being only 28
and 35, respectively. Age, with the physical
strength that comes with it, was particularly
taken into consideration by the
management team in deciding whom to
separate. Hence, it was private respondent
Tormo who was separated from service. The
management choice rested on a rational
basis.
Private respondent Amacio was among the
ten (10) mechanics who manned the
machine shop at the plant site. At their
current production level, the new
management found that it was more cost
efficient to maintain only nine (9) mechanics.
In choosing whom to separate among the
ten (10) mechanics, the management
examined employment records and reports
to determine the least efficient among them.
It was private respondent Amacio who
appeared the least efficient because of his
poor health conditions.
Not one of the private respondents refuted
the foregoing FACTS. They only contend that
the new management should have followed
the policy of first in, last out in choosing
which positions to declare as redundant or
whom to retrench to prevent further
business losses. No law mandates such a
policy. And the reason is simple enough. A
host of relevant factors come into play in
determining cost efficient measures and in
choosing the employees who will be
retained or separated to save the company
from closing shop. In determining these
issues, management has to enjoy a pre-
eminent role. The characterization of
positions as redundant is an exercise of
business judgment on the part of the
employer. It will be upHELD: as long as it
passes the test of arbitrariness.
Private respondents call our attention to
their allegation that casuals were hired to
replace Carias, Martinez and Sendon as
water pump tenders at the Ubay wells.
We have HELD: that an employers good faith
in implementing a redundancy program is
not necessarily destroyed by availment of
the services of an independent contractor to
replace the services of the terminated
employees. We have previously ruled that
the reduction of the number of workers in a
company made necessary by
introduction of the services of
independent contractor is justified when the
latter is undertaken in order to effectuate
more economic and efficient methods of
production. In the case at bar, private
respondent failed to proffer any proof that
the management acted in a malicious or
arbitrary manner in engaging the services of
an independent contractor to operate the
Laura wells. Absent such proof, the Court has
no basis to interfere with the bona fide
decision of management to effect more
economic and efficient methods
production.
31. Meralco vs. Quisimbing
32. Alviado et. al. vs. Procter & Gamble
G.R. No. 160506 March 9, 2010
JOEB M. ALIVIADO, et al vs. PROCTER &
GAMBLE PHILS., INC., and PROMM-GEM
INC.,
When EE-ER Relationship does not exist
FACTS:
Petitioners worked as merchandisers of P&G
from various dates. They all individually
signed employment contracts with either
Promm-Gem or SAPS for 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
the from Promm-Gem or SAPS.
an Petitioners thereafter filed a complaint
against P&G for regularization, service
incentive leave pay and other benefits with
damages. Petitioners insist that they are
employees of P&G. They claim that they
were recruited by the salesmen of P&G and
were engaged to undertake merchandising
chores for P&G long before the existence of
Promm-Gem and/or SAPS. They further
claim that when the latter had its so-called
re-alignment program, petitioners were
instructed to fill up application forms and
of report to the agencies which P&G created.
Petitioners further assert that Promm-Gem
and SAPS are labor-only contractors
providing services of manpower to their
client. They claim that the contractors have
neither substantial capital nor tools and
equipment to undertake independent labor
contracting. Petitioners insist that since they
had been engaged to perform activities
which are necessary or desirable in the usual
business or trade of P&G, then they are its
regular employees.
P&G argues that there is no employment
relationship between it and petitioners. That
the Labor Code neither defines nor limits
which services or activities may be validly
outsourced. It insists that the determination
of whether to engage the services of a job
contractor or to engage in direct hiring is
within the ambit of management
prerogative.
ISSUE:
Whether P&G is the employer of petitioners
RULING:
YES for those contracted by SAPS. But
petitioners employed by Promm-Gem are
not employees of P&G.
It is necessary to first determine whether
Promm-Gem and SAPS are labor-only
contractors or legitimate job contractors.
There is labor-only contracting where the
person supplying workers to an employer
does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others,
and the workers recruited and placed by
such person are performing activities which
are directly related to the principal business
of such employer.
In the instant case, the financial statements
of Promm-Gem show that it has authorized
capital stock of P1 million and a paid-in
capital, or capital available for operations, of
P500,000.00 as of 1990.It also has long term
assets worth P432,895.28 and current assets
of P719,042.32. Promm-Gem has also
proven that it maintained its own warehouse
and office space with a floor area of 870
square meters. It also had under its name
three registered vehicles which were used
for its promotional/merchandising business.
Under the circumstances, Promm-Gem
cannot be considered as a labor-only
contractor. We find that it is a legitimate
independent contractor.
On the other hand, the Articles of
Incorporation of SAPS shows that it has a
paid-in capital of only P31,250.00. There is
no other evidence presented to show how
much its working capital and assets are.
Furthermore, there is no showing of
substantial investment in tools, equipment
or other assets.
Considering that SAPS has no substantial
capital or investment and the workers it
recruited are performing activities which are
directly related to the principal business of
P&G, we find that the former is engaged in
labor-only contracting. Where labor-only
contracting exists, the Labor Code itself
establishes an employer-employee
relationship between the employer and the
employees of the labor-only contractor. The
statute establishes this relationship for a
comprehensive purpose: to prevent a
circumvention of labor laws. The contractor
is considered merely an agent of the
principal employer and the latter is
responsible to the employees of the labor-
only contractor as if such employees had
been directly employed by the principal
employer.
33. Goya vs. Goya Employees Union
GOYA, INC.
vs.
GOYA, INC. EMPLOYEES UNION-FFW
G.R. No. 170054 : January 21, 2013
FACTS:
Sometime in January 2004, petitioner Goya,
Inc. (Company), a domestic corporation
engaged in the manufacture, importation,
and wholesale of top quality food products,
hired contractual employees from PESO
Resources Development Corporation (PESO)
to perform temporary and occasional
services in its factory in Parang, Marikina
City.
This prompted respondent Goya, Inc.
Employees UnionFFW (Union) to request for
a grievance conference on the ground that
the contractual workers do not belong to the
categories of employees stipulated in the
existing Collective Bargaining Agreement
(CBA).
When the matter remained unresolved, the
grievance was referred to the National
Conciliation and Mediation Board (NCMB)
for voluntary arbitration.
The Union asserted that the hiring of
contractual employees from PESO is not a
management prerogative and in gross
violation of the CBA tantamount to unfair
labor practice (ULP).
It noted that the contractual workers
engaged have been assigned to work in
positions previously handled by regular
workers and Union members, in effect
violating Section 4, Article I of the CBA, which
provides for three categories of employees
in the Company, to wit:
Section 4. Categories of Employees. The
parties agree on the following categories of
employees:
(a) Probationary Employee.
One hired to occupy a regular rank-and-file
position in the Company and is serving a
probationary period. If the probationary
employee is hired or comes from outside the
Company (non-Goya, Inc. employee), he
shall be required to undergo a probationary
period of six (6) months, which period, in the
sole judgment of management, may be
shortened if the employee has already
acquired the knowledge or skills required of
the job. If the employee is hired from the
casual pool and has worked in the same
position at any time during the past two (2)
years, the probationary period shall be three
(3) months.
(b) Regular Employee.
An employee who has satisfactorily
completed his probationary period and
automatically granted regular employment
status in the Company.
(c) Casual Employee.
One hired by the Company to perform
occasional or seasonal work directly
connected with the regular operations of the
Company, or one hired for specific projects
of limited duration not connected directly
with the regular operations of the Company.
It was averred that the categories of employees and not filling up the vacant
employees had been a part of the CBA since regular positions through the hiring of
the 1970s and that due to this provision, a contractual workers from PESO, and that a
pool of casual employees had been possible scenario could also be created by
maintained by the Company from which it the Company wherein it could "import"
hired workers who then became regular workers from PESO during an actual strike.
workers when urgently necessary to employ
them for more than a year. Likewise, the In countering the Unions allegations, the
Company sometimes hired probationary Company argued that:
employees who also later became regular
workers after passing the probationary (a) the law expressly allows contracting and
period. With the hiring of contractual subcontracting arrangements through
employees, the Union contended that it Department of Labor and Employment
would no longer have probationary and (DOLE) Order No. 18-02;
casual employees from which it could obtain
additional Union members; thus, rendering (b) the engagement of contractual
inutile Section 1, Article III (Union Security) employees did not, in any way, prejudice the
of the CBA, which states: Union, since not a single employee was
terminated and neither did it result in a
Section 1. Condition of Employment. As a reduction of working hours nor a reduction
condition of continued employment in the or splitting of the bargaining unit; and
Company, all regular rank-and-file
employees shall remain members of the (c) Section 4, Article I of the CBA merely
Union in good standing and that new provides for the definition of the categories
employees covered by the appropriate of employees and does not put a limitation
bargaining unit shall automatically become on the Company’s right to engage the
regular employees of the Company and shall services of job contractors or its
remain members of the Union in good management prerogative to address
standing as a condition of continued temporary/occasional needs in its
employment. operation.

The Union moreover advanced that

sustaining the Company’s position would
easily weaken and ultimately destroy the ISSUE:
former with the latter’s resort to Whether or not the provisions in the
retrenchment and/or retirement of Collective Bargaining Agreement (CBA) is
violative of the management prerogative of
the company. (NO)
HELD:
NO. The right of management to
outsource parts of its operations is not
totally eliminated but is merely limited by
the CBA.
Management prerogative refers to the right
of the employer to regulate all aspects of
employment, such as the freedom to
prescribe work assignments, working
methods, processes to be followed,
regulation regarding transfer of employees,
supervision of their work, lay-off and
discipline, and dismissal and recall of work,
presupposing the existence of employer-
employee relationship.
On the basis of the foregoing definition, the
Companys engagement of PESO was indeed
a management prerogative.
This management prerogative of contracting
out services, however, is not without
limitation. In contracting out services, the
management must be motivated by good
faith and the contracting out should not be
resorted to circumvent the law or must not
have been the result of malicious arbitrary
actions.
In the case at bench, the CBA of the parties
has already provided for the categories of
the employees in the Company’s
establishment. These categories
employees particularly with respect to
casual employees serve as limitation to the
Company’s prerogative to outsource parts of
its operations especially when hiring
contractual employees. As stated earlier, the
work to be performed by PESO was similar to
that of the casual employees. With the
provision on casual employees, the hiring of
PESO contractual employees, therefore, is
not in keeping with the spirit and intent of
their CBA.
To emphasize, declaring that a particular act
falls within the concept of management
prerogative is significantly different from
acknowledging that such act is a valid
exercise thereof. What the VA and the CA
correctly ruled was that the Companys act of
contracting out/outsourcing is within the
purview of management prerogative. Both
did not say, however, that such act is a valid
exercise thereof. Obviously, this is due to the
recognition that the CBA provisions agreed
upon by the Company and the Union delimit
the free exercise of management
prerogative pertaining to the hiring of
contractual employees. Indeed, the VA
opined that "the right of the management to
outsource parts of its operations is not.
Collective bargaining agreement is the law
between the parties:
It is familiar and fundamental doctrine in
labor law that the CBA is the law between
the parties and they are obliged to comply
of with its provisions. We said so in Honda
Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda:
A collective bargaining agreement or CBA
refers to the negotiated contract between a
legitimate labor organization and the
employer concerning wages, hours of work
and all other terms and conditions of
employment in a bargaining unit. As in all
contracts, the parties in a CBA may establish
such stipulations, clauses, terms and
conditions as they may deem convenient
provided these are not contrary to law,
morals, good customs, public order or public
policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between
the parties and compliance therewith is
mandated by the express policy of the law.
As repeatedly HELD:, the exercise of
management prerogative is not unlimited; it
is subject to the limitations found in law,
collective bargaining agreement or the
general principles of fair play and justice.
34. Fonterra vs. Lagardo
TOPIC: Independent contractor / Job –
Contracting vs. Labor – only Contracting
G.R. No. 205300 March 18, 2015
FONTERRA BRANDS PHILS., INC. vs.
LEONARDO LARGADO and TEOTIMO
ESTRELLADO.
Ponente: VELASCO, JR., J.
FACTS:
Fonterra Brands Phils., Inc. (Fonterra)
contracted the services of Zytron Marketing
and Promotions Corp. (Z)rtron) for the
marketing and promotion of its milk and
dairy products. Pursuant to the contract,
Zytron provided Fonterra with trade
merchandising representatives (TMRs),
including LEONARDO LARGADO (LARGADO)
AND TEOTIMO ESTRELLADO (ESTRELLADO).
The engagement of their services began on
September 15, 2003 and May 27, 2002,
respectively, and ended on June 6, 2006.
On May 3, 2006, Fonterra sent Zytron a
letter terminating its promotions contract,
effective June 5, 2006. Fonterra then
entered into an agreement for manpower
supply with A.C. Sicat Marketing and
Promotional Services (A.C. Sicat).
Desirous of continuing their work as TMRs,
LARGARDO and ESTRELLADO submitted
their job applications with A.C. Sicat, which
hired them for a term of five (5) months,
beginning June 7, 2006 up to November 6,
2006.
When LARGARDO and ESTRELLADO’ 5-
month contracts with A.C. Sicat were about
to expire, they allegedly sought renewal
thereof, but were allegedly refused. This
prompted LARGARDO and ESTRELLADO to
file complaints for illegal dismissal, capital of 250,000 cannot be considered as
regularization, non-payment of service substantial capital; (2) its Certificate of
incentive leave and 13th month pay, and Registration was issued by the DOLE months
actual and moral damages, against ZYTRON, after LARGARDO and ESTRELLADO’
AND A.C. SICAT. supposed employment ended; and (3) its
claim that it has the necessary tools and
Labor Arbiter: dismissed the complaint and equipment for its business is
ruled that: (1) LARGARDO and ESTRELLADO unsubstantiated. Therefore, according to
were not illegally dismissed. As a matter of the CA, LARGARDO and ESTRELLADO were
fact, they were the ones who refused to Fonterra’s employees.
renew their contract and that they
voluntarily complied with the requirements Legal ISSUE: W/N A.C. SICAT is engaged in
for them to claim their corresponding legitimate job contracting.
monetary benefits in relation thereto; and
(2) they were consecutively employed by HELD:
Zytron and A.C. Sicat, not by Fonterra.
YES. A.C. Sicat is engaged in legitimate job
NLRC: affirmed the Labor Arbiter, finding contracting complying all the elements of
that LARGARDO and ESTRELLADO’ Legitimate Job Contracting.
separation from Zytron was brought about
by the execution of the contract between As regards LARGARDO and ESTRELLADO’
Fonterra and A.C. Sicat where the parties employment with A.C. Sicat and its
agreed to absorb Zytron’s personnel, termination via non-renewal of their
including LARGARDO and ESTRELLADO. Too, contracts, considering that in labor-only
LARGARDO and ESTRELLADO failed to contracting, the law creates an employer-
present any evidence that they protested employee relationship between the
this set-up. Furthermore, LARGARDO and principal and the labor-only contractor’s
ESTRELLADO failed to refute the allegation employee as if such employees are directly
that they voluntarily refused to renew their employed by the principal employer, and
contract with A.C. Sicat. Also, LARGARDO considers the contractor as merely the agent
and ESTRELLADO did not assert any claim of the principal, it is proper to dispose of the
against Zytron and A.C. Sicat. issue on A.C. Sicat’s status as a job contractor
first before resolving the issue on the legality
CA: A.C. Sicat satisfies the requirements of of the cessation of LARGARDO and
legitimate job contracting, but Zytron does ESTRELLADO’ employment.
not. According to the CA: (1) Zytron’s paid-in
In this regard, We defer to the findings of the
CA anent A.C. Sicat’s status as a legitimate
job contractor, seeing that it is consistent
with the rules on job contracting and is
sufficiently supported by the evidence on
record.
A person is considered engaged in legitimate
job contracting or subcontracting if the
following conditions concur:
1. The contractor or subcontractor carries on
a distinct and independent business and
undertakes to 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
direction of the principal in all matters
connected with the performance of the work
except as to the results thereof;
2. The contractor or subcontractor has
substantial capital or investment; and
3. The agreement between the principal and
contractor or subcontractor assures the
contractual employees entitlement to all
labor and occupational safety and health
standards, free exercise of the right to self-
organization, security of tenure, and social
and welfare benefits.
On the other hand, contracting is prohibited
when the contractor or subcontractor
merely recruits, supplies or places workers
to perform a job, work or service for a
principal and if any of the following elements
are present, thus:
1.The contractor or subcontractor does not
have substantial capital or investment which
relates to the job, work or service to be
performed and the employees recruited,
supplied or placed by such contractor or
subcontractor are performing activities
which are directly related to the main
business of the principal; or
2. The contractor does not exercise the right
to control over the performance of the work
of the contractual employee.
The CA correctly found that A.C. Sicat is
engaged in legitimate job contracting. It duly
noted that A.C. Sicat was able to prove its
status as a legitimate job contractor for
having presented the following evidence, to
wit:
1. Certificate of Business Registration;
2. Certificate of Registration with the Bureau
of Internal Revenue;
3. Mayor’s Permit;
4. Certificate of Membership with the Social
Security System;
5. Certificate of Registration with the
Department of Labor and Employment;
6. Company Profile; and
7. Certifications issued by its clients.
Furthermore, A.C. Sicat has substantial
capital, having assets totaling 5,926,155.76
as of December 31, 2006. Too, its Agreement
with Fonterra clearly sets forth that A.C.
Sicat shall be liable for the wages and
salaries of its employees or workers,
including benefits, premiums,
protection due them, as well as remittance
to the proper government entities of all
withholding taxes, Social Security Service,
and Medicare premiums, in accordance with
relevant laws.
Topic: Independent Contractor / Job-
contracting vs. Labor-only contracting
A contractor is presumed to be a labor-only
contractor, unless it proves that it has the
and substantial capital, investment, tools and the
like. However, where the principal is the one
claiming that the contractor is a legitimate
contractor, the burden of proving the
supposed status of the contractor rests on
the principal

The appellate court further correctly HELD: FACTS:

that Fonterra’s issuance of Merchandising Petron is a domestic corporation
Guidelines, stock monitoring and inventory engaged in the oil business. It owns several
forms, and promo mechanics, for bulk plants in the country for receiving,
compliance and use of A.C. Sicat’s storing and distributing its petroleum
employees assigned to them, does not products.
establish that Fonterra exercises control In 1968, Romualdo D. Gindang
over A.C. Sicat. We agree with the CA’s Contractor, which was owned and operated
conclusion that these were imposed only to by Romualdo D. Gindang (Romualdo),
ensure the effectiveness of the promotion started recruiting laborers for fielding to
services to be rendered by the Petron’s Mandaue Bulk Plant. When
merchandisers as it would be risky, if not Romualdo died in1989, his son Romeo D.
imprudent, for any company to completely Gindang (Romeo), through Romeo D.
entrust the performance of the operations it Gindang Services(RDG), took over the
has contracted out. business and continued to provide
manpower services to Petron.
These sufficiently show that A.C. Sicat carries
out its merchandising and promotions Alilin et.al. were among those recruited by
business, independent of Fonterra’s Romualdo D. Gindang Contractor and RDG to
business. work in the premises of the said bulk plant.

35. Alilin vs. Petron On June 1, 2000, Petron and RDG entered
G.R. No. 177592 June 9, 2014 into a Contract for Services whereby RDG
undertook to provide Petron with janitorial,
maintenance, tanker receiving, packaging
and other utility services in its Mandaue Bulk
Plant. Upon expiration thereof, no further
renewal of the service contract was done.
Proceedings before the Labor Arbiter:
Alleging that they were barred from
continuing their services Alilin et.al. filed a
Complaint for illegal dismissal,
underpayment of wages, damages and
attorney’s fees against Petron and RDG. The
others also filed for overtime pay, holiday
pay, premium pay for holiday, rest day, 13th
month pay, service incentive leave pay,
allowances, separation pay, retirement
benefits, damages and attorney’s fees
against Petron and RDG. The said complaints
were later consolidated.
Alilin admitted that RDG hired them and paid
their salaries. They, however, claimed that
RDG is a labor-only contractor, which merely
acted as an agent of Petron, their true
employer. They allege that their jobs, which
are directly related to Petron’s business,
entailed them to work inside the premises of
Petron using the required equipment and
tools furnished by it and that they were
subject to Petron’s supervision. Claiming to
be regular employees, Alilin et.al. thus
asserted that their dismissal allegedly in
view of the expiration of the service contract
between Petron and RDG is illegal.
RDG corroborated Alilin’s claim that they are
regular employees of Petron. It alleged that
Petron directly supervised their activities;
they performed jobs necessary and desirable
to Petron’s business; Petron provided
petitioners with supplies, tools and
equipment used in their jobs; and that
petitioners’ workplace since the start of their
employment was at Petron’s bulk plant in
Mandaue City. RDG denied liability over
Alilin’s claim of illegal dismissal and further
argued that Petron cannot capitalize on the
service contract to escape liability.
Petron, on the other hand, maintained that
RDG is an independent contractor and the
real employer of the Alilin et.al. It was RDG
which hired and selected petitioners, paid
their salaries and wages, and directly
supervised their work. Anent its allegation
that RDG is an independent contractor,
Petron presented the following documents:
(1) RDG’s Certificate of Registration issued
by the Department of Labor and
Employment (DOLE) (2) RDG’s Certificate of
Registration of Business Name issued by the
Department of Trade and Industry (DTI) (3)
Contractor’s Pre-Qualification Statement,
Social Security System (SSS) Online Inquiry
System Employee Contributions and
Employee Static Information and, an
affidavit stating that he had paid the salaries
of his employees assigned to Petron. Petron
argued that with the expiration of the
service contract it entered with RDG, Alilin
et.al.’s term of employment has
concomitantly ended. And not being the
employer, Petron cannot be HELD: liable for
petitioners’ claim of illegal dismissal.

Labor Arbiter’s decision:
Alilin et.al. are regular employees of Petron.
It found that their jobs were directly related
to Petron’s business operations; they
worked under the supervision of Petron’s
foreman and supervisor; and they were
using Petron’s tools and equipment in the
performance of their works. The LA also
found no showing that Alilin’s dismissal was
for a just and authorized cause, they were
illegally dismissed.
Proceedings before the National Labor
Relations Commission:
Petron insists that there is no ER-EE
Rel. between them and Alilin et.al. The NLRC
ruled that petitioners are Petron’s regular
employees because they are performing job
assignments which are germane to its main
business.
Proceedings before the Court of Appeals:
The CA found no employer-employee
relationship between the parties. It HELD:
that the records of the case do not show that
Alilin et.al. were directly hired, selected or
employed by Petron; that their wages and
other wage related benefits were paid by the
said company; and that Petron controlled
the manner by which they carried out their
tasks.
RDG was HELD: to be responsible for paying
Alilin’s wages. In fact, SSS records show that
RDG is their employer and actually the one
remitting their contributions thereto. Joint
affidavits showed that it was Romeo and his
brother Alejandre Gindang who supervised
their work, not Petron’s foreman or
supervisor. This was even corroborated by
the Terminal Superintendent of the
Mandaue Bulk Plant. The CA also found RDG
to be an independent labor contractor with
sufficient capitalization and investment as
shown by its financial statement
ISSUE:
1. Is RDG a legitimate job contractor?
NO. Labor-contracting only.
2. Is Petron the employer of Alilin et.al.?
YES. They exercised the power of
control.
RULING:
The prevailing rule on labor-only contracting
at the time Petron and RDG entered into the
Contract for Services in June 2000 is DOLE
Department Order No. 10, series of 1997,
the pertinent provision of which reads:
Section 4. x x x
xxxx
(f) "Labor-only contracting" prohibited
under this Rule is an arrangement where the
contractor or subcontractor merely recruits,
supplies or places workers to perform a job,
work or service for a principal and the
following elements are present:
(i) The contractor or subcontractor does not
have substantial capital or investment to
actually perform the job, work or service
under its own account and responsibility;
and
(ii) The employees recruited, supplied or
placed by such contractor or subcontractor
are performing activities which are directly
related to the main business of the principal.
xxxx
Section 6. Permissible contracting or
subcontracting. - Subject to the conditions
set forth in Section 3 (d) and (e) and Section
5 hereof, the principal may engage the
services of a contractor or subcontractor for
the performance of any of the following:
(a) Works or services temporarily or
occasionally needed to meet abnormal
increase in the demand of products or
services, provided that the normal
production capacity or regular workforce of
the principal cannot reasonably cope with
such demands;
(b) Works or services temporarily or
occasionally needed by the principal for
undertakings requiring expert or highly
technical personnel to improve the
management or operations of an enterprise;
(c) Services temporarily needed for the
introduction or promotion of new products,
only for the duration of the introductory or
promotional period;
(d) Works or services not directly related or
not integral to the main business or
operation of the principal, including casual
work, janitorial, security, landscaping, and
messengerial services, and work not related
to manufacturing processes in
manufacturing establishments;
(e) Services involving the public display of
manufacturers’ products which do not
involve the act of selling or issuance of
receipts or invoices;
(f) Specialized works involving the use of
some particular, unusual or peculiar skills,
expertise, tools or equipment the
performance of which is beyond the
competence of the regular workforce or
production capacity of the principal; and
(g) Unless a reliever system is in place among
the regular workforce, substitute services
for absent regular employees, provided that
the period of service shall be coextensive
with the period of absence and the same is
made clear to the substitute employee at the
time of engagement. The phrase "absent
regular employees" includes those who are
serving suspensions or other disciplinary
measures not amounting to termination of
employment meted out by the principal, but
excludes those on strike where all the formal
requisites for the legality of the strike have
been prima facie complied with based on the
records filed with the National Conciliation
and Mediation Board.
Permissible job contracting or
subcontracting refers to an arrangement
whereby a principal agrees to farm out with
a contractor or subcontractor the
performance of a specific job, work, or
service within a definite or predetermined
period, regardless of whether such job, work
or, service is to be performed or completed
within or outside the premises of the
principal.
Under this arrangement, the following
conditions must be met:
(a) the contractor carries on a distinct and
independent business and undertakes the
contract work on his account under his own
responsibility according to his own manner
and method, free from the control and
direction of his employer or principal in all
matters connected with the performance of
his work except as to the results thereof;
(b) the contractor has substantial capital or
investment; and
(c) the agreement between the principal and
contractor or subcontractor assures the
contractual employees’ entitlement to all
labor and occupational safety and health
standards, free exercise of the right to self-
organization, security of tenure, and social
welfare benefits."
Labor-only contracting, on the other hand, is
a prohibited act, defined as "supplying
workers to an employer who does not have
substantial capital or investment in the form
of tools, equipment, machineries, work
premises, among others, and the workers
recruited and placed by such person are
performing activities which are directly
related to the principal business of such
employer."
"[I]n distinguishing between prohibited
labor-only contracting and permissible job
contracting, the totality of the FACTS and the
surrounding circumstances of the case shall
be considered." Generally, the contractor is
presumed to be a labor-only contractor,
unless such contractor overcomes the
burden of proving that it has the substantial
capital, investment, tools and the like.
However, where the principal is the one
claiming that the contractor is a legitimate
contractor, as in the present case, said
principal has the burden of proving that
supposed status. It is thus incumbent upon
Petron, and not upon Alilin as Petron insists,
to prove that RDG is an independent
contractor.
Petron failed to discharge the burden of
proving that RDG is a legitimate contractor.
Hence, the presumption that RDG is a labor-
only contractor stands.
The financial statements and other financial
documents of RDG shows that it does have
sufficient working capital to meet the
requirements of its service contract (RDG
has a maximum financial capability of
Php4.807 Million, and Php1.611 Million the
following year).
The Court stresses that this determination of
RDG’s status as an independent contractor is
only with respect to its financial capability
for the period covered by the financial and
other documents presented. In other words,
the evidence adduced merely proves that
RDG was financially qualified as a legitimate
contractor but only with respect to its last
service contract with Petron in the year
2000.
SC:
Alilin et.al. have rendered work for
Petron for a long period of time even before
the service contract was executed in 2000.
Petron failed to establish the financial
capability of RDG at the time when
petitioners actually started to work for
Petron in 1968, 1979, 1981, 1987, 1990,1992
and 1993.
Sections 8 and 9,Rule VIII, Book III of
the implementing rules of the Labor Code, in
force since 1976 and prior to DOLE
Department Order No. 10, series of 1997,
provide that for job contracting to be
permissible, one of the conditions that has
to be met is that the contractor must have
substantial capital or investment. Petron
having failed to show that this condition was
met by RDG, it can be concluded, on this
score alone, that RDG is a mere labor-only
contractor. Otherwise stated, the
presumption that RDG is a labor-only
contractor stands due to the failure of
Petron to discharge the burden of proving
the contrary.
2. Works performed by Alilin et.al. were
directly related to Petron’s business,
another factor which negates Petron’s claim
that RDG is an independent contractor.
Petron’s power of control over petitioners
exists in this case.
"[A] finding that a contractor is a ‘labor-only’
contractor is equivalent to declaring that
there is an employer-employee relationship
between the principal and the employees of
the supposed contractor." In this case, the
employer employee relationship between
Petron and petitioners becomes all the more
apparent due to the presence of the power
of control on the part of the former over the
latter.
36. Garden of Memories Park and Life Plan
vs. NLRC
G.R. No. 160278 February 8, 2012
GARDEN OF MEMORIES PARK and LIFE PLAN,
INC. and PAULINA T. REQUIÑO Vs. NATIONAL
LABOR RELATIONS COMMISSION, SECOND
DIVISION, LABOR ARBITER FELIPE T.
GARDUQUE II and HILARIA CRUZ
FACTS:
Petitioner Garden of Memories is engaged in
the business of operating a memorial park
situated at Calsadang Bago, Pateros, Metro-
Manila and selling memorial Plan and
services.
Respondent Cruz, on the other hand, worked
at the Garden of Memories Memorial Park as
a utility worker from August 1991 until her
termination in February 1998.
On March 13, 1998, Cruz filed a complaint
for illegal dismissal, underpayment of wages,
non-inclusion in the Social Security Services,
and non-payment of legal/special holiday,
premium pay for rest day, 13th month pay
and service incentive leave pay against
Garden of Memories before the Department
of Labor and Employment (DOLE).
Upon motion of Garden of Memories,
Requiño was impleaded as respondent on
the alleged ground that she was its service
contractor and the employer of Cruz.
In her position paper, Cruz averred that she
worked as a utility worker of Garden of
Memories with a salary of ₱115.00 per day.
As a utility worker, she was in charge, among
others, of the cleaning and maintenance of
the ground facilities of the memorial park.
Sometime in February 1998, she had a
misunderstanding with a co-worker named
Adoracion Requiño regarding the use of a
garden water hose. When the
misunderstanding came to the knowledge of
Requiño, the latter instructed them to go
home and not to return anymore. After
three (3) days, Cruz reported for work but
she was told that she had been replaced by
another worker. She immediately reported
the matter of her replacement to the
personnel manager of Garden of Memories
and manifested her protest.
Cruz argued that as a regular employee of
the Garden of Memories, she could not be
terminated without just or valid cause. Also,
her dismissal was violative of due process as
she was not afforded the opportunity to
explain her side before her employment was
terminated.
Cruz further claimed that as a result of her
illegal dismissal, she suffered sleepless
nights, serious anxiety and mental anguish.
Garden of Memories denied liability for the
claims of Cruz and asserted that she was not
its employee but that of Requiño, its
independent service contractor, who
maintained the park for a contract price. It
insisted that there was no employer-
employee relationship between them
because she was employed by its service
contractor, Victoriana Requiño (Victoriana),
who was later succeeded by her daughter,
Paulina, when she (Victoriana) got sick.
Garden of Memories claimed that Requiño
was a service contractor who carried an
independent business and undertook the
contract of work on her own account, under
her own responsibility and according to her
own manner and method, except as to the
results thereof.
The LA ruled that Requiño was not an
independent contractor but a labor-only
contractor and that her defense that Cruz
abandoned her work was negated by the
filing of the present case. The LA declared
both Garden of Memories and Requiño,
jointly and severally, liable for the monetary In the present case, the LA, the NLRC,
claims of Cruz. and the CA are one in declaring that
petitioner Requiño was not a legitimate
Garden of Memories and Requiño appealed contractor. Echoing the decision of the LA
the decision to the NLRC. The NLRC affirmed and the NLRC, the CA reasoned out that
the ruling of the LA, stating that Requiño had Requiño was not a licensed contractor and
no substantial capital or investments in the had no substantial capital or investment in
form of tools, equipment, machineries, and the form of tool, equipment and work
work premises, among others, for her to premises, among others.
qualify as an independent contractor. It
declared the dismissal of Cruz illegal There is labor-only contracting where: (a)
reasoning out that there could be no the person supplying workers to an
abandonment of work on her part since employer does not have substantial capital
Garden of Memories and Requiño failed to or investment in the form of tools,
prove that there was a deliberate and equipment, machineries, work premises,
unjustified refusal on the part of the among others; and (b) the workers recruited
employee to go back to work and resume her and placed by such person are performing
employment. activities which are directly related to the
Garden of Memories moved for a principal business of the employer.
reconsideration of the NLRC decision but it
was denied for lack of merit. The Court finds no compelling reason to
deviate from the findings of the tribunals
The CA dismissed the petition and affirmed below. Both the capitalization requirement
the NLRC decision. Hence, this petition, and the power of control on the part of
Requiño are wanting.
Issues:
1. WHETHER OR NOT PETITIONER Generally, the presumption is that the
PAULINA REQUIÑO IS ENGAGED IN LABOR- contractor is a labor-only contracting unless
ONLY CONTRACTING. YES such contractor overcomes the burden of
2. WHETHER OR NOT RESPONDENT proving that it has the substantial capital,
CRUZ ABANDONED HER WORK; NOT investment, tools and the like. In the present
ILLEGALLY DISMISSED. NO case, though Garden of Memories is not the
contractor, it has the burden of proving that
Ruling: Requiño has sufficient capital or investment
1. since it is claiming the supposed status of
Requiño as independent contractor. Garden
of Memories, however, failed to adduce
evidence purporting to show that Requiño
had sufficient capitalization. Neither did it
show that she invested in the form of tools,
equipment, machineries, work premises and
other materials which are necessary in the
completion of the service contract.
Furthermore, Requiño was not a licensed
contractor. Her explanation that her
business was a mere livelihood program akin
to a cottage industry provided by Garden of
Memories as part of its contribution to the
upliftment of the underprivileged residing
near the memorial park proves that her
capital investment was not substantial.
Substantial capital or investment refers to
capital stocks and subscribed capitalization
in the case of corporations, tools,
equipment, implements, machineries, and
work premises, actually and directly used by
the contractor or subcontractor in the
performance or completion of the job, work
or service contracted out.Obviously,
Requiño is a labor-only contractor.
Another determinant factor that classifies
petitioner Requiño as a labor-only
contractor was her failure to exercise the
right to control the performance of the work
of Cruz. This can be gleaned from the Service
Contract Agreement between Garden of
Memories and Requiño, to wit:
xxxx
NOW THEREFORE, premises considered, the
parties hereto have hereunto agreed on the
following terms and conditions:
1. That the Contractor shall undertake the
maintenance of the above-mentioned works
in strict compliance with and subject to all
the requirements and standards of
GMMPLPI.
The requirement of the law in determining
the existence of independent contractorship
is that the contractor should undertake the
work on his own account, under his own
responsibility, according to his own manner
and method, free from the control and
direction of the employer except as to the
results thereof. In this case, however, the
Service Contract Agreement clearly indicates
that Requiño has no discretion to determine
the means and manner by which the work is
performed. Rather, the work should be in
strict compliance with, and subject to, all
requirements and standards of Garden of
Memories.
Under these circumstances, there is no
doubt that Requiño is engaged in labor-only
contracting, and is considered merely an
agent of Garden of Memories. As such, the
workers she supplies should be considered
as employees of Garden of Memories.
Consequently, the latter, as principal
employer, is responsible to the employees of
the labor-only contractor as if such
employees have been directly employed by
it.

Notably, Cruz was hired as a utility worker
tasked to clean, sweep and water the lawn
of the memorial park. She performed
activities which were necessary or desirable
to its principal trade or business. Thus, she
was a regular employee of Garden of
Memories and cannot be dismissed except
for just and authorized causes.
2.
The Court agrees with the findings of the
tribunals below that respondent Cruz did not
abandon her work but was illegally
dismissed.
As the employer, Garden of Memories has
the burden of proof to show the employee's
deliberate and unjustified refusal to resume
his employment without any intention of
returning. For abandonment to exist, two
factors must be present: (1) the failure to
report for work or absence without valid or
justifiable reason; and (2) a clear intention to
sever employer-employee relationship, with
the second element as the more
determinative factor being manifested by
some overt acts. It has been said that
abandonment of position cannot be lightly
inferred, much less legally presumed from
certain equivocal acts.Mere absence is not
sufficient.
In this case, no such intention to abandon
her work can be discerned from the
actuations of Cruz. Neither were there overt
acts which could be considered
manifestations of her desire to truly
abandon her work. On the contrary, her
reporting to the personnel manager that she
had been replaced and the immediate filing
of the complaint before the DOLE
demonstrated a desire on her part to
continue her employment with Garden of
Memories. As correctly pointed out by the
CA, the filing of the case for illegal dismissal
negated the allegation of abandonment.
37. Arlene S. Espiritu G.R. No. 204944-45
38. Semblante vs. CA, G.R. No. 196426,
August 15, 2011
FACTS:
Petitioners Marticio Semblante and Dubrick
Pilar worked in the Gallera de Mandaue
owned by the respondents-spouses Vicente
and Maria Luisa Loot. The petitioners
rendered their services as the official
massiador and sentenciador in 1993. As the
masiador, Semblante calls and takes the bets
from the gamecock owners and other
bettors and orders the start of the cockfight.
He also distributes the winnings after
deducting the arriba, or the commission for
the cockpit. Meanwhile, as the sentenciador,
Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks'
physical condition and capabilities to
continue the cockfight, and eventually
declares the result of the cockfight. As
masiador and sentenciador, Semblante
receives PhP2,000 per week or a total of
PhP8,000 per month, while Pilar gets
PhP3,500 a week or PhP14,000 per month.
They work every Tuesday, Wednesday,
Saturday, and Sunday every week, excluding
monthly derbies and cockfights HELD: on
special holidays. Their working days start at
1:00 p.m. and last until 12:00 midnight, or
until the early hours of the morning
depending on the needs of the cockpit.
Petitioners had both been issued employees'
identification cards that they wear every
time they report for duty. However on
November 14,1993, petitioners were denied
entry into the cockpit upon the instructions
of respondents and were informed of the
termination of their employment effective
that date.
Respondents denied that petitioners were
their employees and alleged that they were
associates of respondents’ independent
contractor, Tomas Vega. They claimed that
petitioners have no regular working time or
day and they are free to decide for
themselves whether to report for work or
not on any cockfighting day. And the
identification card issued was only to free
them from the normal entrance fees and to
differentiate them from the general public.
The Labor Arbiter found that there exist an
employer-employee relationship between
the petitioner and the respondents because
the latter performed the works necessary
and indispensable to the usual trade or
business of the respondents for a number of
years. It has ruled that petitioners were
illegally dismissed and are entitled to their
backwages and separation pay. However,
the NLRC reversed the Labor Arbiter’s
decision. It HELD: that respondents having
no power on the selection and engagement
of petitioners and that no separate
individual contract with respondents was
ever executed by petitioners. In its appeal to
the CA, the latter ruled in favor for the
respondents and HELD: that referees and
bet-takers in a cockfight need to have the
kind of expertise that is characteristic of the
game to interpret messages conveyed by
mere gestures. Hence, petitioners are akin
to independent contractors who possess
unique skills , expertise and talent to
distinguish them from ordinary employees.
Further, petitioners were not provided by
tools and instrumentalities they needed to
perform their work. They only need their
unique skills and talents in the performance
of their job as masiador and sentenciador.
ISSUE:
Whether the dismissal of the petitioners is
illegal on the ground that that they are
regular employees of the respondents? No.
There was no employer-employee
relationship.
HELD:
Respondents had no part in petitioners'
selection and management; petitioners'
compensation was paid out of the arriba
(which is a percentage deducted from the
total bets), not by petitioners;
petitioners performed their functions as
masiador and sentenciador free from the
direction and control of respondents. In the
conduct of their work, petitioners relied
mainly on their "expertise that
characteristic of the cockfight gambling,"
and were never given by respondents any
tool needed for the performance of their
work. Respondents, not being petitioners'
employers, could never have dismissed,
legally or illegally, petitioners, since
respondents were without power
prerogative to do so in the first place. The
rule on the posting of an appeal bond cannot
defeat the substantive rights of respondents
to be free from an unwarranted burden of
answering for an illegal dismissal for which
they were never responsible.
40. Jose Sonza vs. ABS-CBN
FACTS: In May 1994, respondent ABS-CBN
Broadcasting Corporation (ABS-CBN) signed
an Agreement (Agreement) with the Mel
and Jay Management and Development
Corporation (MJMDC). Referred to in the
Agreement as AGENT, MJMDC agreed to
provide SONZAs services exclusively to ABS-
CBN as talent for radio and television.
ABS-CBN agreed to pay for SONZAs services
and a monthly talent fee of P310,000 for the first
year and P317,000 for the second and third
year of the Agreement. ABS-CBN would pay
the talent fees on the 10th and 25th days of
the month.
is
On 30 April 1996, SONZA filed a complaint
against ABS-CBN before the Department of
Labor and Employment, National Capital
Region in Quezon City. SONZA complained
that ABS-CBN did not pay his salaries,
separation pay, service incentive leave pay,
or 13th month pay, signing bonus, travel
allowance and amounts due under the
Employees Stock Option Plan (ESOP).
On 10 July 1996, ABS-CBN filed a Motion to
Dismiss on the ground that no employer-
employee relationship existed between the
parties. SONZA filed an Opposition to the
motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit
SONZAs monthly talent fees through his
account at PCIBank, Quezon Avenue Branch,
Quezon City. In July 1996, ABS-CBN opened
a new account with the same bank where
ABS-CBN deposited SONZAs talent fees and
other payments due him under the
Agreement.
In his Order dated 2 December 1996, the
Labor Arbiter denied the motion to dismiss.
The Labor Arbiter found for respondent
citing that Sonza as a ‘talent’ cannot be
considered an employee of petitioner. Both
NLRC and CA affirmed.
ISSUE: W/N the CA gravely erred in affirming
the NLRC’s decision and refusing to find that
an employer-employee relationship existed
between Sonza and ABS-CBN, despite the
weight of controlling law, jurisprudence and
evidence to support such a finding.
HELD: NO.
Case law has consistently HELD: that the
elements of an employer-employee
relationship are: (a) the selection and
engagement of the employee; (b) the
payment of wages; (c) the power of
dismissal; and (d) the employer’s power to
control the employee on the means and
methods by which the work is accomplished.
The last element, the so-called control test,
is the most important element.
A. Selection and Engagement of
Employee:
Independent contractors often present
themselves to possess unique skills,
expertise or talent to distinguish them from
ordinary employees. The specific selection
and hiring of SONZA, because of his unique
skills, talent and celebrity status not
possessed by ordinary employees, is a
circumstance indicative, but not conclusive,
of an independent contractual relationship.
If SONZA did not possess such unique skills,
talent and celebrity status, ABS-CBN would
not have entered into the Agreement with
SONZA but would have hired him through its
personnel department just like any other
employee.
In any event, the method of selecting and
engaging SONZA does not conclusively
determine his status.
B. Payment of wages:
All the talent fees and benefits paid to
SONZA were the result of negotiations that
led to the Agreement. If SONZA were ABS-
CBNs employee, there would be no need for
the parties to stipulate on benefits such as
SSS, Medicare, x x x and 13th month pay
which the law automatically incorporates
into every employer-employee contract.
Whatever benefits SONZA enjoyed arose
from contract and not because of an
employer-employee relationship. The
payment of talent fees directly to SONZA and
not to MJMDC does not negate the status of
SONZA as an independent contractor.
C. Power of Dismissal:
For violation of any provision of the
Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-
CBN could terminate his services on grounds
other than breach of contract, such as
retrenchment to prevent losses as provided
under labor laws.
D. Power of Control:
Applying the control test to the present case,
we find that SONZA is not an employee but
an independent contractor. The control test
is the most important test our courts apply
in distinguishing an employee from an
independent contractor. This test is based
on the extent of control the hirer exercises
over a worker. The greater the supervision
and control the hirer exercises, the more
likely the worker is deemed an employee.
ABS-CBN engaged SONZAs services
specifically to co-host the Mel & Jay
programs. ABS-CBN did not assign any other
work to SONZA. To perform his work, SONZA
only needed his skills and talent. How SONZA
delivered his lines, appeared on television,
and sounded on radio were outside ABS-
CBNs control. SONZA did not have to render
eight hours of work per day. The Agreement
required SONZA to attend only rehearsals
and tapings of the shows, as well as pre- and
post-production staff meetings. ABS-CBN
could not dictate the contents of SONZAs
script. However, the Agreement prohibited
SONZA from criticizing in his shows ABS-CBN
or its interests. The clear implication is that
SONZA had a free hand on what to say or
discuss in his shows provided he did not
attack ABS-CBN or its interests. ABS-CBN was
not involved in the actual performance that
produced the finished product of SONZAs
work. ABS-CBN did not instruct SONZA how
to perform his job. ABS-CBN merely reserved
the right to modify the program format and
airtime schedule for more effective
programming. ABS-CBNs sole concern was
the quality of the shows and their standing
in the ratings. Clearly, ABS-CBN did not
exercise control over the means and
methods of performance of SONZAs work.
ABS-CBN claims that there exists a prevailing
practice in the broadcast and entertainment
industries to treat talents like Sonza as
independent contractors. The right of labor
to security of tenure as guaranteed in the
Constitution arises only if there is an
employer-employee relationship under
labor laws. Individuals with special skills,
expertise or talent enjoy the freedom to
offer their services as independent
contractors. The right to life and livelihood
guarantees this freedom to contract as
independent contractors. The right of labor
to security of tenure cannot operate to
deprive an individual, possessed with special
skills, expertise and talent, of his right to
contract as an independent contractor.
41.
FACTS:ABS-CBN BROADCASTING
CORPORATION vs. MARLYN NAZARENO,
MERLOU GERZON, JENNIFER DEIPARINE, and
JOSEPHINE LERASAN G.R.
No. 164156 September 26, 2006
ABS-CBN Broadcasting Corporation (ABS-
CBN) ABS-CBN Broadcasting Corporation
(ABS-CBN) employed respondents
Nazareno, Gerzon, Deiparine, and Lerasan as
production assistants (PAs) on different
dates. They were assigned at the news and
public affairs, for various radio programs in
the Cebu Broadcasting Station, with a
monthly compensation of P4,000. They were
issued ABS-CBN employees’ identification
cards and were required to work for a
minimum of eight hours a day, including
Sundays and holidays.
On December 19, 1996, ABS-CBN and the
ABS-CBN Rank-and-File Employees executed
a Collective Bargaining Agreement (CBA).
However, since ABS-CBN refused to
recognize PAs as part of the bargaining unit,
Nazareno, et al were not included to the
CBA. On October 12, 2000, Nazareno,et al
filed a Complaint for Recognition of Regular
Employment Status, Underpayment of
Overtime Pay, Holiday Pay, Premium Pay,
Service Incentive Pay, Sick Leave Pay, and
13th Month Pay with Damages against the
petitioner before the NLRC.
The Labor Arbiter rendered judgment in
favor of Nazareno, et al and declared that
they were regular employees of ABS-CBN as
such, they were awarded monetary benefits.
NLRC affirmed the decision of the Labor
Arbiter. ABS-CBN filed a motion for
reconsideration but CA dismissed it. Hence,
this petition.
ISSUE: Whether or not nazareno, et al were
considered regular employees of ABS-CBN.
RULING: YES
The primary standard of determining regular
employment is the reasonable connection
between the particular activity performed
by the employee in relation to the usual
trade or business of the employer. The test
is whether the former is usually necessary or
desirable in the usual business or trade of
the employer. The connection can be
determined by considering the nature of
work performed and its relation to the
scheme of the particular business or trade in
its entirety. Also, if the employee has been
performing the job for at least a year, even if
the performance is not continuous and
merely intermittent, the law deems
repeated and continuing need for its
performance as sufficient evidence of the
necessity if not indispensability of that
activity to the business. Hence, the
employment is considered regular, but only
with respect to such activity and while such
activity exists (see: Article 280 Labor Code).
Not considered regular employees are
"project employees," the completion or
termination of which is more or less
determinable at the time of employment,
such as those employed in connection with a
particular construction project, and
"seasonal employees" whose employment
by its nature is only desirable for a limited
period of time. Even then, any employee
who has rendered at least one year of
service, whether continuous or intermittent,
is deemed regular with respect to the
activity performed and while such activity
actually exists.
In this case, it is undisputed that Nazareno,
et al had continuously performed the same
activities for an average of five years. Their
assigned tasks are necessary or desirable in
the usual business or trade of the ABS-CBN.
Thus, they are deemed to be regular
employees within the meaning of the law.
In addition, Nazareno, et al cannot be
considered "talents" because they are not
actors or actresses or radio specialists or
mere clerks or utility employees. They are
regular employees who perform several
different duties under the control and
direction of ABS-CBN executives and
supervisors.
It follows then that respondents are entitled
to the benefits provided for in the existing
CBA between petitioner and its rank-and-file
employees.
NOTE: As Distinguished in the case of Sonza:
● ABS-CBN engaged SONZA’S services
to co-host its television and radio programs
because of SONZA’S peculiar skills, talent
and celebrity status. It is a circumstance
indicative, but not conclusive, of an
independent contractual relationship. If
SONZA did not possess such unique skills,
talent and celebrity status, ABS-CBN would
not have entered into the Agreement with
SONZA but would have hired him through its
personnel department just like any other
employee.
● All the talent fees and benefits paid
to SONZA were the result of negotiations
that led to the Agreement. If SONZA were
ABS-CBN’s employee, there would be no
need for the parties to stipulate on benefits
such as "SSS, Medicare, x x x and 13th month
pay which the law automatically
incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed
arose from contract and not because of an
employer-employee relationship.
In the present case:
● First. In the selection and
engagement of Nazareno, et al, no peculiar
or unique skill, talent or celebrity status was
required from them because they were
merely hired through petitioner’s personnel
department just like any ordinary employee.
● Second. The so-called "talent fees" of
Nazareno, et al correspond to wages given as
a result of an employer-employee
relationship. They did not have the power to
bargain for huge talent fees, a circumstance
negating independent contractual
relationship.
● Third. ABS-CBN could always
discharge Nazareno, et al should it find their
work unsatisfactory, and respondents are
highly dependent on the company for
continued work.
● Fourth. The degree of control and
supervision exercised by ABS-CBN over
Nazareno, et al through its supervisors
negates the allegation that the latter are
independent contractors.
42. Farley Fulache et al vs. ABS CBN
FACTS:
Petitioners Farley Fulache, Manolo
Jabonero, David Castillo, Jeffrey Lagunzad,
Magdalena Malig-on Bigno, Francisco Cabas,
Jr., Harvey Ponce and Alan C. Almendras
(petitioners) and Cresente Atinen (Atinen)
filed two separate complaints for
regularization, unfair labor practice and
several money claims (regularization case)
against ABS-CBN Broadcasting Corporation-
Cebu (ABS-CBN). Fulache and Castillo were
drivers/cameramen; Atinen, Lagunzad and
Jabonero were drivers; Ponce and
Almendras were cameramen/editors; Bigno
was a PA/Teleprompter Operator-Editing,
and Cabas was a VTR man/editor.
temporary and not regular employees, in
violation of the Labor Code. They claimed
they had already rendered more than a year
of service in the company and, therefore,
should have been recognized as regular
employees entitled to security of tenure and
to the privileges and benefits enjoyed by
regular employees.
ABS-CBN explained the nature of the
petitioners employment within the
framework of its operations. It claimed that:
it operates in several divisions, one of which
is the Regional Network Group (RNG). The
RNG exercises control and supervision over
all the ABS-CBN local stations to ensure that
ABS-CBN programs are extended to the
provinces. A local station, like the Cebu
station, can resort to cost-effective and cost-
saving measures to remain viable; local
stations produced shows and programs that
were constantly changing because of the
competitive nature of the industry, the
changing public demand or preference, and
the seasonal nature of media broadcasting
programs.

The petitioners alleged that ABS-CBN and ABS-CBN further claimed that to cope with
the ABS-CBN Rank-and-File Employees fluctuating business conditions, it contracts
Union (Union) executed a collective on a case-to-case basis the services of
bargaining agreement (CBA) effective persons who possess the necessary talent,
December 11, 1999 to December 10, 2002; skills, training, expertise or qualifications to
they only became aware of the CBA when meet the requirements of its programs and
they obtained copies of the agreement; they productions. These contracted persons are
learned that they had been excluded from its called talents and are considered
coverage as ABS-CBN considered them
independent contractors who offer their
services to broadcasting companies.
Instead of salaries, ABS-CBN pointed out that
talents are paid a pre-arranged
consideration called talent fee taken from
the budget of a particular program and
subject to a ten percent (10%) withholding
tax. Talents do not undergo probation. Their
services are engaged for a specific program
or production, or a segment thereof. Their
contracts are terminated once the program,
production or segment is completed.
ABS-CBN alleged that the petitioners
services were contracted on various dates by
its Cebu station as independent
contractors/off camera talents, and they
were not entitled to regularization in these
capacities.
Labor Arbiter Rendoque rendered his
decision holding that the petitioners were
regular employees of ABS-CBN, not
independent contractors, and are entitled to
the benefits and privileges of regular
employees. ABS-CBN appealed the ruling to
the National Labor Relations Commission
(NLRC).
While the appeal of the regularization case
was pending, ABS-CBN dismissed Fulache,
Jabonero, Castillo, Lagunzad and Atinen (all
drivers) for their refusal to sign up contracts
of employment with service contractor Able
Services. The four drivers and Atinen
responded by filing a complaint for illegal
dismissal (illegal dismissal case).
In defense, ABS-CBN alleged that even
before the labor arbiter rendered his
decision of January 17, 2002 in the
regularization case, it had already
undertaken a comprehensive review of its
existing organizational structure to address
its operational requirements. It then decided
to course through legitimate service
contractors all driving, messengerial,
janitorial, utility, make-up, wardrobe and
security services for both the Metro Manila
and provincial stations, to improve its
operations and to make them more
economically viable.
Labor Arbiter Rendoque upHELD: the validity
of ABS-CBN's contracting out of certain work
or services in its operations. The labor
arbiter found that petitioners Fulache,
Jabonero, Castillo, Lagunzad and Atinen had
been dismissed due to redundancy, an
authorized cause under the law.
Again, ABS-CBN appealed to the NLRC which
rendered a joint decision on the
regularization and illegal dismissal cases. The
NLRC ruled that there was an employer-
employee relationship between the
petitioners and ABS-CBN as the company
exercised control over the petitioners in the
performance of their work; the petitioners
were regular employees because they were
engaged to perform activities usually
necessary or desirable in ABS-CBN's trade or
business; they cannot be considered
contractual employees since they were not
paid for the result of their work, but on a
monthly basis and were required to do their
work in accordance with the companys
schedule.
The NLRC reversed the labor arbiters ruling
in the illegal dismissal case; it found that
petitioners Fulache, Jabonero, Castillo,
Lagunzad and Atinen had been illegally
dismissed.
ISSUE:
Whether petitioners entitled to the benefits
if the CBA. (YES)
Whether the dismissal of the petitioners is
valid. (NO)
Ruling:
The Claim for CBA Benefits
As regular employees, the petitioners fall
within the coverage of the bargaining unit
and are therefore entitled to CBA benefits as
a matter of law and contract. In the root
decision (the labor arbiters decision of
January 17, 2002) that the NLRC and CA
affirmed, the labor arbiter declared:
WHEREFORE, IN THE LIGHT OF THE
FOREGOING, taking into account the factual
scenario and the evidence adduced by both
parties, it is declared that complainants in
these cases are REGULAR EMPLOYEES of
respondent ABS-CBN and not INDEPENDENT
CONTRACTORS and thus henceforth they are
entitled to the benefits and privileges
attached to regular status of their
employment.
This declaration unequivocally settled the
petitioners employment status: they are
ABS-CBNs regular employees entitled to the
benefits and privileges of regular employees.
These benefits and privileges arise from
entitlements under the law (specifically, the
Labor Code and its related laws), and from
their employment contract as regular ABS-
CBN employees, part of which is the CBA if
they fall within the coverage of this
agreement.
Thus, as regular rank-and-file employees,
they fall within CBA coverage under the CBAs
express terms and are entitled to its
benefits.
The Dismissal of Fulache, Jabonero,
Castillo and Lagunzad
The termination of employment of the four
drivers occurred under highly questionable
circumstances and with plain and
unadulterated bad faith.
The records show that the regularization
case was in fact the root of the resulting bad
faith as this case gave rise and led to the
dismissal case. First, the regularization case
was filed leading to the labor arbiters
decision declaring the petitioners, including
Fulache, Jabonero, Castillo and Lagunzad, to
be regular employees. ABS-CBN appealed
the decision and maintained its position that
the petitioners were independent
contractors.
In the course of this appeal, ABS-CBN took
matters into its own hands and terminated
the petitioners services, clearly disregarding
its own appeal then pending with the NLRC.
Notably, this appeal posited that the
petitioners were not employees (whose
services therefore could be terminated
through dismissal under the Labor Code);
they were independent contractors whose
services could be terminated at will, subject
only to the terms of their contracts. To justify
the termination of service, the company
cited redundancy as its authorized cause but
offered no justificatory supporting evidence.
It merely claimed that it was contracting out
the petitioners activities in the exercise of its
management prerogative.
ABS-CBNs intent, of course, based on the
records, was to transfer the petitioners and
their activities to a service contractor
without paying any attention to the
requirements of our labor laws; hence, ABS-
CBN dismissed the petitioners when they
refused to sign up with the service
contractor.
It forgot that by claiming redundancy as
authorized cause for dismissal, it impliedly
admitted that the petitioners were regular
employees whose services, by law, can only
be terminated for the just and authorized
causes defined under the Labor Code.
Lastly, it forgot that there was a standing
labor arbiters decision that, while not yet
final because of its own pending appeal,
cannot simply be disregarded. By
implementing the dismissal action at the
time the labor arbiters ruling was under
review, the company unilaterally negated
the effects of the labor arbiters ruling while
at the same time appealling the same ruling
to the NLRC. This unilateral move is a direct
affront to the NLRCs authority and an abuse
of the appeal process.
The injustice committed on the
petitioners/drivers requires rectification.
Their dismissal was not only unjust and in
bad faith as the above discussions
abundantly show. The bad faith in ABS-CBNs
move toward its illegitimate goal was not
even hidden; it dismissed the petitioners
already recognized as regular employees for
refusing to sign up with its service
contractor. Thus, from every perspective,
the petitioners were illegally dismissed.
By law, illegally dismissed employees are
entitled to reinstatement without loss of
seniority rights and other privileges and to
full backwages, inclusive of allowances, and
to other benefits or their monetary
equivalent from the time their
compensation was withHELD: from them up
to the time of their actual reinstatement.
The four dismissed drivers deserve no less.
43. NELSON V. BEGINO v. ABS-CBN
CORPORATION GR No. 199166, Apr 20, 2015
FACTS:
Respondent ABS-CBN Corporation is a
television and radio broadcasting
corporation which, for its Regional Network
Group in Naga City, employed respondent
Amalia Villafuerte (Villafuerte) as Manager;
thru Villafuerte, ABS-CBN engaged the
services of petitioners Nelson Begino
(Begino) and Gener Del Valle (Del Valle)
sometime in 1996 as Cameramen/Editors for
TV Broadcasting. Petitioners Ma. Cristina
Sumayao (Sumayao) and Monina Avila-Llorin
(Llorin) were likewise similarly engaged as
reporters sometime in 1996 and 2002,
respectively. With their services engaged by
respondents thru Talent Contracts which,
though regularly renewed over the years,
provided terms ranging from three (3)
months to one (1) year, petitioners were
given Project Assignment Forms which
detailed, among other matters, the duration
of a particular project as well as the budget
and the daily technical requirements
thereof. In the aforesaid capacities,
petitioners were tasked with coverage of
news items for subsequent daily airings in
respondents’ TV Patrol Bicol Program.
While specifically providing that nothing
therein shall be deemed or construed to
establish an employer-employee
relationship between the parties, the
aforesaid Talent Contracts included, among
other matters, provisions on the following
matters: (a) the Talent’s creation and
performance of work in accordance with the
ABS-CBN’s professional standards and
compliance with its policies and guidelines
covering intellectual property creators,
industry codes as well as the rules and
regulations of the Kapisanan ng mga
Broadcasters sa Pilipinas (KBP) and other
regulatory agencies; (b) the Talent’s non-
engagement in similar work for a person or
entity directly or indirectly in competition
with or adverse to the interests of ABS-CBN
and non-promotion of any product or service
without prior written consent; and (c) the
results-oriented nature of the talent’s work
which did not require them to observe
normal or fixed working hours.
Petitioners filed against respondents the
complaint. Petitioners alleged that they
performed functions necessary and
desirable in ABS-CBN's business. Mandated
to wear company IDs and provided all the
equipment they needed, petitioners averred
that they worked under the direct control
and supervision of Villafuerte and, at the end
of each day, were informed about the news
to be covered the following day, the routes
they were to take and, whenever the subject
of their news coverage is quite distant, even
the start of their workday.
Due to the importance of the news items
they covered and the necessity of their
completion for the success of the program,
petitioners claimed that, under pain of
immediate termination, they were bound by
the company’s policy on, among others,
attendance and punctuality.
Although their work involved dealing with
emergency situations at any time of the day
or night, petitioners claimed that they were
not paid the labor standard benefits the law
extends to regular employees. To avoid
paying what is due them, however,
respondents purportedly resorted to the
simple expedient of using said Talent
Contracts and/or Project Assignment Forms
which denominated petitioners as talents,
despite the fact that they are not actors or
TV hosts of special skills. As a result of this
iniquitous situation, petitioners asseverated
that they merely earned an average of
P7,000.00 to P8,000.00 per month, or
decidedly lower than the P21,773.00
monthly salary ABS-CBN paid its regular
rank-and-file employees. Considering their
repeated re-hiring by respondents for
ostensible fixed periods, this situation had
gone on for years since TV Patrol Bicol has
continuously aired from 1996 onwards.
Labor Arbiter: resolved in favor of
petitioners who, having rendered services
necessary and related to ABS-CBN’s business
for more than a year, were determined to be
its regular employees.
NLRC: affirming said Labor Arbiter’s
appealed decision.
CA: reversing the findings of the Labor
Arbiter and the NLRC; Discounted the
existence of an employer-employee relation
between the parties
ISSUE: Whether or not there is employer-
employee relationship
RULING: yes
The recognized supremacy of the law over
the nomenclature of the contract and the
stipulations contained therein is aimed at
bringing life to the policy enshrined in the
Constitution to afford protection to
labor.[25] Insofar as the nature of one’s
employment is concerned, Article 280 of the
Labor Code of the Philippines.
The Court finds that, notwithstanding the
nomenclature of their Talent Contracts
and/or Project Assignment Forms and the
terms and condition embodied therein,
petitioners are regular employees of ABS-
CBN. Time and again, it has been ruled that
the test to determine whether employment
is regular or not is the reasonable connection
between the activity performed by the
employee in relation to the business or trade
of the employer.[28] As cameramen/editors
and reporters, petitioners were undoubtedly
performing functions necessary and
essential to ABS-CBN’s business of
broadcasting television and radio content. It
matters little that petitioners’ services were
engaged for specified periods for TV Patrol
Bicol and that they were paid according to
the budget allocated therefor. Aside from
the fact that said program is a regular
weekday fare of the ABS-CBN’s Regional
Network Group in Naga City, the record
shows that, from their initial engagement in
the aforesaid capacities, petitioners were
continuously re-hired by respondents over
the years. To the mind of the Court,
respondents’ repeated hiring of petitioners
for its long-running news program positively
indicates that the latter were ABS-CBN’s
regular employees.
As cameramen/editors and reporters, it also
appears that petitioners were subject to the
control and supervision of respondents
which, first and foremost, provided them
with the equipments essential for the
discharge of their functions. Prepared at the
instance of respondents, petitioners’ Talent
Contracts tellingly provided that ABS-CBN
retained “all creative, administrative,
financial and legal control” of the program to
which they were assigned. Aside from having
the right to require petitioners “to attend
and participate in all promotional or
merchandising campaigns, activities or
events for the Program,” ABS-CBN required
the former to perform their functions “at
such locations and Performance/Exhibition
Schedules” it provided or, subject to prior
notice, as it chose determine, modify or
change. Even if they were unable to comply
with said schedule, petitioners were
required to give advance notice, subject to
respondents’ approval.[34] However
obliquely worded, the Court finds the
foregoing terms and conditions
demonstrative of the control respondents
exercised not only over the results of
petitioners’ work but also the means
employed to achieve the same.
This conclusion is borne out by the
ineluctable showing that petitioners
perform functions necessary and essential to
the business of ABS-CBN which repeatedly
employed them for a long-running news
program of its Regional Network Group in
Naga City. In the course of said employment,
petitioners were provided the equipments
they needed, were required to comply with
the Company's policies which entailed prior
approval and evaluation of their
performance. Viewed from the prism of
these considerations, we find and so hold
that the CA reversibly erred when it
overturned the NLRC's affirmance of the
Labor Arbiter's finding that an employer-
employee relationship existed between the
parties.
44. INSULAR LIFE ASSURANCE CO., LTD.,
petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and MELECIO BASIAO,
respondents.
FACTS:
Insular Life Assurance Co., Ltd and Melecio T.
Basiao entered into a contract by which
Basiao was "authorized to solicit within the
Philippines applications for insurance
policies and annuities in accordance with the
existing rules and regulations" and he would
receive compensation, in the form of
commissions.
Under the contract, The Agent shall be free
to exercise his own judgment as to time,
place and means of soliciting insurance.
Nothing herein contained shall therefore be
construed to create the relationship of
employee and employer between the Agent
and the Company.
In May, 1979, the Company terminated the
Agency Manager's Contract. Basiao
thereafter filed with the then Ministry of
Labor a complaint against the Company and
its president seeking to recover commissions
allegedly unpaid thereunder.
The respondents disputed the Ministry's
jurisdiction over Basiao's claim, asserting
that he was not the Company's employee,
but an independent contractor.
Basiao asserts, he had become the
Company's employee by virtue of the
contract invoked by him.
The Company's thesis, that no employer-
employee relation in the legal and generally
accepted sense existed between it and
Basiao, is drawn from the terms of the
contract they had entered into, which, either
expressly or by necessary implication, made
Basiao the master of his own time and selling
methods, left to his judgment the time, place
and means of soliciting insurance, set no
accomplishment quotas and compensated
him on the basis of results obtained. He was
not bound to observe any schedule of
working hours or report to any regular
station.
ISSUE:
Was Basiao an employee of Insular Life?
RULING:
NO
Not every form of control that the hiring
party reserves to himself over the conduct of
the party hired in relation to the services
rendered may be accorded the effect of
establishing an employer-employee
relationship between them in the legal or
technical sense of the term. Realistically, it
would be a rare contract of service that gives
untrammelled freedom to the party hired
and eschews any intervention whatsoever in
his performance of the engagement.
Here, the agent has contractual prerogative The contractual relationship between
to adopt his own selling methods or to sell Tongko and Manulife had two basic phases.
insurance at his own time and convenience, The first or initial phase began on July 1,
hence cannot justifiably be said to establish 1977, under a Career Agent’s Agreement
an employer-employee relationship (Agreement).
between him and the company.
The Court, therefore, rules that under the Pertinent provisions of the agreement state
contract invoked by him, Basiao was not an that:
employee of the petitioner, but a
commission agent, an independent It is understood and agreed that the Agent is
contractor whose claim for unpaid an independent contractor and nothing
commissions should have been litigated in contained herein shall be construed or
an ordinary civil action. The Labor Arbiter interpreted as creating an employer-
erred in taking cognizance of, and employee relationship between the
adjudicating, said claim, being without Company and the Agent.
jurisdiction to do so, as did the respondent
NLRC in affirming the Arbiter's decision. a) The Agent shall canvass for
applications for Life Insurance, Annuities,
Group policies and other products offered by
45. Tongko vs Manufacturer’s Life Insurance the Company, and collect, in exchange for
provisional receipts issued by the Agent,
Gregorio V. Tongko money due or to become due to the
Company in respect of applications or
vs. policies obtained by or through the Agent or
from policyholders allotted by the Company
The Manufacturer’s Life Insurance to the Agent for servicing, subject to
subsequent confirmation of receipt of
(G.R. NO. 167622; June 29, 2010) payment by the Company as evidenced by
an Official Receipt issued by the Company
directly to the policy holder.
FACTS:
b) The Company may terminate this
Manufacturers Life Insurance, Co. is a Agreement for any breach or violation of any
domestic corporation engaged in life of the provisions hereof by the Agent by
insurance business. giving written notice to the Agent within
fifteen (15) days from the time of the
discovery of the breach. No waiver,
extinguishment, abandonment, withdrawal
or cancellation of the right to terminate this
Agreement by the Company shall be
construed for any previous failure to
exercise its right under any provision of this
Agreement.
c) Either of the parties hereto may
likewise terminate his Agreement at any
time without cause, by giving to the other
party fifteen (15) days notice in writing.
Sometime in 2001, De Dios addressed a
letter to Tongko, then one of the Metro
North Managers, regarding meetings
wherein De Dios found Tongko's views and
comments to be unaligned with the
directions the company was taking. De Dios
related his worries about Tongko's inability
to push for company development and
growth.
De Dios subsequently sent Tongko a letter of
termination in accordance with Tongko's
Agents Contract.
Tongko filed a complaint with the NLRC
against Manulife for illegal dismissal, alleging
that he had an employer-employee
relationship with De Dios instead of a
revocable agency by pointing out that the
latter exercised control over him through
directives regarding how to manage his area
of responsibility and setting objectives for
him relating to the business.
Tongko also claimed that his dismissal was
without basis and he was not afforded due
process. The NLRC ruled that there was an
employer-employee relationship as
evidenced by De Dios's letter which
contained the manner and means by which
Tongko should do his work. The NLRC ruled
in favor of Tongko, affirming the existence of
the employer-employee relationship.
The Court of Appeals, however, set aside the
NLRC's ruling. It applied the four-fold test for
determining control and found the elements
in this case to be lacking, basing its decision
on the same FACTS used by the NLRC. It
found that Manulife did not exert control
over Tongko, there was no employer-
employee relationship and thus the NLRC did
not have jurisdiction over the case.
A. Tongko’s Case for Employment
Relationship
Tongko asserted that as Unit Manager, he
was paid an annual over-rider not exceeding
₱50,000.00, regardless of production levels
attained and exclusive of commissions and
bonuses. He also claimed that as Regional
Sales Manager, he was given a travel and
entertainment allowance of ₱36,000.00 per
year in addition to his overriding
commissions; he was tasked with numerous
administrative functions and supervisory
authority over Manulife’s employees, aside
from merely selling policies and recruiting
agents for Manulife; and he recommended
and recruited insurance agents subject to
vetting and approval by Manulife. He further
alleges that he was assigned a definite place
in the Manulife offices when he was not in
the field – at the 3rd Floor, Manulife Center,
108 Tordesillas corner Gallardo Sts., Salcedo
Village, Makati City – for which he never paid
any rental. Manulife provided the office
equipment he used, including tables, chairs,
computers and printers (and even office
stationery), and paid for the electricity,
water and telephone bills. As Regional Sales
Manager, Tongko additionally asserts that
he was required to follow at least three
codes of conduct.
B. Manulife’s Case – Agency Relationship
with Tongko
Manulife argues that Tongko had no fixed
wage or salary. Under the Agreement,
Tongko was paid commissions of varying
amounts, computed based on the premium
paid in full and actually received by Manulife
on policies obtained through an agent. As
sales manager, Tongko was paid overriding
sales commission derived from sales made
by agents under his
unit/structure/branch/region. Manulife also
points out that it deducted and withHELD: a
10% tax from all commissions Tongko
received; Tongko even declared himself to
be self-employed and consistently paid taxes
as such—i.e., he availed of tax deductions
such as ordinary and necessary trade,
business and professional expenses to which
a business is entitled.
Manulife asserts that the labor tribunals
have no jurisdiction over Tongko’s claim as
he was not its employee as characterized in
the four-fold test and our ruling in
Carungcong v. National Labor Relations
Commission, the power to control under
labor law is lacking.
ISSUE:
Whether or not an insurance agent is
an employee under labor law (NO)
HELD:
No. There is no element of control
under labor law that exists in this case,
hence no employer-employee relationship
Tongko failed to show that the
control Manulife exercised over him was the
control required to exist in an employer-
employee relationship; Manulifes control
fell short of this norm and carried only the
characteristic of the relationship between an
insurance company and its agents, as
defined by the Insurance Code and by the
law of agency under the Civil Code.

The Court noted that there are built-
in elements of control specific to an
insurance agency, which do not amount to
the elements of control that characterize an
employment relationship governed by the
Labor Code.
The Insurance Code provides definite
parameters in the way an agent negotiates
for the sale of the companys insurance
products, his collection activities and his
delivery of the insurance contract or policy.
They do not reach the level of control into
the means and manner of doing an assigned
task that invariably characterizes an
employment relationship as defined by labor
law.
To reiterate, guidelines indicative of labor
law "control" do not merely relate to the
mutually desirable result intended by the
contractual relationship; they must have the
nature of dictating the means and methods
to be employed in attaining the result.
Tested by this norm, Manulifes instructions
regarding the objectives and sales targets, in
connection with the training and
engagement of other agents, are among the
directives that the principal may impose on
the agent to achieve the assigned tasks.They
are targeted results that Manulife wishes to
attain through its agents. Manulifes codes of
conduct, likewise, do not necessarily intrude
into the insurance agents means and
manner of conducting their sales. Codes of
conduct are norms or standards of behavior
rather than employer directives into how
specific tasks are to be done.
The laws on insurance and agency
The business of insurance is a highly
regulated commercial activity in the country,
in terms particularly of who can be in the
insurance business, who can act for and in
behalf of an insurer, and how these parties
shall conduct themselves in the insurance
business.
Section 186 of the Insurance Code provides
that "No person, partnership, or association
of persons shall transact any insurance
business in the Philippines except as agent of
a person or corporation authorized to do the
business of insurance in the Philippines."
Sections 299 and 300 of the Insurance Code
on Insurance Agents and Brokers, among
other provisions, provide:
Section 299. No insurance company doing
business in the Philippines, nor any agent
thereof, shall pay any commission or other
compensation to any person for services in
obtaining insurance, unless such person shall
have first procured from the Commissioner a
license to act as an insurance agent of such
company or as an insurance broker as
hereinafter provided.

No person shall act as an insurance agent or
as an insurance broker in the solicitation or
procurement of applications for insurance,
or receive for services in obtaining
insurance, any commission or other
compensation from any insurance company
doing business in the Philippines or any
agent thereof, without first procuring a
license so to act from the Commissioner x x
x The Commissioner shall satisfy himself as
to the competence and trustworthiness of
the applicant and shall have the right to
refuse to issue or renew and to suspend or
revoke any such license in his discretion.
Section 300. Any person who for
compensation solicits or obtains insurance
on behalf of any insurance company or
transmits for a person other than himself an
application for a policy or contract of
insurance to or from such company or offers
or assumes to act in the negotiating of such
insurance shall be an insurance agent within
the intent of this section and shall thereby
become liable to all the duties,
requirements, liabilities and penalties to
which an insurance agent is subject.
Thus, under the Insurance Code, the agent
must, as a matter of qualification, be
licensed and must also act within the
parameters of the authority granted under
the license and under the contract with the
principal. Other than the need for a license,
the agent is limited in the way he offers and
negotiates for the sale of the company’s
insurance products, in his collection
activities, and in the delivery of the
insurance contract or policy. Rules regarding
the desired results (e.g., the required
volume to continue to qualify as a company
agent, rules to check on the parameters on
the authority given to the agent, and rules to
ensure that industry, legal and ethical rules
are followed) are built-in elements of control
specific to an insurance agency and should
not and cannot be read as elements of
control that attend an employment
relationship governed by the Labor Code.
On the other hand, the Civil Code defines an
agent as a "person [who] binds himself to
render some service or to do something in
representation or on behalf of another, with
the consent or authority of the latter." While
this is a very broad definition that on its face
may even encompass an employment
relationship, the distinctions between
agency and employment are sufficiently
established by law and jurisprudence.
Generally, the determinative element is the
control exercised over the one rendering
service. The employer controls the
employee both in the results and in the
means and manner of achieving this result.
The principal in an agency relationship, on
the other hand, also has the prerogative to
exercise control over the agent in
undertaking the assigned task based on the
parameters outlined in the pertinent laws.
Under the general law on agency as applied
to insurance, an agency must be express in
light of the need for a license and for the
designation by the insurance company.
In the present case, the Agreement fully
serves as grant of authority to Tongko as
Manulife’s insurance agent. This agreement
is supplemented by the company’s agency
practices and usages, duly accepted by the
agent in carrying out the agency.
By authority of the Insurance Code, an
insurance agency is for compensation, a
matter the Civil Code Rules on Agency
presumes in the absence of proof to the
contrary. Other than the compensation, the
principal is bound to advance to, or to
reimburse, the agent the agreed sums
necessary for the execution of the agency.
By implication at least under Article 1994 of
the Civil Code, the principal can appoint two
or more agents to carry out the same
assigned tasks, based necessarily on the
specific instructions and directives given to
them.
With particular relevance to the present
case is the provision that "In the execution of
the agency, the agent shall act in accordance
with the instructions of the principal." This
provision is pertinent for purposes of the
necessary control that the principal
exercises over the agent in undertaking the
assigned task, and is an area where the
instructions can intrude into the labor law
concept of control so that minute
consideration of the FACTS is necessary.
A related article is Article 1891 of the Civil
Code which binds the agent to render an
account of his transactions to the principal.
In sum,
Guidelines indicative of labor law "control,"
as the first Insular Life case tells us, should
not merely relate to the mutually desirable
result intended by the contractual
relationship; they must have the nature of
dictating the means or methods to be
employed in attaining the result, or of fixing
the methodology and of binding or
restricting the party hired to the use of these
means.
In fact, results-wise, the principal can impose
production quotas and can determine how
many agents, with specific territories, ought
to be employed to achieve the company’s
objectives. These are management policy
decisions that the labor law element of
control cannot reach.
Our ruling in these respects in the first
Insular Life case was practically reiterated in
Carungcong. Thus, as will be shown more
fully below, Manulife’s codes of conduct, all
of which do not intrude into the insurance
agents’ means and manner of conducting
their sales and only control them as to the
desired results and Insurance Code norms,
cannot be used as basis for a finding that the
labor law concept of control existed
between Manulife and Tongko.
46. Ramy Gallego vs. Bayer Phils.
TOPIC: Effect of DOLE Certifcation as
Legitimate Job Contractor
G.R. No. 179807 July 31, 2009
RAMY GALLEGO, vs. BAYER PHILIPPINES,
INC., DANPIN GUILLERMO, PRODUCT IMAGE
MARKETING, INC., and EDGARDO
BERGONIA.
Ponente: CARPIO MORALES, J.
FACTS:
RAMY GALLEGO was contracted in April
1992 by Bayer Philippines, Inc. (BAYER) as
crop protection technician to promote and
market BAYER products. Under the
supervision of Aristeo Filipino, BAYER sales
representative for Panay Island, GALLEGO
made farm visits to different municipalities
in Panay Island to convince farmers to buy
BAYER products.
In 1996, GALLEGO’s employment with
BAYER came to a halt, prompting him to seek
employment with another company. BAYER
eventually reemployed GALLEGO, however,
in 1997 through Product Image and
Marketing Services, Inc. (PRODUCT IMAGE)
of which EDGARDO BERGONIA (BERGONIA)
was the President and General Manager,
performing the same task as that of crop
protection technician.
GALLEGO’s Claim: October, 2001, he was
directed by Pet Pascual, the newly assigned
BAYER sales representative, to submit a
resignation letter, but he refused; and that in
January, 2002, he was summoned by his
immediate supervisors including DANPIN
GUILLERMO (GUILLERMO), BAYER District
Sales Manager for Panay, and was ordered
to quit his employment which called for him
to return all pieces of service equipment
issued to him, but that again he refused.
GALLEGO received a memorandum that his
area of responsibility would be transferred
to Luzon, of which memorandum he sought
reconsideration but to no avail; and that
Guillermo and Bergonia spread rumors that
reached the dealers in Antique to the effect
that he was not anymore connected with
BAYER and any transaction with him would
no longer be honored as of April 30, 2002.
Believing that his employment was
terminated, GALLEGO lodged on June 6,
2002 a complaint for illegal dismissal with
the National Labor Relations Commission
(NLRC) against herein BAYER, GUILLERMO,
PRODUCT IMAGE, AND BERGONIA, with
claims for reinstatement, backwages and/or
separation pay, unpaid wages, holiday pay,
premium pay, service incentive leave and
allowances, damages and attorney’s fees.
PRODUCT IMAGE and Bergonia’s
CONTENTION: on the other hand, admitted
that GALLEGO was hired as an employee of
PRODUCT IMAGE on April 7, 1997 on a
contractual basis to promote and market
BAYER products pursuant to the Contract of
Promotional Services forged between it and
BAYER. They alleged that GALLEGO was a
field worker who had no fixed hours and
worked under minimal supervision, his
performance being gauged only by his
accomplishment reports duly certified to by
BAYER acting as his de facto supervisor;8
that GALLEGO was originally assigned to
Iloilo but later transferred to Antique; that
GALLEGO was not dismissed, but went on
official leave from January 23 to 31, 2002,
and stopped reporting for work thereafter;
and that GALLEGO was supposed to have
been reassigned to South Luzon effective
March 15, 2002 in accordance with a
personnel reorganization program, but he
likewise failed to report to his new work
station.
Labor Arbiter: declared BAYER PHILIPPINES,
INC., DANPIN GUILLERMO, PRODUCT IMAGE
MARKETING, INC., and EDGARDO BERGONIA
guilty of illegal dismissal. Labor Arbiter
found, among other things, that there was
an employer-employee relationship
between BAYER and GALLEGO since BAYER
furnished GALLEGO the needed facilities and
paraphernalia, and fixed the methodology to
be used in the performance of his work.
NLRC: reversed the Decision of the Labor
Arbiter and dismissed GALLEGO’s complaint
by Decision of February 22, 2006,11 holding
that as an independent contractor,
PRODUCT IMAGE was the employer of
GALLEGO but there was no evidence that
GALLEGO was dismissed by either PRODUCT
IMAGE or BAYER.
Legal ISSUE: W/N PRODUCT IMAGE is a
Legitimate Job Contractor.
HELD:
YES. PRODUCT IMAGE is a legitimate job
contractor.
The Court notes that PRODUCT IMAGE was
issued by the Department of Labor and
Employment (DOLE) Certificate of
Registration Numbered NCR-8-0602-176.
The DOLE certificate having been issued by a
public officer, it carries with it the
presumption that it was issued in the regular
performance of official duty. GALLEGO’s
bare assertions fail to rebut this
presumption. Further, since the DOLE is the
agency primarily responsible for regulating
the business of independent job contractors,
the Court can presume, in the absence of
evidence to the contrary, that it had
thoroughly evaluated the requirements
submitted by PRODUCT IMAGE before
issuing the Certificate of Registration.
Independently of the DOLE’s Certification,
among the circumstances that establish the
status of PRODUCT IMAGE as a legitimate
job contractor are: (1) PRODUCT IMAGE had,
during the period in question, a contract
with BAYER for the promotion
marketing of BAYER products;32
PRODUCT IMAGE has an independent
business and provides services nationwide
to big companies such as Ajinomoto
Philippines and Procter and
Corporation;33 and (3) PRODUCT IMAGE’s
total assets from 1998 to 2000 amounted to
₱405,639, ₱559,897, and ₱644,728,
respectively.34 PRODUCT IMAGE
posted a bond in the amount of ₱100,000 to
answer for any claim of its employees for
unpaid wages and other benefits that may
arise out of the implementation of its
contract with BAYER.
PRODUCT IMAGE cannot thus be considered
a labor-only contractor.
47. COCA-COLA BOTTLERS PHILIPPINES, INC.,
Petitioner,
vs.
RICKY E. DELA CRUZ, ROLANDO M. GUASIS,
MANNY C. PUGAL, RONNIE L. HERMO,
ROLANDO C. SOMERO, JR., DIBSON D.
DIOCARES, and IAN B. ICHAPARE,
Topic: Effect of DOLE Certification as
legitimate job contractor
FACTS:
and Ricky E. Dela Cruz et. al. filed
(2) complaints for regularization with money
claims against Coca-Cola Bottlers
Philippines, Inc. The complaints were
consolidated and subsequently amended to
Gamble implead Peerless Integrated Service, Inc.
(Peerless) as a party-respondent.
Before the Labor Arbiter, the Ricky et.al.
also alleged that they are route helpers assigned
to work in Coca Cola’s trucks. They go from
the Coca- Cola sales offices or plants to
customer outlets such as sari-sari stores,
restaurants, groceries, supermarkets and
similar establishments; they were hired
either directly by Coca Cola or by its
contractors, but they do not enjoy the full
remuneration, benefits and privileges
granted to Coca Cola’s regular sales force.
They argued that the services they render
are necessary and desirable in the regular
business of Coca Cola.
In their defense, Coca Cola contended that it
entered into contracts of services with
Peerless and Excellent Partners Cooperative,
Inc. (Excellent) to provide allied services;
under these contracts, Peerless and
Excellent retained the right to select, hire,
dismiss, supervise, control and discipline and
pay the salaries of all personnel they assign
to the petitioner; in return for these services,
Peerless and Excellent were paid a stipulated
fee.
Coca Cola alleges that there is no employer-
employee relationship between them and
the Ricky et.al., and the complaints should
be dismissed for lack of jurisdiction on the
part of the National Labor Relations
Commission (NLRC). Peerless did not file a
position paper, although nothing on record
indicates that it was ever notified of the
amended complaint.
In reply, Ricky et.al. countered that they
worked under the control and supervision of
the Coca Cola’s supervisors who prepared
their work schedules and assignments.
Peerless and Excellent, too, did not have
sufficient capital or investment to provide
services to the Coca Cola. Ricky et.al. thus
argued that Coca Cola’s contracts of services
with Peerless and Excellent are in the nature
of "labor-only" contracts prohibited by law.
In rebuttal, the Coca Cola countered Ricky
et.al.’s submission that their jobs are usually
necessary and desirable in its main business.
It claimed that its main business is softdrinks
manufacturing and Ricky et.al.’s tasks of
handling, loading and unloading of the
manufactured softdrinks are not part of the
manufacturing process. It stressed that its
only interest in Ricky et.al. is in the result of
their work, and left to them the means and
the methods of achieving this result. It thus
argued that there is no basis for Ricky et.al.’s
claim. Coca Cola lastly argued that in any
case, Ricky et.al. did not present evidence in
support of their claims of company control
and supervision so that these claims cannot
be considered and given weight.
Labor Arbiter: Ricky et.al. are employees of
either Peerless or Excellent, and ordered
Peerless "to accord to the appropriate
complainants all employment benefits and
privileges befitting its regular employees."
NLRC: Affirmed the Labor Arbiter’s ruling.
CA: Peerless and Excellent were engaged in
labor-only contracting, a prohibited
undertaking. It found that the contractors
simply supplied the company with
manpower, and that the sale and
distribution of the company’s products are
necessary and desirable functions in the
company’s business. The CA found no proof
in the records showing the required
capitalization and tools; thus, the CA
concluded that Peerless and Excellent were
engaged in "labor-only" contracting.
ISSUE:
Are Excellent and Peerless independent
contractors or labor-only contractors?
LABOR-ONLY CONTRACTORS
RULING:
There are three parties in
legitimate contracting relationship, namely:
the principal, the contractor, and the
contractor’s employees. In this trilateral
relationship, the principal controls the
contractor and his employees with respect
to the ultimate results or output of the
contract; the contractor controls
employees with respect, not only to the
results to be obtained, but with respect to
the means and manner of achieving this
result. This pervasive control by the
contractor over its employees results in an
employer-employee relationship between
them.
This trilateral relationship under a
legitimate job contracting is different from
the relationship in a labor-only contracting
situation because in the latter,
contractor simply becomes an agent of the
principal; either directly or through the
agent, the principal then controls the results
as well as the means and manner of
achieving the desired result. In labor-
contracting, there is really no contracting
and no contractor; there is only the
employer’s representative who gathers and
supplies people for the employer.
In this case, a labor-only contracting
situation is found to exist. These purported
contractors (Excellent and peerless) are
mere representatives of
principal/employer (Coca Cola). Our
a conclusion that labor-only contracting exists.
The Contracting Out Issue.
The law allows contracting and
subcontracting involving services but closely
regulates these activities for the protection
of workers. Thus, an employer can contract
his out part of its operations, provided it
complies with the limits and standards
provided in the Code and in its implementing
rules.
The directly applicable provision of the Labor
Code on contracting and subcontracting is
Article 106 which provides:
Whenever, an employer enters into a
contract with another person for the
performance of the former’s work, the
employees of the contractor and of the
latter’s subcontractor shall be paid in
the accordance with the provisions of this Code.
There are appropriate distinctions between
labor-only contracting and job contracting as
well as differentiations within these types of
contracting and determine who among the
parties involved shall be considered the
employer for purposes of this Code.
There is "labor-only" contracting where the
person supplying workers to an employer
does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others,
and the workers recruited and placed by
the such persons are performing activities which
are directly related to the principal business
of such employer. In such cases, 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 alter were
directly employed by him(underscoring
supplied).
The Department of Labor and Employment
implements this Labor Code provision
through its Department Order No. 18-02
(D.O. 18-02). On the matter of labor-only
contracting, Section 5 thereof provides:
Prohibition against labor-only contracting. -
Labor-only contracting is hereby declared
prohibited x x x labor-only contracting shall
refer to an arrangement where the
contractor or subcontractor merely recruits,
supplies or places workers to perform a job,
work or service for a principal, and any of the
following elements are present:
i) The contractor or subcontractor does not
have sufficient capital or investment which
relates to the job, work or service to be
performed and the employees recruited,
supplied or placed by such contractor or
subcontractor are performing activities
which are directly related to the main
business of the principal; or
ii) The contractor does not exercise the right
to control over the performance of the work
of the contractual-employee.
"Substantial capital or investment" refers to
capital stocks and subscribed capitalization
in the case of corporations, tools or
equipment, implements, machineries and
work premises, actually and directly used by
the contractor or subcontractor in the
performance or completion of the job, work
or service contracted out. [Emphasis
supplied]
The "right to control" refers to the
prerogative of a party to determine, not only
the end result sought to be achieved, but
also the means and manner to be used to
achieve this end.
Based on these considerations, we fully
agree with the CA that Peerless and Excellent
were mere suppliers of labor who had no
sufficient capitalization and equipment to
undertake sales and distribution of
softdrinks as independent activities separate
from the manufacture of softdrinks, and
who had no control and supervision over the
contracted personnel. They are therefore
labor-only contractors. Consequently, the
contracted personnel, engaged in
component functions in the main business of
the company under the latter’s supervision
and control, cannot but be regular company
employees. In these lights, the petition is
totally without merit and hence must be
denied.
48. Coca-Cola vs Agito
FACTS
Respondents filed before the NLRC two
complaints against petitioner, Interserve,
Peerless Integrated Services, Inc., Better
Builders, Inc., and Excellent Partners, Inc. for
reinstatement with backwages,
regularization, nonpayment of 13th month
pay, and damages.
Respondents alleged in their Position Paper
that they were salesmen assigned at the
Lagro Sales Office of petitioner. They had
been in the employ of petitioner for years,
but were not regularized. Their employment
was terminated on 8 April 2002 without just
cause and due process.
Petitioner filed its Motion to Dismiss, where
it averred that respondents were employees
of Interserve (allegedly an independent
contractor) who were tasked to perform
contracted services.
Petitioner asserted that respondents were
employees of Interserve, since it was the
latter which hired them, paid their wages,
and supervised their work, as proven by: (1)
respondents’ Personal Data Files in the
records of Interserve; (2) respondents’
Contract of Temporary Employment with
Interserve; and (3) the payroll records of
Interserve.
Petitioner, thus, sought the dismissal of
respondents’ complaint against it on the
ground that the Labor Arbiter did not
acquire jurisdiction over the same in the
absence of an employer-employee
relationship between petitioner and the
respondents.
Respondents maintained that contrary to
the finding of the Labor Arbiter, their work
was indispensable to the principal business
of petitioner. Petitioner was "engaged in the
manufacture, distribution and sale of soft
drinks and other related products with
various plants and sales offices and
warehouses located all over the Philippines."
Moreover, petitioner supplied the tools and
equipment used by respondents in their jobs
such as forklifts, pallet, etc. Respondents
were also required to work in the
warehouses, sales offices, and plants of
petitioner. Respondents pointed out that, in
contrast, Interserve did not own trucks,
pallets cartillas, or any other equipment
necessary in the sale of Coca-Cola products.
Respondents further averred that petitioner
exercised control and discipline over
workers supplied by various contractors as
well.
W/N there is ER-EE relationship between
petitioner and respondent. Yes because
there is labor-only contracting.
The relations which may arise in a situation,
where there is an employer, a contractor,
and employees of the contractor, are
identified and distinguished under Article
106 of the Labor Code:

Article 106. Contractor or subcontractor. -
Whenever an employer enters into a
contract with another person for the
performance of the former’s work, the
employees of the contractor and of the
latter’s subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or
subcontractor fails to pay the wages of his
employees in accordance with this Code, the
employer shall be jointly and severally liable
with his contractor or subcontractor to such
employees to the extent of the work
performed under the contract, in the same
manner and extent that he is liable to
employees directly employed by him.
There is "labor-only" contracting where the
person supplying workers to an employee
does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others,
and the workers recruited and placed by
such persons are performing activities which
are directly related to the principal business
of such employer. In such cases, 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.
The afore-quoted provision recognizes two
possible relations among the parties: (1) the
permitted legitimate job contract, or (2) the
prohibited labor-only contracting.
A legitimate job contract, wherein an
employer enters into a contract with a job
contractor for the performance of the
former’s work, is permitted by law. Thus, the
employer-employee relationship between
the job contractor and his employees is
maintained. In legitimate job contracting,
the law creates an employer-employee
relationship between the employer and the
contractor’s employees only for a limited
purpose, i.e., to ensure that the employees
are paid their wages. The employer becomes
jointly and severally liable with the job
contractor only for the payment of the
employees’ wages whenever the contractor
fails to pay the same. Other than that, the
employer is not responsible for any claim
made by the contractor’s employees.
On the other hand, labor-only contracting is
an arrangement wherein the contractor
merely acts as an agent in recruiting and
supplying the principal employer with
workers for the purpose of circumventing
labor law provisions setting down the rights
of employees. It is not condoned by law. A
finding by the appropriate authorities that a
contractor is a "labor-only" contractor
establishes an employer-employee
relationship between the principal employer
and the contractor’s employees and the
former becomes solidarily liable for all the
rightful claims of the employees.

"Substantial capital or investment" refers to
capital stocks and subscribed capitalization
in the case of corporations, tools,
equipment, implements, machineries and
work premises, actually and directly used by
the contractor or subcontractor in the
performance or completion of the job, work,
or service contracted out.
The "right to control" shall refer to the right
reversed to the person for whom the
services of the contractual workers are
performed, to determine not only the end to
be achieved, but also the manner and means
to be used in reaching that end.
Labor-only contracting would give rise to: (1)
the creation of an employer-employee
relationship between the principal and the
employees of the contractor or sub-
contractor; and (2) the solidary liability of
the principal and the contractor to the
employees in the event of any violation of
the Labor Code.
The law clearly establishes an employer-
employee relationship between the
principal employer and the contractor’s
employee upon a finding that the contractor
is engaged in "labor-only" contracting.
Article 106 of the Labor Code categorically
states: "There is ‘labor-only’ contracting
where the person supplying workers to an
employee does not have substantial capital
or investment in the form of tools,
equipment, machineries, work premises,
among others, and the workers recruited
and placed by such persons are performing
activities which are directly related to the
principal business of such employer." Thus,
performing activities directly related to the
principal business of the employer is only
one of the two indicators that "labor-only"
contracting exists; the other is lack of
substantial capital or investment. The Court
finds that both indicators exist in the case at
bar.
Respondents worked for petitioner as
salesmen, with the exception of respondent
Gil Francisco whose job was designated as
leadman. In the Delivery Agreement32
between petitioner and TRMD Incorporated,
it is stated that petitioner is engaged in the
manufacture, distribution and sale of
softdrinks and other related products. The
work of respondents, constituting
distribution and sale of Coca-Cola products,
is clearly indispensable to the principal
business of petitioner. The repeated re-
hiring of some of the respondents supports
this finding.33 Petitioner also does not
contradict respondents’ allegations that the
former has Sales Departments and Sales
Offices in its various offices, plants, and
warehouses; and that petitioner hires
Regional Sales Supervisors and District Sales
Supervisors who supervise and control the
salesmen and sales route helpers.34
W/N Interserve has sufficient capital. No

At the outset, the Court clarifies that
although Interserve has an authorized
capital stock amounting to ₱2,000,000.00,
only ₱625,000.00 thereof was paid up. The
Court does not set an absolute figure for
what it considers substantial capital for an
independent job contractor, but it measures
the same against the type of work which the
contractor is obligated to perform for the
principal. However, this is rendered
impossible in this case since the Contract
between petitioner and Interserve does not
even specify the work or the project that
needs to be performed or completed by the
latter’s employees, and uses the dubious
phrase "tasks and activities that are
considered contractible under existing laws
and regulations." Even in its pleadings,
petitioner carefully sidesteps identifying or
describing the exact nature of the services
that Interserve was obligated to render to
petitioner. The importance of identifying
with particularity the work or task which
Interserve was supposed to accomplish for
petitioner becomes even more evident,
considering that the Articles of
Incorporation of Interserve states that its
primary purpose is to operate, conduct, and
maintain the business of janitorial and allied
services. But respondents were hired as
salesmen and leadman for petitioner.
The Court cannot, under such ambiguous
circumstances, make a reasonable
determination if Interserve had substantial
capital or investment to undertake the job it
was contracting with petitioner.
We clarify that it was not enough to show
substantial capitalization or investment in
the form of tools, equipment, machinery and
work premises, etc., to be considered an
independent contractor. In fact,
jurisprudential holdings were to the effect
that in determining the existence of an
independent contractor relationship, several
factors may be considered, such as, but not
necessarily confined to, whether the
contractor was carrying on an independent
business; the nature and extent of the work;
the skill required; the term and duration of
the relationship; the right to assign the
performance of specified pieces of work; the
control and supervision of the workers; the
power of the employer with respect to the
hiring, firing and payment of the workers of
the contractor; the control of the premises;
the duty to supply premises, tools,
appliances, materials and labor; and the
mode, manner and terms of payment.
The contractor, not the employee, has the
burden of proof that it has the substantial
capital, investment, and tool to engage in job
contracting. Although not the contractor
itself (since Interserve no longer appealed
the judgment against it by the Labor Arbiter),
said burden of proof herein falls upon
petitioner who is invoking the supposed
status of Interserve as an independent job
contractor. Noticeably, petitioner failed to
submit evidence to establish that value of
the service vehicles and equipment of
Interserve. The Court will not presume that
Interserve had sufficient investment in
service vehicles and equipment, especially
since respondents’ allegation – that they
were using equipment, such as forklifts and
pallets belonging to petitioner, to carry out
their jobs – was uncontroverted.
In sum, Interserve did not have substantial
capital or investment in the form of tools,
equipment, machineries, and work
premises; and respondents, its supposed
employees, performed work which was
directly related to the principal business of
petitioner. It is, thus, evident that Interserve
falls under the definition of a "labor-only"
contractor, under Article 106 of the Labor
Code; as well as Section 5(i) of the Rules
Implementing Articles 106-109 of the Labor
Code, as amended.
W/N there is labor-only contracting. Yes.
The contract specified that the personnel of
contractor Interserve, which included the
respondents, would comply with "CLIENT" as
well as "CLIENT’s policies, rules and
regulations." It even required Interserve
personnel to subject themselves to on-the-
spot searches by petitioner or its duly
authorized guards or security men on duty
every time the said personnel entered and
left the premises of petitioner. Said
paragraph explicitly established the control
of petitioner over the conduct of
respondents.
Also significant was the right of petitioner to
"request the replacement of the
CONTRACTOR’S personnel." The said
provision left a gap which could enable
petitioner to demand the removal or
replacement of any employee in the guise of
his or her inability to complete a project in
time or to deliver the desired result. The
power to recommend penalties or dismiss
workers is the strongest indication of a
company’s right of control as direct
employer.
Interserve warranted to petitioner that the
former would provide replacements in case
of absences of its personnel, raises another
red flag. An independent job contractor,
who is answerable to the principal only for
the results of a certain work, job, or service
need not guarantee to said principal the
daily attendance of the workers assigned to
the latter. An independent job contractor
would surely have the discretion over the
pace at which the work is performed, the
number of employees required to complete
the same, and the work schedule which its
employees need to follow.
The certification issued by the DOLE stating
that Interserve is an independent job
contractor does not sway this Court to take
it at face value. The delivery and distribution
of Coca-Cola products, the work for which
respondents were employed and assigned to
petitioner, were in no way allied to janitorial
services. While the DOLE may have found
that the capital and/or investments in tools
and equipment of Interserve were sufficient
for an independent contractor for janitorial
services, this does not mean that such
capital and/or investments were likewise
sufficient to maintain an independent
contracting business for the delivery and
distribution of Coca-Cola products.
With the finding that Interserve was
engaged in prohibited labor-only
contracting, petitioner shall be deemed the
true employer of respondents. As regular
employees of petitioner, respondents
cannot be dismissed except for just or
authorized causes, none of which were
alleged or proven to exist in this case, the
only defense of petitioner against the charge
of illegal dismissal being that respondents
were not its employees. Records also failed
to show that petitioner afforded
respondents the twin requirements of
procedural due process, i.e., notice and
hearing, prior to their dismissal.
Respondents were not served notices
informing them of the particular acts for
which their dismissal was sought. Nor were
they required to give their side regarding the
charges made against them. Certainly, the
respondents’ dismissal was not carried out in
accordance with law and, therefore, illegal.
51. Carino vs CHR
HON. ISIDRO CARIÑO, in his capacity as
Secretary of the Department of Education,
Culture & Sports, DR. ERLINDA LOLARGA, in
her capacity as Superintendent of City
Schools of Manila, petitioners, vs. THE
COMMISSION ON HUMAN RIGHTS,
GRACIANO BUDOY, JULIETA BABARAN, ELSA
IBABAO, HELEN LUPO, AMPARO GONZALES,
LUZ DEL CASTILLO, ELSA REYES and
APOLINARIO ESBER, respondents. G.R. No.
96681 December 2, 1991 NARVASA, J.:
FACTS:
On September 17, 1990, a Monday and a
class day, some 800 public school teachers,
among them members of MPSTA and ACT
undertook "mass concerted actions" after
the protest rally without disrupting classes
as a last call for the government to negotiate
the granting of demands had elicited no
response from the Secretary of Education.
The "mass actions" consisted in staying away
from their classes, converging at the
Liwasang Bonifacio, gathering in peaceable
assembly. Secretary of Education issued a
return to work in 24 hours or face dismissal
and a memorandum directing the DECS
officials and to initiate dismissal proceedings
against those who did not comply. After
failure to heed the order, the CHR
complainant (private respondents) were
administratively charged and preventively
suspended for 90 days. The private
respondents moved "for suspension of the
administrative proceedings pending
resolution by the Supreme Court of their
application for issuance of an injunctive
writ/temporary restraining order. The
motion was denied. The respondent staged
a walkout. The case was eventually decided
ordering the dismissal of Esber and
suspension of others. The petition for
certiorari in RTC was dismissed. Petition for
Certiorari to the Supreme Court was also
denied.
Respondent complainant filed a complaint
on the Commission of Human Rights alleging
they were denied due process and dismissed
without due notice. The Commission issued
an order to Cariño to appear and enlighten
the commission so that they can be
accordingly guided in its investigation and
resolution of the matter.
Cariño filed a petition to Supreme Court for
certiorari and prohibition whether the
Commission has the jurisdiction to try and
decide on the issue regarding denial of due
process and whether or not grievances
justify their mass action or strike.
ISSUE:
Whether the CHR has the power to
adjudicate alleged human rights violations.
No.
HELD:
The Commission evidently intends to itself
adjudicate, that is to say, determine with the
character of finality and definiteness, the
same issues which have been passed upon
and decided by the Secretary of Education
and subject to appeal to CSC, this Court
having in fact, as aforementioned, declared
that the teachers affected may take appeals
to the CSC on said matter, if still timely.
The threshold question is whether or not the
CHR has the power under the constitution to
do so; whether or not, like a court of justice
or even a quasi-judicial agency, it has
jurisdiction or adjudicatory powers over, or
the power to try and decide, or dear and
determine, certain specific type of cases, like
alleged human rights violations involving
civil or political rights.
The Court declares that the CHR to have no
such power, and it was not meant by the
fundamental law to be another court or
quasi-judicial agency in this country, or
duplicate much less take over the functions
of the latter.
The most that may be conceded to the
Commission in the way of adjudicative
power is that it may investigate, i.e. receive
evidence and make findings of fact as
regards claimed human rights violations
involving civil and political rights. But fact-
finding is not adjudication, and cannot be
likened to judicial function of a court of
justice, or even a quasi judicial agency or
official. The function of receiving evidence
and ascertaining therefrom the FACTS of a
controversy is not a judicial function,
properly speaking. To be considered such,
the faculty of receiving evidence and making
factual conclusions in a controversy must be
accompanied by the authority of applying
the law to those factual conclusions to the
end that the controversy be decided or
determined authoritatively, finally and
definitely, subject to such appeals or modes
of review as may be provided by law. This
function, to repeat, the Commission does
not have.
Hence it is that the CHR having merely the
power to “investigate,” cannot and not “try
and resolve on the merits” (adjudicate) the
matters involved in Striking Teachers HRC
Case No. 90-775, as it has announced it
means to do; and cannot do so even if there
be a claim that in the administrative
disciplinary proceedings against the teachers
in question, initiated and conducted by the
DECS, their human rights, or civil or political
rights had been transgressed.
52. Abanilla vs Commission on Audit (2005)
FACTS
Metropolitan Cebu Water District (MCWD),
a local water district was organized as a
government-owned corporation with
original charter. MCWD, through its Board of
Directors, issued the following Resolutions
giving benefits and privileges to its
personnel, one of whom is Dulce M. Abanilla,
MCWDs General Manager, petitioner
herein: (1) Board Resolution No. 054-83
dated May 23, 1983 granting hospitalization
privileges; (2) Board Resolution Nos. 091-83
and 0203-85 dated October 21, 1983 and
November 20, 1985, respectively, allowing
the monetization of leave credits; (3) Board
Resolution No. 0161-86 dated November 29,
1986 granting Christmas bonus; and (4)
Board Resolution No. 083-88 granting
longevity allowance.
MCWD and Metropolitan Cebu Water
District Employees Union, petitioner-in-
intervention, executed a collective
bargaining agreement (CBA) providing for
the continuous grant to all its regular rank
and file employees of existing benefits, such
as cash advances, thirteenth month pay,
mid-year bonus, Christmas bonus, vacation
and sick leave credits, hospitalization,
medicare, uniform privileges, and water
allowance.
On November 13, 1995, an audit team
headed by Bernardita T. Jabines of the COA
Regional Office No. VII at Cebu City, one of
the herein respondents, conducted an audit
of the accounts and transactions of MCWD.
Thereafter, the Regional Director of COA
Regional Office No. VII, also a respondent,
sent MCWD several notices disallowing the
amount of P12,221,120.86 representing
hospitalization benefits, mid-year bonus,
13th month pay, Christmas bonus and
longevity pay.
In sustaining the disallowance in the amount
of P12,221,120.86, respondent COA cited
this Courts ruling in Davao City Water District
vs. Civil Service Commission that a water
district is a corporation created pursuant to
a special law P.D. No. 198, as amended, and
as such, its officers and employees are
covered by the Civil Service Law.
Petitioner contends that respondent COA
acted with grave abuse of discretion in
disallowing the above benefits and privileges
and contravened the Labor Code provision
on non-diminution of benefits.
ISSUE
Whether or not the invocation of the CBA, in
justifying the receipt by the MCWD
personnel of benefits and privileges is valid
HELD:
No. While we sustain the disallowance of the
above benefits by respondent COA,
however, we find that the MCWD affected
personnel who received the above
mentioned benefits and privileges acted in
good faith under the honest belief that the
CBA authorized such payment.
Consequently, they need not refund them.
In Querubin vs. Regional Cluster Director,
Legal and Adjudication Office, COA Regional
Office VI, Pavia, Iloilo City, citing De Jesus vs.
Commission on Audit, this Court HELD:
Petitioners here received the additional
allowances and bonuses in good faith under
the honest belief that LWUA Board
Resolution No. 313 authorized such
payment. At the time petitioners received
the additional allowances and bonuses, the
Court had not yet decided Baybay Water
District. Petitioners had no knowledge that
such payment was without legal basis. Thus,
being in good faith, petitioners need not
refund the allowances and bonuses they
received but disallowed by the COA.
53. Lumanta vs. NLRC
FACTS: On 20 March 1987, petitioner Luz
Lumanta, joined by fifty-four (54) other
retrenched employees, filed a complaint for
unpaid 'd retrenchment or separation pay
against private respondent Food Terminal,
Inc. ("FTI") with the Department of Labor
and Employment. The complaint was later
amended to include charges of
underpayment of wages and non-payment
of emergency cost of living allowances
(ECOLA).
Private respondent FTI moved to dismiss the
complaint on the ground of lack of
jurisdiction. It argued that being a
government-owned and controlled
corporation, its employees are governed by
the Civil Service Law not by the Labor Code,
and that claims arising from employment fall
within the jurisdiction of the Civil Service
Commission and not the Department of
Labor and Employment.
The petitioners opposed the Motion to
Dismiss contending that although FTI is a
corporation owned and controlled by the
government, it has still the marks of a private
corporation: it directly hires its employees
without seeking approval from the Civil
Service Commission and its personnel are
covered by the Social Security System and
not the Government Service Insurance
System. Petitioners also argued that being a
government-owned and controlled
corporation without original charter, private
respondent FTl clearly falls outside the scope
of the civil service as marked out in Section 2
(1), Article IX of the 1987 Constitution.
Labor arbiter: Finds the instant case
governed by Civil service law.
NLRC: Affirms the decision of LA.
Hence this Petition for Certiorari.
ISSUE: Whether or not a labor law claim
against a government-owned and controlled
corporation, such as private respondent FTI,
falls within the jurisdiction of the
Department of Labor and Employment.
HELD: Labor law claims against government
owned and controlled corporations without
original charter, fall within the jurisdiction of
the Department of Labor and Employment
and not the Civil Service Commission.
It is the 1987 Constitution, and not the case
law embodied in Juco, which applies in the
case at bar, under the principle that
jurisdiction is determined as of the time of
the filing of the complaint. At the time the
complaint against private respondent FTI
was filed (i.e., 20 March 1987), and at the
time the decisions of the respondent Labor
Arbiter and National Labor Relations
Commission were rendered (i.e., 31 August
1987 and 18 March 1988, respectively), the
1987 Constitution had already come into
effect. Letter of Instruction No. 1013, dated
19 April 1980, included Food Terminal, Inc. in
the category of "government-owned or
controlled corporations." Since then, FTI
served as the marketing arm of the National
Grains Authority (now known as the National
Food Authority). The pleadings show that FTI
was previously a privately-owned
enterprise, created and organized under the
general incorporation law, with the
corporate name "Greater Manila Food
Terminal Market, Inc." The record does not
indicate the precise amount of the capital
stock of FM that is owned by the
government; the petitioners' claim, and this
has not been disputed, that FTl is not
hundred percent (100%) government-
owned and that it has some private
shareholders.
We conclude that because respondent FTI is
government-owned and controlled
corporation without original charter, it is the
Department of Labor and Employment, and
not the Civil Service Commission, which has
jurisdiction over the dispute arising from
employment of the petitioners with private
respondent FTI, and that consequently, the
terms and conditions of such employment
are governed by the Labor Code and not by
the Civil Service Rules and Regulations.
Public respondent National Labor Relations
Commission acted without or in excess of its
jurisdiction in dismissing petitioners
complaint.
54. Capitol Medical Center vs Meriz (Roxas)
CAPITOL MEDICAL CENTER (CMC) v. MERIS,
FACTS:
Capitol Medical Center closed its industrial
service unit due to alleged loss and extinct
demand resulting to the termination of the
employment of the Dr. Meris. The latter filed
an illegal dismissal case but the same was
denied by the labor arbiter, and
subsequently by the NLRC contending that
the same is part of the management
prerogative. Hence, this petition.
ISSUE: Has employer the right to close its
business even without basis resulting to the
displacement of the worker?
HELD: No.
Employers are also accorded with rights and
privileges to assure their self-determination
and independence and reasonable return of
capital. This mass of privileges is called
management prerogatives. Although they
may be broad and unlimited in scope, the
State has the right to determine whether an
employer's privilege is exercised in a manner
that complies with the legal requirements
and does not offend the protected rights of
labor.
55. San Miguel Brewery Sales vs Ople
(Soriano)
FACTS:
A collective bargaining agreement was
entered into by petitioner San Miguel
Corporation Sales Force Union (PTGWO),
and the private respondent, San Miguel
Corporation, Section 1, of Article IV of which
provided as follows:
Art. IV, Section 1. Employees within the
appropriate bargaining unit shall be entitled
to a basic monthly compensation plus
commission based on their respective sales.
In September 1979, the company introduced
a marketing scheme known as the
"Complementary Distribution System" (CDS)
whereby its beer products were offered for
sale directly to wholesalers through San
Miguel's sales offices.
The labor union (herein petitioner) filed a
complaint for unfair labor practice in the
Ministry of Labor, with a notice of strike on
the ground that the CDS was contrary to the
existing marketing scheme whereby the
Route Salesmen were assigned specific
territories within which to sell their stocks of
beer, and wholesalers had to buy beer
products from them, not from the company.
It was alleged that the new marketing
scheme violates Section 1, Article IV of the
collective bargaining agreement because the
introduction of the CDS would reduce the
take-home pay of the salesmen and their
truck helpers for the company would be
unfairly competing with them.
The Minister of Labor found:
... We see nothing in the record as to suggest
that the unilateral action of the employer in
inaugurating the new sales scheme was
designed to discourage union organization
or diminish its influence, but rather it is
undisputable that the establishment of such
scheme was part of its overall plan to
improve efficiency and economy and at the
same time gain profit to the highest. While it
may be admitted that the introduction of
new sales plan somewhat disturbed the
present set-up, the change however was too
insignificant as to convince this Office to
interpret that the innovation interferred
with the worker's right to self-organization.
ISSUE:
Whether the CDS violates the collective
bargaining agreement. (NO)
Whether it is an indirect way of busting the
union. (NO)
Ruling:
Public respondent was correct in holding
that the CDS is a valid exercise of
management prerogatives:
Except as limited by special laws, an
employer is free to regulate, according to his
own discretion and judgment, all aspects of
employment, including hiring, work
assignments, working methods, time, place
and manner of work, tools to be used,
processes to be followed, supervision of
workers, working regulations, transfer of
employees, work supervision, lay-off of
workers and the discipline, dismissal and
recall of work.
Every business enterprise endeavors to
increase its profits. In the process, it may
adopt or devise means designed towards
that goal. In Abbott Laboratories vs. NLRC,
154 SCRA 713, We ruled:
... Even as the law is solicitous of the welfare
of the employees, it must also protect the
right of an employer to exercise what are
clearly management prerogatives. The free
will of management to conduct its own
business affairs to achieve its purpose
cannot be denied.
So long as a company's management
prerogatives are exercised in good faith for
the advancement of the employer's interest
and not for the purpose of defeating or
circumventing the rights of the employees
under special laws or under valid
agreements, this Court will uphold them. San
Miguel Corporation's offer to compensate
the members of its sales force who will be
adversely affected by the implementation of
the CDS by paying them a so-called "back
adjustment commission" to make up for the
commissions they might lose as a result of
the CDS proves the company's good faith
and lack of intention to bust their union.
56. Wiltshire File Co. vs NLRC (Tado)
G.R. No. 82249 February 7, 1991
WILTSHIRE FILE CO., INC., petitioner, vs. THE
NATIONAL LABOR RELATIONS
oCOMMISSION and VICENTE T. ONG,
respondents.
FACTS
Private respondent Vicente T. Ong was the
Sales Manager of petitioner Wiltshire File
Co., Inc. ("Wiltshire") from 16 March 1981 up
to 18 June 1985.
Upon Ong’s return from a business and
pleasure trip abroad, he was informed by the
President of petitioner Wiltshire that his
services were being terminated. Private
respondent maintains that he tried to get an
explanation from management of his
dismissal but to no avail. On 18 June 1985,
when private respondent again tried to
speak with the President of Wiltshire, the
company's security guard handed him a
letter which formally informed him that his
services were being terminated upon the
ground of redundancy.
Private respondent filed, on 21 October
1985, a complaint before the Labor Arbiter
for illegal dismissal alleging that his position
could not possibly be redundant because
nobody (save himself) in the company was
then performing the same duties. Private
respondent further contended that
retrenching him could not prevent further
losses because it was in fact through his
remarkable performance as Sales Manager
that the Company had an unprecedented
increase in domestic market share the
preceding year. For that accomplishment, he
continued, he was promoted to Marketing
Manager and was authorized by the
President to hire four (4) Sales Executives
five (5) months prior to his termination.
In its answer, petitioner company alleged
that the termination of respondent's
services was a cost-cutting measure: that in
December 1984, the company had
experienced an unusually low volume of
orders: and that it was in fact forced to
rotate its employees in order to save the
company. Despite the rotation of
employees, petitioner alleged; it continued
to experience financial losses and private
respondent's position, Sales Manager of the
company, became redundant.
LABOR ARBITER: termination of private
respondent's services illegal and ordered
petitioner to pay private respondent
backwages in the amount of P299,000.00,
unpaid salaries in the amount of P22,352.11,
accumulated sick and vacation leaves in the
amount of P12,543.91, hospitalization
benefit package in the amount
P10,000.00, unpaid commission in the
amount of P57,500,00, moral damages in the
amount of P100,000.00 and attorney's fees
in the amount of P51,639.60.
NLRC: affirmed in toto
ISSUE: Whether or not the termination was
illegal
RULING: NO
We are unable to sustain public respondent
NLRC's holding that private respondent's
dismissal was not justified by redundancy
and hence illegal. In the first place, we note
that while the letter informing private
respondent of the termination of his services
used the word "redundant", that letter also
referred to the company having "incur[red]
financial losses which [in] fact has compelled
[it] to resort to retrenchment to prevent
further losses".3
Thus, what the letter was in effect saying
was that because of financial losses,
retrenchment was necessary, which
retrenchment in turn resulted in the
redundancy of private respondent's
position.
In the second place, we do not believe that
redundancy in an employer's personnel
force necessarily or even ordinarily refers to
of duplication of work. That no other person
was holding the same position that private
respondent HELD: prior to the termination
of his services, does not show that his
position had not become redundant. Indeed,
in any well-organized business enterprise, it
would be surprising to find duplication of
work and two (2) or more people doing the
work of one person. We believe that
redundancy, for purposes of our Labor Code,
exists where the services of an employee are
in excess of what is reasonably demanded by
the actual requirements of the enterprise.
Succinctly put, a position is redundant where
it is superfluous, and superfluity of a position
or positions may be the outcome of a
number of factors, such as overhiring of
workers, decreased volume of business, or
dropping of a particular product line or
service activity previously manufactured or
undertaken by the enterprise.4
The employer has no legal obligation to keep
in its payroll more employees than are
necessarily for the operation of its business.
In the third place, in the case at bar, In D.M. Consunji, Inc. v. National Labor
petitioner Wiltshire, in view of the Relations Commission,5 the Court HELD:
contraction of its volume of sales and in An employer has a much wider discretion in
order to cut down its operating expenses, terminating the employment relationship of
effected some changes in its organization by managerial personnel as compared to rank
abolishing some positions and thereby and file employees. However, such
effecting a reduction of its personnel. Thus, prerogative of management to dismiss or lay
the position of Sales Manager was abolished off an employee must be made without
and the duties previously discharged by the abuse of discretion, for what is at stake is not
Sales Manager simply added to the duties of only the private respondent's position but
the General Manager, to whom the Sales also his means of livelihood . . . .
Manager used to report.
The determination of the continuing
It is of no legal moment that the financial necessity of a particular officer or position in
troubles of the company were not of private a business corporation is management's
respondent's making. Private respondent prerogative, and the courts will not interfere
cannot insist on the retention of his position with the exercise of such so long as no abuse
upon the ground that he had not contributed of discretion or merely arbitrary or malicious
to the financial problems of Wiltshire. The action on the part of management is shown.
characterization of private respondent's
services as no longer necessary or
sustainable, and therefore properly 57. Royal Plant Workers Union vs Coca Cola
terminable, was an exercise of business Bottlers Phils (Tingson)
judgment on the part of petitioner company. G.R. No. 198783, April 15, 2013
The wisdom or soundness of such ROYAL PLANT WORKERS UNION vs. COCA-
characterization or decision was not subject COLA BOTTLERS PHILIPPINES, INC.-CEBU
to discretionary review on the part of the PLANT
Labor Arbiter nor of the NLRC so long, of
course, as violation of law or merely FACTS:
arbitrary and malicious action is not shown. Petitioner Coca-Cola Bottlers Philippines,
It should also be noted that the position Inc. (CCBPI) is a domestic corporation
HELD: by private respondent, Sales engaged in the manufacture, sale and
Manager, was clearly managerial in distribution of softdrink products. It has
character. several bottling plants all over the country,
one of which is located in Cebu City. Under
the employ of each bottling plant are
bottling operators. In the case of the plant in
Cebu City, there are 20 bottling operators
who work for its Bottling Line 1 while there
are 12-14 bottling operators who man its
Bottling Line 2. All of them are male and they
are members of herein respondent Royal
Plant Workers Union (ROPWU).
The bottling operators of Bottling Line 1 & 2
were provided with chairs upon their
request. However, The chairs provided for
the operators were removed pursuant to a
national directive of petitioner, in line with
the "I Operate, I Maintain, I Clean" program
of petitioner for bottling operators. The
bottling operators took issue with the
removal of the chairs.
Petitioner alleged that with this task of
moving constantly to check on the
machinery and equipment assigned to him,
a bottling operator does not need a chair
anymore.
Union argues that there is no connection
between CCBPI’s "I Operate, I Maintain, I
Clean" program and the removal of the
chairs because the implementation of the
program was in 2006 and the removal of the
chairs was done in 2008. That the removal of
the chairs constitutes violation of the
Occupational Health and Safety Standards
and that management prerogatives are not
absolute but subject to certain limitations
found in law, a collective bargaining
agreement, or general principles of fair play
and justice.
ISSUE:
Whether the removal of chairs of the
operators assigned at the
production/manufacturing line while
performing their duties and responsibilities
is valid or not.
RULING:
VALID. There is no law that requires
employers to provide chairs for bottling
operators.
Jurisprudence recognizes the exercise of
management prerogatives. Labor Jaws also
discourage interference with an employer's
judgment in the conduct of its business. For
this reason, the Court often declines to
interfere in legitimate business decisions of
employers. The law must protect not only
the welfare of the employees, but also the
right of the employers.
The Court has HELD: that management is
free to regulate, according to its own
discretion and judgment, all aspects of
employment, including hiring, work
assignments, working methods, time, place,
and manner of work, processes to be
followed, supervision of workers, working
regulations, transfer of employees, work
supervision, lay-off of workers, and
discipline, dismissal and recall of workers.
The exercise of management prerogative,
however, is not absolute as it must be
exercised in good faith and with due regard
to the rights of labor.
In the present controversy, it cannot be
denied that CCBPI removed the operators’
chairs pursuant to a national directive and in
line with its "I Operate, I Maintain, I Clean"
program, launched to enable the Union to
perform their duties and responsibilities
more efficiently. The chairs were not
removed indiscriminately. They were
carefully studied with due regard to the
welfare of the members of the Union. The
removal of the chairs was compensated by:
a) a reduction of the operating hours of the
bottling operators from a two-and-one-half
(2 ½)-hour rotation period to a one-and-a-
half (1 ½) hour rotation period; and b) an
increase of the break period from 15 to 30
minutes between rotations.
Apparently, the decision to remove the
chairs was done with good intentions as
CCBPI wanted to avoid instances of
operators sleeping on the job while in the
performance of their duties and
responsibilities and because of the fact that
the chairs were not necessary considering
that the operators constantly move about
while working.
Importantly, prolonged sitting is a risk factor
for poor health and early death, even among
those who meet, or exceed, national activity
guidelines.
The CBA between the Union and CCBPI
contains no provision whatsoever requiring
the management to provide chairs for the
operators in the production/manufacturing
line while performing their duties and
responsibilities.
58. Ymbong vs ABS CBN (Vosotros)
Ernesto G. Ymbong
vs
ABS-CBN Broadcasting Corporation, Verande
Sy, and Dante Luzon
G. R. No. 184885 March 7, 2012
FACTS:
Petitioner Ernesto G. Ymbong started
working for ABS-CBN Broadcasting
Corporation (ABS-CBN) in 1993 at its
regional station in Cebu as a television
talent, co-anchoring Hoy Gising and TV
Patrol Cebu. His stint in ABS-CBN later
extended to radio when ABS-CBN Cebu
launched its AM station DYAB in 1995 where
he worked as drama and voice talent,
spinner, scriptwriter and public affairs
program anchor.
Like Ymbong, Leandro Patalinghug also
worked for ABS-CBN Cebu. Starting 1995, he
worked as talent, director and scriptwriter
for various radio programs aired over DYAB.
On January 1, 1996, the ABS-CBN Head
Office in Manila issued Policy No. HR-ER-016
or the Policy on Employees Seeking Public
Office. The pertinent portions read:
1. Any employee who intends to run for any
public office position, must file his/her letter
of resignation, at least thirty (30) days prior
to the official filing of the certificate of
candidacy either for national or local
election.
xxxx
3. Further, any employee who intends to join
a political group/party or even with no
political affiliation but who intends to openly
and aggressively campaign for a candidate or
group of candidates (e.g. publicly
speaking/endorsing candidate, recruiting
campaign workers, etc.) must file a request
for leave of absence subject to
managements approval. For this particular
reason, the employee should file the leave
request at least thirty (30) days prior to the
start of the planned leave period.
xxxx
Because of the impending May 1998
elections and based on his immediate
recollection of the policy at that time, Dante
Luzon, Assistant Station Manager of DYAB
issued a memorandum stating:
Please be informed that per company policy,
any employee/talent who wants to run for
any position in the coming election will have
to file a leave of absence the moment he/she
files his/her certificate of candidacy.
After the issuance of the March 25, 1998
Memorandum, Ymbong got in touch with
Luzon. Luzon claims that Ymbong
approached him and told him that he would
leave radio for a couple of months because
he will campaign for the administration
ticket. It was only after the elections that
they found out that Ymbong actually ran for
public office himself at the eleventh hour.
As regards Patalinghug, Patalinghug
approached Luzon and advised him that he
will run as councilor for Naga, Cebu.
According to Luzon, he clarified to
Patalinghug that he will be considered
resigned and not just on leave once he files
a certificate of candidacy.
Unfortunately, both Ymbong and
Patalinghug lost in the May 1998 elections.
Later, Ymbong and Patalinghug both tried to
come back to ABS-CBN Cebu. According to
Luzon, he informed them that they cannot
work there anymore because of company
policy. This was stressed even in subsequent
meetings and they were told that the
company was not allowing any exceptions.
ABS-CBN, however, agreed out of pure
liberality to give them a chance to wind up
their participation in the radio drama,
Nagbabagang Langit, since it was rating well
and to avoid an abrupt ending.
September 14, 1998, Ymbong received a
memorandum stating that his services are
being terminated immediately, much to his
surprise. Thus, he filed an illegal dismissal
complaint.
ISSUE:
Whether or not the subject company policy
is a valid exercise of management
prerogative (YES)
HELD:
Yes. Company Policy No. HR-ER-016 is valid.
ABS-CBN BROADCASTING CORPORATION
strongly believes that it is to the best interest
of the company to continuously remain
apolitical. While it encourages and supports
its employees to have greater political
awareness and for them to exercise their
right to suffrage, the company, however,
prefers to remain politically independent
and unattached to any political individual or
entity.
Therefore, employees who intend to run for
public office or accept political appointment
should resign from their positions, in order
to protect the company from any public
misconceptions. To preserve its objectivity,
neutrality and credibility, the company
reiterates the following policy guidelines for
strict implementation.
It has consistently been HELD: that so long as
a company’s management prerogatives are
exercised in good faith for the advancement
of the employers interest and not for the
purpose of defeating or circumventing the
rights of the employees under special laws or
under valid agreements, this Court will
uphold them.
In the instant case, ABS-CBN validly justified
the implementation of Policy No. HR-ER-016.
It is well within its rights to ensure that it
maintains its objectivity and credibility and
freeing itself from any appearance of
impartiality so that the confidence of the
viewing and listening public in it will not be
in any way eroded. Even as the law is
solicitous of the welfare of the employees, it
must also protect the right of an employer to
exercise what are clearly management
prerogatives. The free will of management
to conduct its own business affairs to
achieve its purpose cannot be denied.
It is worth noting that such exercise of
management prerogative has earned a
stamp of approval from no less than our
Congress itself when on February 12, 2001,
it enacted Republic Act No. 9006, otherwise
known as the Fair Election Act. Section 6.6
thereof reads:
6.6. Any mass media columnist,
commentator, announcer, reporter, on-air
correspondent or personality who is a
candidate for any elective public office or is
a campaign volunteer for or employed or
retained in any capacity by any candidate or
political party shall be deemed resigned, if so
required by their employer, or shall take a
leave of absence from his/her work as such
during the campaign period: Provided, That
any media practitioner who is an official of a
political party or a member of the campaign
staff of a candidate or political party shall not
use his/her time or space to favor any
candidate or political party. [Emphasis and
underscoring supplied.]
Therefore, Ymbong is deemed resigned
when he ran for councilor. As Policy No. HR-
ER-016 is the subsisting company policy and
not Luzon’s March 25, 1998 Memorandum,
Ymbong is deemed resigned when he ran for
councilor.
59. Briccio “Ricky” Pollo vs Chairperson
Karina Constantino-David (Banuelos)
TOPIC: Search of Office Computer to Check
Misconduct
G.R. No. 181881 October 18, 2011
BRICCIO "Ricky" A. POLLO vs. CHAIRPERSON
KARINA CONSTANTINO-DAVID, DIRECTOR IV
RACQUEL DE GUZMAN BUENSALIDA,
DIRECTOR IV LYDIA A. CASTILLO, DIRECTOR
III ENGELBERT ANTHONY D. UNITE AND THE
CIVIL SERVICE COMMISSION.
Ponente: VILLARAMA, JR., J.
FACTS:
POLLO is a former Supervising Personnel
Specialist of the CSC Regional Office No. IV
and also the Officer-in-Charge of the Public
Assistance and Liaison Division (PALD) under
the "Mamamayan Muna Hindi Mamaya Na"
program of the CSC.
On January 3, 2007 at around 2:30 p.m., an
unsigned letter-complaint addressed to
respondent CSC Chairperson Karina
Constantino-David which was marked
"Confidential" and sent through a courier
service (LBC) from a certain "Alan San
Pascual" of Bagong Silang, Caloocan City,
was received by the Integrated Records
Management Office (IRMO) at the CSC
Central Office. Following office practice in
which documents marked "Confidential" are
left unopened and instead sent to the
addressee, the aforesaid letter was given
directly to Chairperson David.
The letter-complaint reads:
I have known that a person have been
lawyered by one of your attorny in the
region 4 office. He is the chief of the
Mamamayan muna hindi mamaya na
division. He have been helping many who
have pending cases in the Csc. The justice in
our govt system will not be served if this will
continue. Please investigate this anomaly
because our perception of your clean and
good office is being tainted.
Chairperson David immediately formed a
team of four personnel with background in
information technology (IT), and issued a
memo directing them to conduct an
investigation and specifically "to back up all
the files in the computers found in the
Mamamayan Muna (PALD) and Legal
divisions."
The backing-up of all files in the hard disk of
computers at the PALD and Legal Services
Division (LSD) was witnessed by several
employees, together with Directors Castillo
and Unite who closely monitored said
activity. At around 6:00 p.m., Director Unite
sent text messages to POLLO and the head of
LSD, who were both out of the office at the
time, informing them of the ongoing copying
of computer files in their divisions upon
orders of the CSC Chair.
The contents of the diskettes were examined
by the CSC’s Office for Legal Affairs (OLA). It
was found that most of the files in the 17
diskettes containing files copied from the
computer assigned to and being used by the
POLLO, numbering about 40 to 42
documents, were draft pleadings or letters7
in connection with administrative cases in
the CSC and other tribunals.
POLLO filed his Comment, denying that he is
the person referred to in the anonymous
letter-complaint which had no attachments
to it, because he is not a lawyer and neither
is he "lawyering" for people with cases in the
CSC. He accused CSC officials of conducting a
"fishing expedition" when they unlawfully
copied and printed personal files in his
computer, and subsequently asking him to
submit his comment which violated his right
against self-incrimination.
He asserted that he had protested the
unlawful taking of his computer done while
he was on leave, citing the letter dated
January 8, 2007 in which he informed
Director Castillo that the files in his
computer were his personal files and those
of his sister, relatives, friends and some
associates and that he is not authorizing
their sealing, copying, duplicating and
printing as these would violate his
constitutional right to privacy and protection
against self-incrimination and warrantless
search and seizure. He pointed out that
though government property, the
temporary use and ownership of the
computer issued under a Memorandum of
Receipt (MR) is ceded to the employee who
may exercise all attributes of ownership,
including its use for personal purposes.
Legal ISSUE: W/N the act of searching an
Office Computer is a valid exercise of
management prerogative.
HELD:
YES. It was a reasonable exercise of the
managerial prerogative of the Commission
as an employer aimed at ensuring its
operational effectiveness and efficiency by
going after the work-related misfeasance of
its employees.
In this inquiry, the relevant surrounding
circumstances to consider include "(1) the
employee’s relationship to the item seized;
(2) whether the item was in the immediate
control of the employee when it was seized;
and (3) whether the employee took actions
to maintain his privacy in the item." These
factors are relevant to both the subjective
and objective prongs of the reasonableness
inquiry, and we consider the two questions
together. Thus, where the employee used a
password on his computer, did not share his
office with co-workers and kept the same
locked, he had a legitimate expectation of
privacy and any search of that space and
items located therein must comply with the
Fourth Amendment.
POLLO failed to prove that he had an actual
(subjective) expectation of privacy either in
his office or government-issued computer
which contained his personal files. POLLO
did not allege that he had a separate
enclosed office which he did not share with
anyone, or that his office was always locked
and not open to other employees or visitors.
Neither did he allege that he used passwords
or adopted any means to prevent other
employees from accessing his computer
files. On the contrary, he submits that being
in the public assistance office of the CSC-
ROIV, he normally would have visitors in his
office like friends, associates and even
unknown people, whom he even allowed to
use his computer which to him seemed a
trivial request. He described his office as "full
of people, his friends, unknown people" and
that in the past 22 years he had been
discharging his functions at the PALD, he is
"personally assisting incoming clients,
receiving documents, drafting cases on
appeals, in charge of accomplishment
report, Mamamayan Muna Program, Public
Sector Unionism, Correction of name,
accreditation of service, and hardly had
anytime for himself alone, that in fact he
stays in the office as a paying customer."
Under this scenario, it can hardly be deduced
that POLLO had such expectation of privacy
that society would recognize as reasonable.
Moreover, even assuming arguendo, in the
absence of allegation or proof of the
aforementioned factual circumstances, that
POLLO had at least a subjective expectation
of privacy in his computer as he claims, such
is negated by the presence of policy
regulating the use of office computers, as in
Simons.
Office Memorandum No. 10, S. 2002
"Computer Use Policy (CUP)" explicitly
provides:
POLICY
1. The Computer Resources are the property
of the Civil Service Commission and may be
used only for legitimate business purposes.
xxxx
No Expectation of Privacy
5. Waiver of privacy rights. Users expressly
waive any right to privacy in anything they
create, store, send, or receive on the
computer through the Internet or any other
computer network. Users understand that
the CSC may use human or automated
means to monitor the use of its Computer
Resources.
6. Non-exclusivity of Computer Resources. A
computer resource is not a personal
property or for the exclusive use of a User to
whom a memorandum of receipt (MR) has
been issued. It can be shared or operated by
other users. However, he is accountable
therefor and must insure its care and
maintenance.
xxxx
Passwords
xxxx
13. Passwords do not imply privacy. Use of
passwords to gain access to the computer
system or to encode particular files or
messages does not imply that Users have an
expectation of privacy in the material they
create or receive on the computer system.
The Civil Service Commission has global
passwords that permit access to all materials
stored on its networked computer system
regardless of whether those materials have
been encoded with a particular User’s
password. Only members of the Commission
shall authorize the application of the said
global passwords.
xxxx
The CSC in this case had implemented a
policy that put its employees on notice that
they have no expectation of privacy in
anything they create, store, send or receive
on the office computers, and that the CSC
may monitor the use of the computer
resources using both automated and human
means. This implies that on-the-spot
inspections may be done to ensure that the
computer resources were used only for such
legitimate business purposes.
The search of POLLO’s computer files was
conducted in connection with investigation
of work-related misconduct prompted by an
anonymous letter-complaint addressed to
Chairperson David regarding anomalies in
the CSC-ROIV where the head of the
Mamamayan Muna Hindi Mamaya Na
division is supposedly "lawyering" for
individuals with pending cases in the CSC.
Chairperson David stated in her sworn
affidavit:
8. That prior to this, as early as 2006, the
undersigned has received several text
messages from unknown sources adverting
to certain anomalies in Civil Service
Commission Regional Office IV (CSCRO IV)
such as, staff working in another
government agency, "selling" cases and
aiding parties with pending cases, all done
during office hours and involved the use of
government properties;
9. That said text messages were not
investigated for lack of any verifiable leads
and details sufficient to warrant an
investigation;
10. That the anonymous letter provided the
lead and details as it pinpointed the persons
and divisions involved in the alleged
irregularities happening in CSCRO IV;
11. That in view of the seriousness of the
allegations of irregularities happening in
CSCRO IV and its effect on the integrity of the
Commission, I decided to form a team of
Central Office staff to back up the files in the
computers of the Public Assistance and
Liaison Division (PALD) and Legal Division;
It bears emphasis that the Commission
pursued the search in its capacity as a
government employer and that it was
undertaken in connection with an
investigation involving a work-related
misconduct, one of the circumstances
exempted from the warrant requirement. At
the inception of the search, a complaint was
received recounting that a certain division
chief in the CSCRO No. IV was "lawyering" for
parties having pending cases with the said
regional office or in the Commission. The
nature of the imputation was serious, as it
was grievously disturbing. If, indeed, a CSC
employee was found to be furtively engaged
in the practice of "lawyering" for parties with
pending cases before the Commission would
be a highly repugnant scenario, then such a
case would have shattering repercussions. It
would undeniably cast clouds of doubt upon
the institutional integrity of the Commission
as a quasi-judicial agency, and in the process,
render it less effective in fulfilling its
mandate as an impartial and objective
dispenser of administrative justice. It is
settled that a court or an administrative
tribunal must not only be actually impartial
but must be seen to be so, otherwise the
general public would not have any trust and
confidence in it.
Considering the damaging nature of the
accusation, the Commission had to act fast,
if only to arrest or limit any possible adverse reasonable exercise of the managerial
consequence or fall-out. Thus, on the same prerogative of the Commission as an
date that the complaint was received, a employer aimed at ensuring its operational
search was forthwith conducted involving effectiveness and efficiency by going after
the computer resources in the concerned the work-related misfeasance of its
regional office. That it was the computers employees. Consequently, the evidence
that were subjected to the search was derived from the questioned search are
justified since these furnished the easiest deemed admissible.
means for an employee to encode and store 60. Pfizer Philippines vs Albayda, Jr.
documents. Indeed, the computers would be (Caubang)
a likely starting point in ferreting out
incriminating evidence. Concomitantly, the PHARMACIA and UPJOHN, INC. (now PFIZER
ephemeral nature of computer files, that is, PHILIPPINES, INC.), ASHLEY MORRIS, ALEDA
they could easily be destroyed at a click of a CHU, JANE MONTILLA & FELICITO GARCIA,
button, necessitated drastic and immediate Petitioners,
action. Pointedly, to impose the need to vs.
comply with the probable cause RICARDO P. ALBAYDA, JR
requirement would invariably defeat the G.R. No. 172724 August 23, 2010
purpose of the work-related investigation. Topic: Transfer of Employees
FACTS:
Worthy to mention, too, is the fact that the Ricardo P. Albayda, Jr. was an employee of
Commission effected the warrantless search Upjohn, Inc. (Upjohn) in 1978 and continued
in an open and transparent manner. Officials working there until 1996 when a merger
and some employees of the regional office, between Pharmacia and Upjohn was
who happened to be in the vicinity, were on created. After the merger, Ricardo was
hand to observe the process until its designated Pharmacia and Upjohn
completion. In addition, the respondent (Pharmacia) as District Sales Manager
himself was duly notified, through text assigned to District XI in the Western Visayas
messaging, of the search and the area. During the period of his assignment,
concomitant retrieval of files from his Ricardo settled in Bacolod City.
computer. Thereafter, Ricardo received a
Memorandum announcing the sales force
All in all, the Commission is convinced that structure for the year 2000. In the said
the warrantless search done on computer memorandum, he was reassigned as District
assigned to Pollo was not, in any way, Sales Manager to District XII in the Northern
vitiated with unconstitutionality. It was a
Mindanao area. One of the key areas
covered in District XII is Cagayan de Oro City.
In response to the memorandum, Ricardo
wrote a letter to Felicito M. Garcia (Garcia),
Pharmacia’s Vice-President for Sales and
Marketing, questioning his transfer from
District XI to District XII. Ricardo concluded
that his transfer might be a way for his
managers to dismiss him from employment.
Ricardo added that he could not possibly
accept his new assignment in Cagayan de
Oro City because he will be dislocated from
his family.
In response, Garcia wrote a letter to Ricardo
denying his request to be reassigned to the
Western Visayas area. Garcia explained that
the factors used in determining assignments
of managers are to maximize business
opportunities and growth and development
of personnel. Garcia stressed that other
people, representatives and district sales
managers have been re-located in the past
and in the year 2000 re-alignment.
Ricardo wrote a letter to Aleda Chu (Chu),
Pharmacia’s National Sales and External
Business Manager, reiterating his request to
be reassigned to the Western Visayas area.
Ricardo alleged that during one
conversation, Chu assured him that as long
as he hits his sales target by 100%, he would
not be transferred. Ricardo again speculated
that the real reason behind his transfer was
that it was Pharmacia’s way of terminating
his employment.
In response, Chu said that she did not give
any assurance or commitment to
respondent that he would not be transferred
as long as he achieved his 100% target for
1999. Chu explained to Ricardo that they are
moving him to Cagayan de Oro City, because
of their need of his expertise to build the
business there. Moreover, since Ricardo has
been already in Bacolod and Iloilo for 22
years, Chu said that exposure to a different
market environment and new challenges will
contribute to respondent’s development as
a manager. Finally, Chu stressed that the
decision to transfer respondent was purely a
business decision.
Ricardo likened his transfer to Mindanao as
a form of punishment. Ricardo argued that
Chu failed to face and address the issues he
raised regarding the loss of his family
income, the additional cost of housing and
other additional expenses he will incur in
Mindanao.
Chu concluded that it appeared to her that
Ricardo would not accept any reason for the
movement and that nothing is acceptable to
him except a Western Visayas assignment.
Consequently, Chu referred the case to the
Human Resource Department for
appropriate action.
Montilla stressed that the company needed
respondent in Cagayan de Oro City, because
of his wealth of experience, talent and skills.
Ricardo was given an option to transfer to
Manila. Ricardo was informed that he should
report for work either in Manila or
Mindanao within 5 days, otherwise he would
be terminated on the basis of being absent
without official leave (AWOL).
Thereafter, Ricardo was terminated from his and other benefits. Should the employer fail
services after he repeatedly refused to to overcome this burden of proof, the
report for work despite due notice. employee's transfer shall be tantamount to
Ricardo filed a complaint with the NLRC, constructive dismissal.
against Pharmacia, Chu, Montilla and Garcia Both the LA and the NLRC ruled that the
for constructive dismissal. The Labor Arbiter reassignment of respondent was a valid
dismissed the case for lack of merit. exercise of petitioners’ management
Ricardo’s appeal with the NLRC, was likewise prerogative to maximize business
denied. opportunities, growth and development of
CA: the CA rendered a decision in favor of personnel and that the expertise of Ricardo
Ricardo. was needed to build the company’s business
in Cagayan de Oro City. The LA explained
ISSUE: Is Ricardo’s transfer legal/ valid? that the reassignment of respondent was
YES. His refusal to abide by the not a demotion as he will also be assigned as
transfer justified his dismissal from service. a District Sales Manager in Mindanao or in
Metro Manila and that the notice of his
RULING: transfer did not indicate that his
The SC sustains the Rulings of the LA emoluments will be reduced. Moreover, the
and the NLRC. Ricardo’s transfer was a valid LA mentioned that respondent was entitled
exercise of management prerogative. to Relocation Benefits and Allowance in
Jurisprudence recognizes the exercise of accordance with petitioners’ Benefits
management prerogative to transfer or Manual.
assign employees from one office or area of Lastly, the LA pointed out that in Ricardo’s
operation to another, provided there is no contract of employment, he agreed to be
demotion in rank or diminution of salary, assigned to any work or workplace as may be
benefits, and other privileges, and the action determined by the company whenever the
is not motivated by discrimination, made in operations require such assignment.
bad faith, or effected as a form of The NLRC affirmed in toto the findings of the
punishment or demotion without sufficient LA. The NLRC ruled that petitioners’
cause. restructuring move was a valid exercise of its
To determine the validity of the transfer of management prerogative and authorized
employees, the employer must show that under the employment contract of
the transfer is not unreasonable, respondent.
inconvenient, or prejudicial to the On the existence of grounds to dismiss
employee; nor does it involve a demotion in respondent from the service: Because of
rank or a diminution of his salaries, privileges respondent’s adamant refusal to be
reassigned, the LA ruled that Pharmacia had
valid grounds to terminate Ricardo’s
employment.
61.PRINCE TRANSPORT, Inc. and Mr.
RENATO CLAROS vs.DIOSDADO GARCIA
The present petition arose from various
complaints filed by herein respondents
charging petitioners with illegal dismissal,
unfair labor practice and illegal deductions
and praying for the award of premium pay
for holiday and rest day, holiday pay, service
leave pay, 13th month pay, moral and
exemplary damages and attorney's fees.
Respondents alleged in their respective
position papers and other related pleadings
that they were employees of Prince
Transport, Inc. (PTI), a company engaged in
the business of transporting passengers by
land; respondents were hired either as
drivers, conductors, mechanics or
inspectors, except for respondent Diosdado
Garcia (Garcia).
PTI caused the transfer of all union members
and sympathizers to one of its sub-
companies, Lubas Transport (Lubas); despite
such transfer, the schedule of drivers and
conductors, as well as their company
identification cards, were issued by PTI; the
daily time records, tickets and reports of the
respondents were also filed at the PTI office;
and, all claims for salaries were transacted at
the same office; later, the business of Lubas
deteriorated because of the refusal of PTI to
maintain and repair the units being used
therein, which resulted in the virtual
stoppage of its operations and respondents'
loss of employment.
Petitioners, on the other hand, denied the
material allegations of the complaints
contending that herein respondents were no
longer their employees, since they all
transferred to Lubas at their own request;
petitioners have nothing to do with the
management and operations of Lubas as
well as the control and supervision of the
latter's employees.
Petitioners also contend that the the
doctrine of piercing the corporate veil with
respect to Lubas cannot apply to them,
because the said doctrine is applicable only
to corporations and Lubas is not a
corporation but a single proprietorship; that
Lubas had been found by the Labor Arbiter
and the NLRC to have a personality which is
separate and distinct from that of PTI; that
PTI had no hand in the management and
operation as well as control and supervision
of the employees of Lubas.
W/N PTI is a separate entity from Lubas? No
The Court agrees with the CA that Lubas is a
mere agent, conduit or adjunct of PTI. A
settled formulation of the doctrine of
piercing the corporate veil is that when two
business enterprises are owned, conducted
and controlled by the same parties, both law
and equity will, when necessary to protect
the rights of third parties, disregard the legal
fiction that these two entities are distinct
and treat them as identical or as one and the
same. In the present case, it may be true that
Lubas is a single proprietorship and not a
corporation. However, petitioners’ attempt
to isolate themselves from and hide behind
the supposed separate and distinct
personality of Lubas so as to evade their
liabilities is precisely what the classical
doctrine of piercing the veil of corporate
entity seeks to prevent and remedy.
If Lubas were truly a separate entity, how
come that it was Prince Transport who made
the decision to transfer its employees to the
former? Besides, Prince Transport never
regarded Lubas Transport as a separate
entity. In the aforesaid letter, it referred to
said entity as "Lubas operations." Moreover,
in said letter, it did not transfer the
employees; it "assigned" them. Lastly, the
existing funds and 201 file of the employees
were turned over not to a new company but
a "new management."
The Court also agrees with respondents that
if Lubas is indeed an entity separate and
independent from PTI why is it that the latter
decides which employees shall work in the
former?
What is telling is the fact that in a
memorandum issued by PTI, dated January
22, 1998, petitioner company admitted that
Lubas is one of its sub-companies. In
addition, PTI, in its letters to its employees
who were transferred to Lubas, referred to
the latter as its "New City Operations Bus."
Moreover, petitioners failed to refute the
contention of respondents that despite the
latter’s transfer to Lubas of their daily time
records, reports, daily income remittances of
conductors, schedule of drivers and
conductors were all made, performed, filed
and kept at the office of PTI. In fact,
respondents’ identification cards bear the
name of PTI.
It may not be amiss to point out at this
juncture that in two separate illegal
dismissal cases involving different groups of
employees transferred by PTI to other
companies, the Labor Arbiter handling the
cases found that these companies and PTI
are one and the same entity; thus, making
them solidarily liable for the payment of
backwages and other money claims awarded
to the complainants therein.
W/N liable for unfair labor practice. Yes
As to whether petitioners are guilty of unfair
labor practice, the Court finds no cogent
reason to depart from the findings of the CA
that respondents’ transfer of work
assignments to Lubas was designed by
petitioners as a subterfuge to foil the
former’s right to organize themselves into a
union. Under Article 248 (a) and (e) of the
Labor Code, an employer is guilty of unfair
labor practice if it interferes with, restrains
or coerces its employees in the exercise of
their right to self-organization or if it
discriminates in regard to wages, hours of
work and other terms and conditions of
employment in order to encourage or
discourage membership in any labor
organization.
Indeed, evidence of petitioners' unfair labor
practice is shown by the established fact
that, after respondents' transfer to Lubas,
petitioners left them high and dry insofar as
the operations of Lubas was concerned. The
Court finds no error in the findings and
conclusion of the CA that petitioners
"withHELD: the necessary financial and
logistic support such as spare parts, and
repair and maintenance of the transferred
buses until only two units remained in
running condition." This left respondents
virtually jobless.
62. Manila Pavillion vs Henry Delada
(Dosdos)
63. St. Luke’s Medical Center Employees
Union- AFW vs NLRC (Dulay)
64. Star Paper vs Simbol (Macatol)
STAR PAPER CORPORATION, JOSEPHINE
ONGSITCO & SEBASTIAN CHUA, -versus-
RONALDO D. SIMBOL, WILFREDA N. COMIA
& LORNA E. ESTRELLA, G.R. No. 164774 April
12, 2006 PUNO, J.:
Star Paper Corporation (the company) is a
corporation engaged in trading principally of
paper products
Josephine Ongsitco is its Manager of the
Personnel and Administration Department
Sebastian Chua is its Managing Director
FACTS:
Petitioner’s version: Respondents Ronaldo
D. Simbol (Simbol), Wilfreda N. Comia
(Comia) and Lorna E. Estrella (Estrella) were
all regular employees of the company.[1]
Simbol was employed by the company on
October 27, 1993. He met Alma Dayrit, also
an employee of the company, whom he
married on June 27, 1998. Prior to the
marriage, Ongsitco advised the couple that
should they decide to get married, one of
them should resign pursuant to a company
policy promulgated in 1995, viz.:
1. New applicants will not be allowed to be
hired if in case he/she has [a] relative, up to
[the] 3rd degree of relationship, already
employed by the company.
2. In case of two of our employees (both
singles [sic], one male and another female)
developed a friendly relationship during the
course of their employment and then
decided to get married, one of them should
resign to preserve the policy stated above.
Simbol resigned on June 20, 1998 pursuant
to the company policy.

Comia was hired by the company on
February 5, 1997. She met Howard Comia, a
co-employee, whom she married on June 1,
2000. Ongsitco likewise reminded them that
pursuant to company policy, one must resign
should they decide to get married. Comia
resigned on June 30, 2000.[5]
Estrella was hired on July 29, 1994. She met
Luisito Zuiga (Zuiga), also a co-worker.
Petitioners stated that Zuiga, a married man,
got Estrella pregnant. The company allegedly
could have terminated her services due to
immorality but she opted to resign on
December 21, 1999.
The respondents each signed a Release and
Confirmation Agreement. They stated
therein that they have no money and
property accountabilities in the company
and that they release the latter of any claim
or demand of whatever nature.[7]
Respondents’ version: Simbol and Comia
allege that they did not resign voluntarily;
they were compelled to resign in view of an
illegal company policy. As to respondent
Estrella, she alleges that she had a
relationship with co-worker Zuiga who
misrepresented himself as a married but
separated man. After he got her pregnant,
she discovered that he was not separated.
Thus, she severed her relationship with him
to avoid dismissal due to the company
policy. On November 30, 1999, she met an
accident and was advised by the doctor at
the Orthopedic Hospital to recuperate for
twenty-one (21) days. She returned to work
on December 21, 1999 but she found out
that her name was on-hold at the gate. She
was denied entry. She was directed to
proceed to the personnel office where one
of the staff handed her a memorandum. The
memorandum stated that she was being
dismissed for immoral conduct. She refused
to sign the memorandum because she was
on leave for twenty-one (21) days and has
not been given a chance to explain. The
management asked her to write an
explanation. However, after submission of
the explanation, she was nonetheless
dismissed by the company. Due to her
urgent need for money, she later submitted
a letter of resignation in exchange for her
thirteenth month pay.[8]
Respondents later filed a complaint for
unfair labor practice, constructive dismissal,
separation pay and attorneys fees. They
averred that the aforementioned company
policy is illegal and contravenes Article 136
of the Labor Code. They also contended that
they were dismissed due to their union
membership.
LA: Dismissed the complaint for lack of
merit.
NLRC: Affirmed the decision of the Labor
Arbiter on January 11, 2002.
CA: Reversed the NLRC
ISSUE:
Whether the policy of the employer banning
spouses from working in the same company
violates the rights of the employee under the
Constitution and the Labor Code or is a valid
exercise of management prerogative. Yes, it
is not a valid exercise of MP.
HELD:
The requirement that a company policy must
be reasonable under the circumstances to
qualify as a valid exercise of management
prerogative was also at issue in the 1997
case of Philippine Telegraph and Telephone
Company v. NLRC. In said case, the employee
was dismissed in violation of petitioners
policy of disqualifying from work any woman
worker who contracts marriage. We HELD:
that the company policy violates the right
against discrimination afforded all women
workers under Article 136 of the Labor Code,
but established a permissible exception, viz.:
[A] requirement that a woman employee
must remain unmarried could be justified as
a bona fide occupational qualification, or
BFOQ, where the particular requirements of
the job would justify the same, but not on
the ground of a general principle, such as the
desirability of spreading work in the
workplace. A requirement of that nature
would be valid provided it reflects an
inherent quality reasonably necessary for
satisfactory job performance.
The cases of Duncan and PT&T instruct us
that the requirement of reasonableness
must be clearly established to uphold the
questioned employment policy. The
employer has the burden to prove the
existence of a reasonable business necessity.
The burden was successfully discharged in
Duncan but not in PT&T.
We do not find a reasonable business
necessity in the case at bar.
Petitioners sole contention that the
company did not just want to have two (2) or
more of its employees related between the
third degree by affinity and/or consanguinity
is lame. That the second paragraph was
meant to give teeth to the first paragraph of
the questioned rule is evidently not the valid
reasonable business necessity required by
the law.
It is significant to note that in the case at bar,
respondents were hired after they were
found fit for the job, but were asked to
resign when they married a co-employee.
Petitioners failed to show how the marriage
of Simbol, then a Sheeting Machine
Operator, to Alma Dayrit, then an employee
of the Repacking Section, could be
detrimental to its business operations.
Neither did petitioners explain how this
detriment will happen in the case of
Wilfreda Comia, then a Production Helper in
the Selecting Department, who married
Howard Comia, then a helper in the cutter-
machine. The policy is premised on the mere
fear that employees married to each other
will be less efficient. If we uphold the
questioned rule without valid justification,
the employer can create policies based on an
unproven presumption of a perceived
danger at the expense of an employees right
to security of tenure.
Petitioners contend that their policy will
apply only when one employee marries a co-
employee, but they are free to marry
persons other than co-employees. The
questioned policy may not facially violate
Article 136 of the Labor Code but it creates a
disproportionate effect and under the
disparate impact theory, the only way it
could pass judicial scrutiny is a showing that
it is reasonable despite the discriminatory,
albeit disproportionate, effect. The failure of
petitioners to prove a legitimate business
concern in imposing the questioned policy
cannot prejudice the employees right to be
free from arbitrary discrimination based
upon stereotypes of married persons
working together in one company.
Lastly, the absence of a statute expressly
prohibiting marital discrimination in our
jurisdiction cannot benefit the petitioners.
The protection given to labor in our
jurisdiction is vast and extensive that we
cannot prudently draw inferences from the
legislatures silence[41] that married persons
are not protected under our Constitution
and declare valid a policy based on a
prejudice or stereotype. Thus, for failure of
petitioners to present undisputed proof of a
reasonable business necessity, we rule that
the questioned policy is an invalid exercise of
management prerogative.
Other discussions:
Petitioners allege that its policy may appear
to be contrary to Article 136 of the Labor
Code but it assumes a new meaning if read
together with the first paragraph of the rule.
The rule does not require the woman
employee to resign. The employee spouses
have the right to choose who between them
should resign. Further, they are free to marry
persons other than co-employees. Hence, it
is not the marital status of the employee, per
se, that is being discriminated. It is only
intended to carry out its no-employment-
for-relatives-within-the-third-degree-policy
which is within the ambit of the prerogatives
of management.[16]
It is true that the policy of petitioners
prohibiting close relatives from working in
the same company takes the nature of an
anti-nepotism employment policy.
Companies adopt these policies to prevent
the hiring of unqualified persons based on
their status as a relative, rather than upon
their ability.[17] These policies focus upon
the potential employment problems arising
from the perception of favoritism exhibited
towards relatives.
With more women entering the workforce,
employers are also enacting employment
policies specifically prohibiting spouses from
working for the same company. We note
that two types of employment policies
involve spouses: policies banning only
spouses from working in the same company
(no-spouse employment policies), and those
banning all immediate family members,
including spouses, from working in the same
company (anti-nepotism employment
policies).[18]
Unlike in our jurisdiction where there is no
express prohibition on
discrimination,[19] there are twenty state
statutes[20] in the United States prohibiting
marital discrimination. Some
courts[21] have been confronted with the
issue of whether no-spouse policies violate
their laws prohibiting both marital status
and sex discrimination.
In challenging the anti-nepotism
employment policies in the United States,
complainants utilize two theories
employment discrimination: the disparate
treatment and the disparate impact. Under
the disparate treatment analysis, the
plaintiff must prove that an employment
policy is discriminatory on its face. No-
spouse employment policies requiring an
employee of a particular sex to either quit,
transfer, or be fired are
discriminatory. For example,
employment policy prohibiting the employer
from hiring wives of male employees, but
not husbands of female employees, is
discriminatory on its face.[22]
On the other hand, to establish disparate
impact, the complainants must prove that a
facially neutral policy has a disproportionate
effect on a particular class. For example,
although most employment policies do not
expressly indicate which spouse will be
required to transfer or leave the company,
the policy often disproportionately affects
one sex.
marital The state courts rulings on the issue depend
on their interpretation of the scope of
marital status discrimination within the
state meaning of their respective civil rights acts.
Though they agree that the term marital
status encompasses discrimination based on
a person's status as either married, single,
divorced, or widowed, they are divided on
whether the term has a broader meaning.
Thus, their decisions vary.[24]
of The courts narrowly interpreting marital
status to refer only to a person's status as
married, single, divorced, or widowed
reason that if the legislature intended a
broader definition it would have either
chosen different language or specified its
intent. They hold that the relevant inquiry is
if one is married rather than to whom one is
facially married. They construe marital status
an discrimination to include only whether a
person is single, married, divorced, or
widowed and not the identity, occupation,
and place of employment of one's spouse.
These courts have upHELD: the questioned
policies and ruled that they did not violate
the marital status discrimination provision of
their respective state statutes.
The courts that have broadly construed the
term marital status rule that it encompassed
the identity, occupation and employment of
one's spouse. They strike down the no-
spouse employment policies based on the
broad legislative intent of the state statute.
They reason that the no-spouse
employment policy violate the marital status
provision because it arbitrarily discriminates
against all spouses of present employees
without regard to the actual effect on the
individual's qualifications or work
performance.These courts also find the no-
spouse employment policy invalid for failure
of the employer to present any evidence of
business necessity other than the general
perception that spouses in the same
workplace might adversely affect the
business. They hold that the absence of such
a bona fide occupational qualification
invalidates a rule denying employment to
one spouse due to the current employment
of the other spouse in the same office. Thus,
they rule that unless the employer can prove
that the reasonable demands of the business
require a distinction based on marital status
and there is no better available or
acceptable policy which would better
accomplish the business purpose, an
employer may not discriminate against an
employee based on the identity of the
employees spouse. This is known as the
bona fide occupational qualification
exception.
We note that since the finding of a bona fide
occupational qualification justifies an
employers no-spouse rule, the exception is
interpreted strictly and narrowly by these
state courts. There must be a compelling
business necessity for which no alternative
exists other than the discriminatory
practice.[32] To justify a bona fide
occupational qualification, the employer
must prove two factors: (1) that the
employment qualification is reasonably
related to the essential operation of the job
involved; and, (2) that there is a factual basis
for believing that all or substantially all
persons meeting the qualification would be
unable to properly perform the duties of the
job.[33]
The concept of a bona fide occupational
qualification is not foreign in our jurisdiction.
We employ the standard of reasonableness
of the company policy which is parallel to the
bona fide occupational qualification
requirement. In the recent case of Duncan
Association of Detailman-PTGWO and Pedro
Tecson v. Glaxo Wellcome Philippines, Inc.,
we passed on the validity of the policy of a
pharmaceutical company prohibiting its
employees from marrying employees of any
competitor company. We HELD: that
Glaxohas a right to guard its trade secrets,
manufacturing formulas, marketing
strategies and other confidential programs
and information from competitors. We
considered the prohibition against personal
or marital relationships with employees of
competitor companies upon Glaxos
employees reasonable under the
circumstances because relationships of that
nature might compromise the interests of
Glaxo. In laying down the assailed company
policy, we recognized that Glaxo only aims to
protect its interests against the possibility
that a competitor company will gain access
to its secrets and procedures.[35]
As to respondent Estrella, the Labor Arbiter
and the NLRC based their ruling on the
singular fact that her resignation letter was
written in her own handwriting. Both ruled
that her resignation was voluntary and thus
valid. The respondent court failed to
categorically rule whether Estrella
voluntarily resigned but ordered that she be
reinstated along with Simbol and Comia.
Estrella claims that she was pressured to
submit a resignation letter because she was
in dire need of money. We examined the
records of the case and find Estrellas
contention to be more in accord with the
evidence. While findings of fact by
administrative tribunals like the NLRC are
generally given not only respect but, at
times, finality, this rule admits of
exceptions,[42] as in the case at bar.
The contention of petitioners that Estrella
was pressured to resign because she got
impregnated by a married man and she
could not stand being looked upon or talked
about as immoral[43] is incredulous. If she
really wanted to avoid embarrassment and
humiliation, she would not have gone back
to work at all. Nor would she have filed a suit
for illegal dismissal and pleaded for
reinstatement. We have HELD: that in
voluntary resignation, the employee is
compelled by personal reason(s) to
dissociate himself from employment. It is
done with the intention of relinquishing an
office, accompanied by the act of
abandonment. [44] Thus, it is illogical for
Estrella to resign and then file a complaint
for illegal dismissal. Given the lack of
sufficient evidence on the part of petitioners
that the resignation was voluntary, Estrellas
dismissal is declared illegal.
65. Duncan Association of Detailman -
PGTWO and Tecson vs Glaxo Wellcome Phils
(Pacquiao, L)
G.R. No. 162994 September 17, 2004
DUNCAN ASSOCIATION OF DETAILMAN-
PTGWO and PEDRO A. TECSON, petitioners,
vs.
GLAXO WELLCOME PHILIPPINES, INC.,
Respondent.
FACTS

Tecson was hired by Glaxo as a medical
representative on October 1995. Contract of
employment signed by Tecson stipulates,
among others, that he agrees to study and
abide by the existing company rules; to
disclose to management any existing future
relationship by consanguinity or affinity with
co-employees or employees with competing
drug companies and should management
find that such relationship poses a possible
conflict of interest, to resign from the
company. Company's Code of Employee
Conduct provides the same with stipulation
that management may transfer the
employee to another department in a non-
counterchecking position or preparation for
employment outside of the company after 6
months.
Tecson was initially assigned to market
Glaxo's products in the Camarines Sur-
Camarines Norte area and entered into a
romantic relationship with Betsy, an
employee of Astra, Glaxo's competition.
Before getting married, Tecson's District
Manager reminded him several times of the
conflict of interest but marriage took place
in Sept. 1998. In January 1999, Tecson's
superiors informed him of conflict of
interest. Tecson asked for time to comply
with the condition (that either he or Betsy
resign from their respective positions).
Unable to comply with condition, Glaxo
transferred Tecson to the Butuan-Surigao
City-Agusan del Sur sales area. After his
request against transfer was denied, Tecson
brought the matter to Glaxo's Grievance
Committee and while pending, he continued
to act as medical representative in the
Camarines Sur-Camarines Norte sales area.
On Nov. 15, 2000, the National Conciliation
and Mediation Board ruled that Glaxo's
policy was valid.
ISSUES
1. Whether or not the policy of a
pharmaceutical company in prohibiting its
employees from marrying employees of any
competitor company is valid (YES)
2. Whether or not there Tecson was
constructively dismissed (NO)
HELD:
1. Yes. Glaxo’s policy prohibiting an
employee from having a relationship with an
employee of a competitor company is a valid
exercise of management prerogative. Glaxo
has a right to guard its trade secrets,
manufacturing formulas, marketing
strategies, and other confidential programs
and information from competitors. The
prohibition against personal or marital
relationships with employees of competitor
companies upon Glaxo's employees is
reasonable under the circumstances
because relationships of that nature might
compromise the interests of the company.
That Glaxo possesses the right to protect its
economic interest cannot be denied.
It is the settled principle that the commands
of the equal protection clause are addressed
only to the state or those acting under color
of its authority. Corollarily, it has been HELD:
in a long array of US Supreme Court
decisions that the equal protection clause
erects to shield against merely privately
conduct, however, discriminatory or
wrongful.
The company actually enforced the policy
after repeated requests to the employee to
comply with the policy. Indeed the
application of the policy was made in an
impartial and even-handed manner, with
due regard for the lot of the employee.
2. No. Constructive dismissal is defined as a
quitting, an involuntary resignation resorted
to when continued employment becomes
impossible, unreasonable or unlikely; when
there is demotion in rank, or diminution in
pay; or when a clear discrimination,
insensibility, or disdain by an employer
becomes unbearable to the employee. None
of these conditions are present in the instant
case.
The challenged policy has been
implemented by Glaxo impartially and
disinterestedly for a long period of time. In
the case at bar, the record shows that Glaxo
gave Tecson several chances to eliminate the
conflict of interest brought about by his
relationship with Betsy, but he never availed
of any of them.
After Tecson married Bettsy, Glaxo gave him
time to resolve the conflict by either
resigning from the company or asking his
wife to resign from Astra. Glaxo even
expressed its desire to retain Tecson in its
employ because of his satisfactory
performance and suggested that he ask
Bettsy to resign from her company instead.
Glaxo likewise acceded to his repeated
requests for more time to resolve the
conflict of interest. When the problem could
not be resolved after several years of
waiting, Glaxo was constrained to reassign
Tecson to a sales area different from that
handled by his wife for Astra. Notably, the
Court did not terminate Tecson from
employment but only re-assigned him to
another area where his home province,
Agusan del Sur, was included. In effecting
Tecson’s transfer, Glaxo even considered the
welfare of Tecson’s family. Clearly, the
foregoing dispels any suspicion of unfairness
and bad faith on the part of Glaxo.
66. Ollendorf vs Abrahamson
FACTS: Plaintiff is and for a long time past
has been engaged in the city of Manila and
elsewhere in the Philippine Islands in the
business of manufacturing ladies
embroidered underwear for export. Plaintiff
imports the material from which this
underwear is made and adopts decorative
designs which are embroidered upon it by
Filipino needle workers from patterns
selected and supplied by him. On September
10, 1915, plaintiff and defendant entered
into a contract.
Under the terms of this agreement
defendant entered the employ of plaintiff
and worked for him until April, 1916, when
defendant, on account of ill health, left
plaintiff's employ and went to the United
States. Some months after his departure for
the United States, defendant returned to
Manila as the manager of the Philippine
Underwear Company, a corporation. This
corporation does not maintain a factory in
the Philippine Islands, but send material and
embroidery designs from New York to its
local representative here who employs
Filipino needle workers to embroider the
designs and make up the garments in their
homes. The only difference between
plaintiff's business and that of the firm by
which the defendant is employed, is the
method of doing the finishing work.
Shortly after defendant's return to Manila
and the commencement by him of the
discharge of the duties of his position as local
manager of the Philippine Embroidery
Company, plaintiff commenced this action,
the principal purpose of which is to prevent
by injunction, any further breach of that part
of defendant's contract of employment by
plaintiff, by which he agreed that he would
not "enter into or engage himself directly or
indirectly . . . in a similar or competitive
business to that of (plaintiff) anywhere
within the Philippine Islands for a period of
five years . . ." from the date of the
agreement. The lower court granted a
preliminary injunction, and upon trial the
injunction was made perpetual.
Defendant, as appellant, argues that plaintiff
failed to substantiate the averments of his
complaints to the effect that the business in
which the defendant is employed is
competitive with that of plaintiff. The court
below found from the evidence that the
business was "very similar." We have
examined the evidence and rare of the
opinion that the business in which
defendant is engaged is not only very similar
to that of plaintiff, but that it is conducted in
open competition with that business within
the meaning of the contract in question.
ISSUE: W/N the contract is void for lack of
mutuality; W/N the contract is void as
constituting an unreasonable restraint of
trade
HELD: NO. The contention that the contract
is void for lack of mutuality is based upon
that part of the agreement which authorizes
plaintiff to discharge the defendant before
the expiration of the stipulated term, should
defendant fail to comply with its conditions
to plaintiff's satisfaction. It is argued that by
these contracts it was sought to impose
upon defendant the absolute obligation of
rendering service, while reserving to plaintiff
the right to rescind it at will. We are of the
opinion that this question is largely
academic. It is admitted that defendant left
plaintiff's employ at his own request before
the expiration of the stipulated terms of the
contract. Had plaintiff sought to discharge
defendant without just cause, before the
expiration of the term of the employment, it
might have been a serious question whether
he could lawfully do so, notwithstanding the
terms in which the contract was drawn. (Civil
Code, art. 1256.) But even assuming this
particular clause of the contract to be
invalid, this would not necessarily affect the
rest of the agreement. The inclusion is an
agreement of one or more pacts which are
invalid does not of necessity invalidate the
whole contract.
We are of the opinion that the contract was
not void as constituting an unreasonable
restraint of trade. The rule in this jurisdiction
is that the obligations created by contracts
have the force of law between the
contracting parties and must be enforce in
accordance with their tenor. (Civil Code, art
1091.) The only limitation upon the freedom
of contractual agreement is that the pacts
established shall not be contrary to "law,
morals or public order." (Civil Code, Art.
1255.) The industry of counsel has failed to
discover any direct expression of the
legislative will which prohibits such a
contract as that before us. It certainly is not
contrary to any recognized moral precept,
and it therefore only remains to consider
whether it is contrary to "public order."
We adopt the modern rule that the validity
of restraints upon trade or employment is to
be determined by the intrinsic
reasonableness of restriction in each case
and that such restrictions may be upHELD:
when not contrary to afford a fair and
reasonable protection to the party in whose
favor it is imposed.
Examining the contract here in question
from this standpoint, it does not seem so
with respect to an employee whose duties
are such as of necessity to give him an insight
into the general scope and details of his
employer’s business. A business enterprise
may and often does depend for its success
upon the owner's relations with other
dealers, his skill in establishing favorable
connections, his methods of buying and
selling -- a multitude of details, none vital if
considered alone, but which in the aggregate
constitute the sum total of the advantages
which the result of the experience or
individual aptitude and ability of the man or
men by whom the business has been built
up. Failure or success may depend upon the
possession of these intangible but all-
important assets, and it is natural that their
possessor should seek to keep them from
falling into the hands of his competitors. It is
with this object in view that such restrictions
as that now under consideration are written
into contracts of employment. Their purpose
is the protection of the employer, and if they
do not go beyond what is reasonably
necessary to effectuate this purpose they
should be upHELD:. We are of the opinion,
and so hold, that in the light of the
established FACTS the restraint imposed
upon defendant by his contract is not
unreasonable.
67. Red Line Transportation Co. vs Bachrach
Motor Co. (Roxas)
RED LINE TRANSPORTATION CO., petitioner-
appellant,
vs.
RURAL TRANSIT CO., LTD., respondent-
appellee.
FACTS:
On June 4, 1932, the Rural Transit Company,
Ltd., a Philippine corporation, filed with the
Public Company Service Commission an
application in which it is stated in substance
that it is the holder of a certificate or public
convenience to operate a passenger bus
service between Manila and Tuguegarao;
that it is the only operator of direct service
between said points and the present
authorized schedule of only one trip daily is
not sufficient; that it will be also to the public
convenience to grant the applicant a
certificate for a new service between
Tuguegarao and Ilagan.
On July 22, 1932, the appellant, Red Line
Transportation Company, filed an opposition
to the said application alleging in substance
that as to the service between Tuguegarao
and Ilagan, the oppositor already holds a
certificate of public convenience and is
rendering adequate and satisfactory service;
that the granting of the application of the
Rural Transit Company, Ltd., would not serve
public convenience but would constitute a
ruinous competition for the oppositor over
said route.
The Commission approved the application of
the Rural Transit Company, Ltd., and issued
a certificate of public convenience with the
condition, among others, that "all the other
terms and conditions of the various
certificates of public convenience of the
herein applicant and herein incorporated are
made a part hereof."
Red Line Transportation Company filed a
motion for rehearing and reconsideration in
which it called the commission's attention to
the fact that there was pending in the Court
of First Instance of Manila case N. 42343, an
application for the voluntary dissolution of
the corporation, Rural Transit Company, Ltd.
A motion for postponement was filed by
Rural Transit as verified by M. Olsen who
swears "that he was the secretary of the
Rural Transit Company, Ltd. During the
hearing before the Public Service
Commission, the petition for dissolution and
the CFI’s decision decreeing the dissolution
of Rural Transit were admitted without
objection. At the trial of this case before the
Public Service Commission an issue was
raised as to who was the real party in
interest making the application, whether the
Rural Transit Company, Ltd., as appeared on
the face of the application, or the Bachrach
Motor Company, Inc., using name of the
Rural Transit Company, Ltd., as a trade
name.
However, PSC granted Rural Transit’s
application for certificate of public
convenience and ordered that a certificate
be issued on its name.
ISSUE: Can the Public Service Commission
authorize a corporation to assume the name
of another corporation as a trade name?
Ruling: NO
The Rural Transit Company, Ltd., and the
Bachrach Motor Co., Inc., are Philippine
corporations and the very law of their
creation and continued existence requires
each to adopt and certify a distinctive name.
The incorporators "constitute a body politic
and corporate under the name stated in the
certificate."
A corporation has the power "of succession
by its corporate name." It is essential to its
existence and cannot change its name
except in the manner provided by the
statute. By that name alone is it authorized
to transact business. The law gives a
corporation no express or implied authority
to assume another name that is
unappropriated: still less that of another
corporation, which is expressly set apart for
it and protected by the law. If any
corporation could assume at pleasure as an
unregistered trade name the name of
another corporation, this practice would
result in confusion and open the door to
frauds and evasions and difficulties of
administration and supervision.
In this case, the order of the commission
authorizing the Bachrach Motor Co.,
Incorporated, to assume the name of the
Rural Transit Co., Ltd. likewise incorporated,
as its trade name being void. Accepting the
order of December 21, 1932, at its face as
granting a certificate of public convenience
to the applicant Rural Transit Co., Ltd., the
said order last mentioned is set aside and
vacated on the ground that the Rural Transit
Company, Ltd., is not the real party in
interest and its application was fictitious.
68. Dator vs UST, Rev. Frs. Tamerlane Lana
and Rodel Aligan (Soriano)
Topic: Terms and conditions upon hiring:
non-compete clause
FACTS:
Petitioner Roque D.A. Dator was hired by
respondent University of Santo Tomas (UST).
Petitioner was also hired as Graft
Investigation Officer II with the Office of the
Ombudsman but he failed to disclose such
other employment to respondents, who
discovered the same only during the first
semester of School Year 2000-2001.

Petitioner was informed that his teaching
load would be reduced to 12 hours per week,
pursuant to Section 5, Article III of the UST
Faculty Code which states that faculty
members who have a full time outside
employment other than teaching may not be
given a teaching load in excess of 12 hours
per week.
Petitioner asked for reconsideration of the
reduction in his teaching load which was
granted. He was given an additional load of
three teaching hours.
Petitioner again requested for an additional
load of three units but his request was
denied by respondent Rev. Fr. Aligan on the
ground that [t]o grant the request when one
was already made before for humanitarian
and equitable reasons would reduce the
subject policy to naught and the granting
might become the general rather than the
exception to the policy.
Petitioner thus filed a complaint for Illegal
Reduction of Teaching Load and Illegal
Change of Employment Status, Damages,
Unpaid Benefits and Attorneys Fees and
illegal constructive dismissal before the
Labor Arbiter.
Petitioner claimed that his arbitrary
demotion from full-time to part-time faculty
member violated the provisions of the CBA,
as well as his right to security of tenure.
Likewise, he argued that the UST Faculty
Code which respondents relied upon to
reduce his teaching load has been
superseded by the CBA.
On the other hand, respondents maintained
that petitioners teaching load was reduced
in accordance with Sections 5 and 6 of Article
III of the Faculty Code which provide:
SEC. 5 Faculty members who have a full time
outside employment other than teaching
may not be given a teaching load in excess of
12 hours per week. The maximum load of
part time employees should be arranged in
accordance with the following table:
Hours of Weekly Work Load
40-48 12 Units
30-39 15 Units
20-29 18 Units
10-19 21 Units
SEC. 6 All faculty members shall submit each
semester in writing to their respective Deans
a statement of the number of teaching hours
per week to be rendered in other institutions
and/or daily hours of work or employment,
inside or outside the University.
The Labor Arbiter ruled in favor of
respondents holding that the situation
contemplated in Section 5, Article III of the
Faculty Code, when evaluated together with
the provisions of the CBA, constitutes a
ground for teaching load reduction.
On appeal, the NLRC ordered the restoration
of petitioners faculty member status to full-
time.
ISSUE:
Whether the reduction of petitioners
teaching load was justified. (YES)
Ruling:
There is no dispute that petitioner was
holding a full-time position with the Office of
the Ombudsman while working as a faculty
member in UST. Accordingly, Section 5,
Article III of the Faculty Code applies. We
quote with approval the ruling of the Court
of Appeals, to wit:
We completely disagree with the NLRCs
conclusions as it applied the wrong rules and
misappreciated the evidence on record. The
NLRC gravely abused its discretion on this
point for its complete disregard of the
Faculty Code.
While the NLRC correctly viewed the CBA as
the primary instrument that governs the
relationship between UST and its unionized
faculty members, it disregarded Article XX of
this CBA which reconciles the CBA with the
Faculty Code. Article XX states:
ARTICLE XX
FACULTY CODE
The provisions of the Faculty Code of 1981,
as amended, which are not otherwise
incorporated in the CBA and which are not in
conflict with any provisions of the latter shall
remain in full force and effect.
In the event of conflict between a faculty
code provision and the CBA, the provision of
the latter shall prevail.
Thus, contrary to the NLRCs conclusion, the
UST Faculty Code continues to exist and to
apply to UST faculty members, but must give
way if its terms are in conflict with what the
CBA provides. The standard in determining
the applicable rule and the one that the
NLRC completely missed is whether a
conflict exists between the provisions the
parties cited.
We see no conflict between the provisions
the parties respectively cited as these
provisions apply to different situations.
Article IV of the CBA are the rules on the
teaching loads that faculty members may
normally expect to carry; it provides as well
the grounds or reasons for giving a tenured
faculty member less than his normal
teaching load. These provisions do not
address the question of when a faculty
member is to be considered a full-time or a
part-time faculty member. Whether a
faculty member should only be on part-time
basis is governed by Section 5 Article III of
the UST Faculty Code we have quoted above.
Thus, the provisions Dator cited regarding
deloading and the authorized grounds
therefore do not apply because what is
involved is a change of status from full-time
faculty member to a part-time one due to
the faculty members full-time employment
elsewhere.
In contrast with the authorized causes for
deloading under the CBA, the change of
status from full-time faculty member with a
24-unit load to a part-time one with a 12-
unit load in effect involves a disqualification
to be a full-time faculty member because of
the very practical reason that he or she is
already a full-time employee elsewhere. In
the present case, this disqualification is
compounded by Dators repeated
misrepresentations about his employment
status outside UST. The present case
therefore is closer to being a disqualification
situation coupled with a disciplinary cause,
rather than one involving a purely
authorized deloading under the CBA.
Petitioner argues that he was under no
obligation to disclose his employment with
the Office of the Ombudsman. He claims that
the only information required of him
pertained to 1) other colleges where he is
teaching, 2) teaching loads outside the
university, and 3) a business firm he is
employed with. He argues that the Office of
the Ombudsman, being a government
agency, does not fall under any of the
foregoing categories.
Petitioners argument is flimsy and deserves
scant consideration.
Section 6, Article III of the Faculty Code
states that all faculty members must submit
each semester a statement of the number of
teaching hours per week to be rendered in
other institutions and/or daily hours of work
or employment, inside or outside the
University. The rationale behind the rule is
unmistakable. As pointed out by
respondents, there is a need to maintain
USTs quality of education as well as to
ensure that government service is not
jeopardized.
Petitioner admitted in his letter-request
dated July 15, 2001 that with the
implementation of a CHED Circular, the
teaching load assignment of government
employees was limited to only 12 units per
semester x x x so as not to prejudice the
interests of both the government and the
University and/or college concerned. It is
clear therefore that petitioner was aware of
the limitation.
69. Moreno vs San Sebastian College-
Recoletos Manila (Tado)
JACKQUI R. MORENO, Petitioner, - versus -
SAN SEBASTIAN COLLEGE-RECOLETOS, Moreno thus instituted with the NLRC a
MANILA, Respondent. complaint for illegal termination against SSC-
R,
FACTS:
Labor Arbiter: dismissed Morenos
Respondent SSC-R is a domestic corporation complaint for lack of merit.
and an educational institution duly
registered under the laws of the Philippines. NLRC: reversed the rulings of the Labor
On 16 January 1999, SSC-R employed Arbiter
petitioner Jackqui R. Moreno (Moreno) as a
teaching fellow. On 23 October 2000, CA: Reinstated the Labor Arbiter decision
Moreno was appointed as a full-time college
faculty member.[5]Then, on 22 October ISSUE: whether or not the dismissal was
2001, Moreno became a member of the proper
permanent college faculty.[6] She was also
offered the chairmanship[7] of the Business RULING: NO
Finance and Accountancy Department of her
college on 13 September 2002. Article 282 of the Labor Code provides for
the just causes for the termination of
Subsequently, reports and rumors of employment, to wit:
Morenos unauthorized external teaching (a) Serious misconduct or willful
engagements allegedly circulated and disobedience by the employee of the lawful
reached SSC-R. The Human Resource orders of his employer or representative in
Department of the school thereafter connection with his work;
conducted a formal investigation on the said (b) Gross and habitual neglect by the
activities. employee of his duties;
(c) Fraud or willful breach by the employee
The grievance committee issued its of the trust reposed in him by his employer
resolution,[14]which unanimously found or duly authorized representative;
that she violated the prohibition against a (d) Commission of a crime or offense by the
full-time faculty having an unauthorized employee against the person of his employer
external teaching load. The majority of the or any immediate member of his family or
grievance committee members his duly authorized representatives; and
recommended Morenos dismissal from (e) Other causes analogous to the foregoing.
employment.
In termination cases, the burden of proof
rests on the employer to show that the
dismissal is for just cause. When there is no
showing of a clear, valid and legal cause for
the termination of employment, the law
considers the matter a case of illegal
dismissal and the burden is on the employer
to prove that the termination was for a valid
or authorized cause.[24]
at least two requisites: (1) the employees
assailed conduct must have been willful or
intentional, the willfulness being
characterized by a "wrongful and perverse
attitude"; and (2) the order violated must
have been reasonable, lawful, made known
to the employee and must pertain to the
duties which he has been engaged to
discharge.

Respondent SSC-R contends that Morenos

dismissal from employment was valid In the present case, SSC-R failed to adduce
because she knowingly violated the any concrete evidence to prove that
prohibition embodied in the Morenoindeed harbored perverse or
aforementioned Section 2.2 of Art. II of the corrupt motivations in violating the
SSC-R Faculty Manual, in accordance with aforesaid school policy. In her letter of
Section 45[25] of the Manual of Regulations explanation to the grievance committee
for Private Schools, and which prohibition dated 12 November 2002, Moreno
was likewise contained in Morenos explained in detail her role as the
employment contract. breadwinner and the grave financial
conditions of her family. As previous
Court finds that Moreno has indeed requests for permission had already been
committed misconduct against respondent denied, Moreno was thus prompted to
SSC-R. Her admitted failure to obtain the engage in illicit teaching activities in other
required permission from the school before schools, as she desperately needed them to
she engaged in external teaching augment her income.Instead of submitting
engagements is a clear transgression of SSC- controverting evidence, SSC-R simply
Rs policy. However, said misconduct falls dismissed the above statements as nothing
below the required level of gravity that more than a lame excuse[30] and are clearly
would warrant dismissal as a penalty. an afterthought,[31] considering that no
evidence was offered to support them and
that Morenos salary was allegedly one of the
Under Art. 282(a) of the Labor Code, willful highest among the universities in the
disobedience of the employers lawful orders country.
as a just cause for termination of
employment envisages the concurrence of
In addition, even if dismissal for cause is the supervisor, respondent Luna also acted as a
prescribed penalty for the misconduct make-up artist of petitioner Avons Theatrical
herein committed, in accordance with the Promotions Group.
SSC-R Faculty Manual and Morenos
employment contract, the Court finds the By virtue of the execution of a “Supervisors
same to be disproportionate to the offense. Agreement”, respondent Luna became part
of the independent sales force of petitioner
Avon. Section 5 & 6 hereof provides:
Finally, the Court notes that in Morenos xxx
contract of employment,[36] one of the (5) That the Supervisor shall sell or offer to
provisions therein categorically stated that sell, display or promote only and exclusively
should a violation of any of the terms and products sold by the Company.
conditions thereof be committed, the
penalty that will be imposed would either be (6) Either party may terminate this
suspension or dismissal from employment. agreement at will, with or without cause, at
Thus, contrary to its position from the any time upon notice to the other.
beginning, SSC-R clearly had the discretion
to impose a lighter penalty of suspension Thereafter, petitioner Avon, notified
and was not at all compelled to dismiss respondent Luna of the termination or
Moreno under the circumstances, just cancellation of her Supervisors Agreement.
because the Faculty Manual said so. That “Luna have sold and promoted
products of Sandr Philippines, Inc. (SPI),
worse luna have promoted/sold SPI
products even to several employees of Avon.
70. Avon Cosmetics vs Leticia Luna (Tingson)
G. R. No. 153674, December 20, 2006 Aggrieved, respondent Luna filed a
AVON COSMETICS, INCORPORATED and complaint for damages.
JOSE MARIE FRANCO vs. LETICIA H. LUNA
ISSUE:
FACTS: Whether or not paragraph 5 & 6 of the
Sometime in 1978, Avon Cosmetics, Inc. Supervisors Agreement is void for being
(Avon), herein petitioner, acquired and took violative of law and public policy
over the management and operations of
Beautifont, Inc. Nonetheless, respondent RULING: NO
Luna continued working for said successor
company. Aside from her work as a As to Section 5
There is nothing invalid or contrary to public
policy either in the objectives sought to be
attained by paragraph 5, i.e., the exclusivity
clause, in prohibiting respondent Luna, and
all other Avon supervisors, from selling
products other than those manufactured by
petitioner Avon.
In business parlance, this is commonly
termed as the exclusivity clause. This is
defined as agreements which prohibit the
obligor from engaging in business in
competition with the obligee.
Restrictions upon trade may be upHELD:
when not contrary to public welfare and not
greater than is necessary to afford a fair and
reasonable protection to the party in whose
favor it is imposed.
There are two principle grounds on which
the doctrine is founded that a contract in
restraint of trade is void as against public
policy. One is, the injury to the public by
being deprived of the restricted partys
industry; and the other is, the injury to the
party himself by being precluded from
pursuing his occupation, and thus being
prevented from supporting himself and his
family.
Such prohibition is neither directed to
eliminate the competition like Sandr Phils.,
Inc. nor foreclose new entrants to the
market. The limitation does not affect the
public at all. It is only a means by which
petitioner Avon is able to protect its
investment.
As to Section 6
When the terms of the agreement are clear
and explicit, that they do not justify an
attempt to read into any alleged intention of
the parties, the terms are to be understood
literally just as they appear on the face of the
contract. The termination or cancellation
clauses such as that subject of the case at
bar, are legitimate if exercised in good faith.
The termination clause of the Supervisors
Agreement clearly provides for two ways of
terminating and/or cancelling the contract.
One mode does not exclude the other. The
contract provided that it can be terminated
or cancelled for cause, it also stated that it
can be terminated without cause, both at
any time and after written notice.
When petitioner Avon chose to terminate
the contract, for cause, respondent Luna
was duly notified thereof. Obviously, no
advantage is taken against each other by the
contracting parties.
71. Armando Yrasuegi vs PAL (Vosotros)
Armando G. Yrasuegui
vs
Philippine Airlines, Inc.
G. R. No. 168081 October 17,
2008
FACTS:
Petitioner Armando G. Yrasuegui was a
former international flight steward of
Philippine Airlines, Inc. (PAL). He stands five
feet and eight inches (5’8) with a large body
frame. The proper weight for a man of his
height and body structure is from 147 to 166
pounds, the ideal weight being 166 pounds,
as mandated by the Cabin and Crew
Administration Manual of PAL.
The weight problem of petitioner dates back
to 1984. Back then, PAL advised him to go on
an extended vacation leave from December
29, 1984 to March 4, 1985 to address his
weight concerns. Apparently, petitioner
failed to meet the companys weight
standards, prompting another leave without
pay from March 5, 1985 to November 1985.
After meeting the required weight,
petitioner was allowed to return to work.
But petitioners weight problem recurred. He
again went on leave without pay from
October 17, 1988 to February 1989.
On April 26, 1989, petitioner weighed 209
pounds, 43 pounds over his ideal weight.
Despite the lapse of a ninety-day period
given him to reach his ideal weight,
petitioner remained overweight. On January
3, 1990, he was informed of the PAL decision
for him to remain grounded until such time
that he satisfactorily complies with the
weight standards. Again, he was directed to
report every two weeks for weight checks,
which he failed to comply with.
On April 17, 1990, petitioner was formally
warned that a repeated refusal to report for
weight check would be dealt with
accordingly. He was given another set of
weight check dates, which he did not report
to.
On November 13, 1992, PAL finally served
petitioner a Notice of Administrative Charge
for violation of company standards on
weight requirements. Petitioner insists that
he is being discriminated as those similarly
situated were not treated the same.
On June 15, 1993, petitioner was formally
informed by PAL that due to his inability to
attain his ideal weight, “and considering the
utmost leniency” extended to him “which
spanned a period covering a total of almost
five (5) years,” his services were considered
terminated “effective immediately.”
LABOR ARBITER:
HELD: that the weight standards of PAL are
reasonable in view of the nature of the job
of petitioner. However, the weight
standards need not be complied with under
pain of dismissal since his weight did not
hamper the performance of his duties.
NLRC affirmed.
CA:
The weight standards of PAL are reasonable.
Thus, petitioner was legally dismissed
because he repeatedly failed to meet the
prescribed weight standards. It is obvious
that the issue of discrimination was only
invoked by petitioner for purposes of
escaping the result of his dismissal for being
overweight.
ISSUE:
Whether or not the dismissal due to the
failure of Yrasuegui to comply with the
weight requirement is valid. (YES)
HELD:
Yes. The imposition of the weight
requirement is valid.
A reading of the weight standards of PAL
would lead to no other conclusion than that
they constitute a continuing qualification of
an employee in order to keep the job. The
dismissal of the employee would thus fall
under Article 282(e) of the Labor Code.
In the case at bar, the evidence on record
militates against petitioner’s claims that
obesity is a disease. That he was able to
reduce his weight from 1984 to 1992 clearly
shows that it is possible for him to lose
weight given the proper attitude,
determination, and self-discipline. Indeed,
during the clarificatory hearing on December
8, 1992, petitioner himself claimed that
“[t]he issue is could I bring my weight down
to ideal weight which is 172, then the answer
is yes. I can do it now.”
Petitioner has only himself to blame. He
could have easily availed the assistance of
the company physician, per the advice of
PAL.
In fine, We hold that the obesity of
petitioner, when placed in the context of his
work as flight attendant, becomes an
analogous cause under Article 282(e) of the
Labor Code that justifies his dismissal from
the service.
His obesity may not be unintended, but is
nonetheless voluntary. As the CA correctly
puts it, “[v]oluntariness basically means that
the just cause is solely attributable to the
employee without any external force
influencing or controlling his actions. This
element runs through all just causes under
Article 282, whether they be in the nature of
a wrongful action or omission. Gross and
habitual neglect, a recognized just cause, is
considered voluntary although it lacks the
element of intent found in Article 282(a), (c),
and (d).”
The dismissal of petitioner can be predicated
on the bona fide occupational qualification
defense. Employment in particular jobs may
not be limited to persons of a particular sex,
religion, or national origin unless the
employer can show that sex, religion, or
national origin is an actual qualification for
performing the job. The qualification is
called a bona fide occupational qualification
(BFOQ). In short, the test of reasonableness
of the company policy is used because it is
parallel to BFOQ. BFOQ is valid “provided it
reflects an inherent quality reasonably
necessary for satisfactory job performance.”
The business of PAL is air transportation. As
such, it has committed itself to safely
transport its passengers. In order to achieve
this, it must necessarily rely on its
employees, most particularly the cabin flight
deck crew who are on board the aircraft. The
weight standards of PAL should be viewed as
imposing strict norms of discipline upon its
employees.
The primary objective of PAL in the
imposition of the weight standards for cabin
crew is flight safety.
Separation pay, however, should be
awarded in favor of the employee as an act
of social justice or based on equity. This is so
because his dismissal is not for serious
misconduct. Neither is it reflective of his
moral character.
72. Philippine Graphic Arts vs NLRC
(Banuelos)
TOPIC: Permissible Reduction of Working
Hours
G.R. No. 80737 September 29, 1988
PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R.
SILVERIO AND CARLOS CABAL, vs. NATIONAL
LABOR RELATIONS COMMISSION, ROSALINA
M. PULPULAAN AND EMELITA SALONGA.
Ponente: GUTIERREZ, JR., J.
FACTS:
In October, 1984, the PHILIPPINE GRAPHIC
ARTS INC. was forced by economic
circumstances to require its workers to go on
mandatory vacation leave in batches of
seven or nine for periods ranging from 15,
30, to 45 days. The workers were paid while
on leave but the pay was charged against
their respective earned leaves.
As a result, the private PULPULAAN AND
SALONGA filed complaints for unfair labor
practice and discrimination.
Labor Arbiter: Wherefore, for lack of merit,
the complaint for unfair labor practice on
grounds of discrimination, forced leave and
reduction of working days is hereby,
DISMISSED.
The private PULPULAAN AND SALONGA filed
a "partial appeal" with the National Labor
Relations Commission (NLRC) questioning
the Labor Arbiter's dismissal of their
complaint for unfair labor practice and the
resultant forced vacation leaves which were
actually without pay.
NLRC: “Be that as it may, since as intimated
at the outset, the vacation leave forced upon
the complainants was visited with
arbitrariness not amounting to unfair labor
practice, a refund of the amount equivalent
to the earned leave of each of the
complainants treated as their pay during
their vacation is believed in order.”
Legal ISSUE: W/N the forced vacation leave
an act of unfair labor practice.
HELD:
NO. It is a valid exercise of management
prerogative.
The Court is convinced from the records now
before it, that there was no unfair labor
practice. As found by the NLRC, the private
PULPULAAN AND SALONGA themselves
never questioned the existence of an
economic crisis but, in fact, admitted its
existence. There is basis for the PHILIPPINE
GRAPHIC ARTS INC.'s contentions that the
reduction of work schedule was temporary,
that it was taken only after notice and
consultations with the workers and
supervisors, that a consensus was reached
on how to deal with deteriorating economic
conditions and reduced sales and that the
temporary reduction of working days was a
more humane solution instead of a
retrenchment and reduction of personnel.
The PHILIPPINE GRAPHIC ARTS INC. further
points out that this is in consonance with the
collective bargaining agreement between
the employer and its employees. The Court,
therefore, agrees with the Solicitor General
in his submission that:
There is also no showing that the imposition
of forced leave was exercised for the
purpose of defeating or circumventing the
rights of employees under special laws or
under valid agreements. As the records
show, PHILIPPINE GRAPHIC ARTS INC.s
instituted the forced leave due to economic
crisis, which private PULPULAAN AND
SALONGA do not even question.
Likewise the forced leave was enforced
neither in a malicious, harsh, oppressive,
vindictive nor wanton manner, nor out of
malice or spite. Apart from private
PULPULAAN AND SALONGA concurrence
that the forced leave was implemented due
to economic crisis, what only "hurts" them
"is that said management's plan was not
even discussed in the grievance procedure
so that the Union members thereof may well
be apprised of the reason therefore."
However, to rule that PHILIPPINE GRAPHIC
ARTS INC.s' failure to bring the question of
necessity in the imposition of forced leave
and the distribution of work availability
before the grievance machinery, as a prior
requisite for the implementation of the
forced leave scheme, constitutes
arbitrariness is erroneous.
The decision to resort to forced leaves was,
under the circumstances, a management
prerogative. The workers' claim of non-
resort. to the grievance machinery is
negated by their failure to initiate steps for
its employment.
73. Linton Comml. Co. vs Herrera (Caubang)
74. Jonathan Morales vs Harbour Port
Terminal (Chiu)
75. Natl. Federation of Labor vs NLRC
(Dosdos)
76. Pier 8 Arrastre vs Roldan-Confessor
(Dulay)
77. Goya Inc. vs Goya Employees Union
(Macatol)
GOYA, INC., Petitioner, v. GOYA, INC.
EMPLOYEES UNION-FFW, Respondent. G.R.
No. 170054 : January 21, 2013 PERALTA, J.:
FACTS:
Sometime in January 2004, petitioner Goya,
Inc. (Company), a domestic corporation
engaged in the manufacture, importation,
and wholesale of top quality food products,
hired contractual employees from PESO
Resources Development Corporation (PESO)
to perform temporary and occasional
services in its factory in Parang, Marikina
City. This prompted respondent Goya, Inc.
Employees UnionFFW (Union) to request for
a grievance conference on the ground that
the contractual workers do not belong to the
categories of employees stipulated in the
existing Collective Bargaining Agreement
(CBA).
The Union asserted that the hiring of
contractual employees from PESO is not a
management prerogative and in gross
violation of the CBA tantamount to unfair
labor practice (ULP). It noted that the
contractual workers engaged have been
assigned to work in positions previously
handled by regular workers and Union
members, in effect violating Section 4,
Article I of the CBA, which provides for three
categories of employees in the Company, to
wit:
Section 4. Categories of Employees. The
parties agree on the following categories of
employees:
(a) Probationary Employee. One hired to
occupy a regular rank-and-file position in the
Company and is serving a probationary
period. If the probationary employee is hired
or comes from outside the Company (non-
Goya, Inc. employee), he shall be required to
undergo a probationary period of six (6)
months, which period, in the sole judgment
of management, may be shortened if the
employee has already acquired the
knowledge or skills required of the job. If the
employee is hired from the casual pool and
has worked in the same position at any time
during the past two (2) years, the
probationary period shall be three (3)
months.
(b) Regular Employee. An employee who has
satisfactorily completed his probationary
period and automatically granted regular
employment status in the Company.
(c) Casual Employee, One hired by the
Company to perform occasional or seasonal
work directly connected with the regular
operations of the Company, or one hired for
specific projects of limited duration not
connected directly with the regular
operations of the Company.
It was averred that the categories of
employees had been a part of the CBA since
the 1970s and that due to this provision, a
pool of casual employees had been
maintained by the Company from which it
hired workers who then became regular
workers when urgently necessary to employ
them for more than a year. Likewise, the
Company sometimes hired probationary
employees who also later became regular
workers after passing the probationary
period. With the hiring of contractual
employees, the Union contended that it
would no longer have probationary and
casual employees from which it could obtain
additional Union members; thus, rendering
inutile Section 1, Article III (Union Security)
of the CBA, which states:
Section 1. Condition of Employment. As a
condition of continued employment in the
Company, all regular rank-and-file
employees shall remain members of the
Union in good standing and that new
employees covered by the appropriate
bargaining unit shall automatically become
regular employees of the Company and shall
remain members of the Union in good
standing as a condition of continued
employment.
The Union moreover advanced that
sustaining the Companys position would
easily weaken and ultimately destroy the
former with the latters resort to
retrenchment and/or retirement of
employees and not filling up the vacant
regular positions through the hiring of
contractual workers from PESO, and that a
possible scenario could also be created by
the Company wherein it could "import"
workers from PESO during an actual strike.
In countering the Unions allegations, the however, that such act is a valid exercise
Company argued that: (a) the law expressly thereof. Obviously, this is due to the
allows contracting and subcontracting recognition that the CBA provisions agreed
arrangements through Department of Labor upon by the Company and the Union delimit
and Employment (DOLE) Order No. 18-02; the free exercise of management
(b) the engagement of contractual prerogative pertaining to the hiring of
employees did not, in any way, prejudice the contractual employees. is Indeed, the VA
Union, since not a single employee was opined that "the right of the management to
terminated and neither did it result in a outsource parts of its operations is not
reduction of working hours nor a reduction totally eliminated but merely limited by the
or splitting of the bargaining unit; and (c) CBA," while the CA HELD: that "this
Section 4, Article I of the CBA merely management prerogative of contracting out
provides for the definition of the categories services, however, is not without limitation.
of employees and does not put a limitation x x x These categories of employees
on the Companys right to engage the particularly with respect to casual
services of job contractors or its employees serve as limitation to the
management prerogative to address Companys prerogative to outsource parts of
temporary/occasional needs in its its operations especially when hiring
operation. contractual employees."

ISSUE: A collective bargaining agreement is the law

Whether Company’s engagement of
contractual workers from PESO was a valid
exercise of management prerogative. No,
the CBA delimit the free exercise of
management prerogative pertaining to the
hiring of contractual employees.
HELD:
Declaring that a particular act falls within the
concept of management prerogative is
significantly different from acknowledging
that such act is a valid exercise thereof.
Companys act of contracting
out/outsourcing is within the purview of
management prerogative. It did not say,
between the parties:
It is familiar and fundamental doctrine in
labor law that the CBA is the law between
the parties and they are obliged to comply
with its provisions. We said so in Honda
Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda:
A collective bargaining agreement or CBA
refers to the negotiated contract between a
legitimate labor organization and the
employer concerning wages, hours of work
and all other terms and conditions of
employment in a bargaining unit. As in all
contracts, the parties in a CBA may establish
such stipulations, clauses, terms and
conditions as they may deem convenient
provided these are not contrary to law,
morals, good customs, public order or public
policy. Thus, where the CBA is clear and
unambiguous, it becomes the law between
the parties and compliance therewith is
mandated by the express policy of the law.
Moreover, if the terms of a contract, as in a
CBA, are clear and leave no doubt upon the
intention of the contracting parties, the
literal meaning of their stipulations shall
control. x x x
In this case, Section 4, Article I (on categories
of employees) of the CBA between the
Company and the Union must be read in
conjunction with its Section 1, Article III (on
union security). Both are interconnected and
must be given full force and effect. Also,
these provisions are clear and unambiguous.
The terms are explicit and the language of
the CBA is not susceptible to any other
interpretation. Hence, the literal meaning
should prevail. As repeatedly HELD:, the
exercise of management prerogative is not
unlimited; it is subject to the limitations
found in law, collective bargaining
agreement or the general principles of fair
play and justice25 Evidently, this case has
one of the restrictions- the presence of
specific CBA provisions-unlike in San Miguel
Corporation Employees Union-PTGWO v.
Bersamira,26 De Ocampo v. NLRC,27 Asian
Alcohol Corporation v. NLRC,28 and Serrano
v. NLRC29cited by the Company. To
reiterate, the CBA is the norm of conduct
between the parties and compliance
therewith is mandated by the express policy
of the law.
78. Philex Gold Phils vs Philex Bulawan
Supervisors (Pacquiao, L)
Respondent Philex Bulawan Supervisors
Union (Philex Supervisors Union) is the sole
and exclusive bargaining representative of
all supervisors of petitioner Philex Gold
Philippines, Incorporated (Philex Gold), a
gold mining company with mine site at Vista
Alegre, Nabulao, Sipalay, Negros Occidental.
On July 2, 1997, respondent union entered
into a Collective Bargaining Agreement
(CBA) with petitioner company effective
August 1, 1996 up to July 31, 2001.
It appears, however, that after the signing of
the CBA, Philex Gold made the employees of
Philex Mining Corporation from Padcal,
Tuba, Benguet, its regular supervisory
employees effective July 1, 1997. Some of
the so-called ex-Padcal supervisors began to
work in the Bulawan mines of Philex Mining
Corporation in 1992 as ordinary rank-and-
file workers. When Philex Gold was
incorporated in 1996 to exclusively handle
gold mining, it took over the operations of
the Bulawan mines and absorbed some of
the ex-Padcal employees.
Philex Gold conveyed to Philex Supervisors
Union the status of the ex-Padcal supervisors
in November 1997 upon the insistence of the
union to be informed of their standing.
It turned out that the ex-Padcal supervisors
were maintained under a confidential
payroll, receiving a different set of benefits
and higher salaries compared to the locally
hired supervisors of similar rank and
classification doing parallel duties and
functions.
Philex Supervisors Union filed a Complaint[2]
against Philex Gold with the National
Conciliation and Mediation Board (NCMB),
Bacolod City, for the payment of wage
differential and damages and the
rectification of the discriminatory salary
structure and benefits between the ex-
Padcal supervisors and the local-hires.
After the submission of the parties
respective position papers and
rejoinders/supplemental position papers,
the Voluntary Arbitrator rendered a decision
on January 14, 2000 in favor of respondent
Union.
As regards the supervisors wage rates[3]
which was submitted by Philex Gold, the
Voluntary Arbitrator HELD:
The Wage rates of the employers as
classified and classed by them are not also
reasonable and undiscriminatory.
This is shown by the fact that the maximum
rate for S-4 at P18,065 per month is higher
than the minimum rate for S-5, the highest
category at P13,295 a month only. The rate
difference between the maximum rate of S-
4 and the minimum rate for S-5 is P4,770, the
maximum rate of S-4 being higher than the
minimum rate of S-5.
Simply stated, an S-4 employee getting the
maximum salary of P18,065 a month will
merely get a reduced or diminished salary of
P13,295 upon his promotion to S-5, the
highest class or category of supervisors upon
his promotion. This condition is not an ideal
labor relation but a situation which will
surely ignite labor conflicts and disputes in
the work place.
In whatever shade or color that we shall look
upon the issue of whether or not the herein
employer can be HELD: liable to pay the
wage differential pay to the LOCALLY HIRED
SUPERVISORS due to its obvious
discriminatory wage policy, one thing stands
outsupervisors of the same ranks are not
paid the same rates of pay.
This inequitable rates of pay being to the date of the Decision to all affected
implemented by respondents result locally hired supervisors.
naturally into the herein employers
discriminatory wage policy which Article 248
(e) of the LABOR CODE prohibits and defines
as UNFAIR LABOR PRACTICE OF 2. To revise or modify its existing
EMPLOYERS.[4] wage rates per supervisory ranking, making
the maximum rate of a lower category lower
The dispositive portion of the Decision than the minimum rate of the next higher
reads: category; and,

WHEREFORE, in view of all the FOREGOING,

judgment is hereby decreed ORDERING the
respondent PHILEX GOLD PHILIPPINES, 3. Pay to the UNION ATTORNEYS
INC./GERARD H. BRIMO/LEONARD P. FEES at 5% of the total sum of the Wage
JOSEF/JOSE B. ANIEVAS, JOINTLY and differential pay awarded within ten (10) days
SEVERALLY to: from receipt of this Decision.

1. Readjust the MONTHLY RATES The respondent is further ordered to deposit

OF PAY of locally hired SUPERVISORS in the
categories of S-1 to S-5 RANKS in the same
level/or amount with that of PADCAL
SUPERVISORS of the same RANKS namely:
S-1 ----------------- P13,081.60
S-2 ----------------- P13,893.60
S-3 ----------------- P15,209.60
S-4 ----------------- P17,472.00
S-5 ----------------- P20,300.00
effective November 1, 1998 and to pay Wage
differential pay from November 1, 1998 up
with the cashier of the NCMB the sum which
is equivalent to the wage differential pay
computed at a differential of P5,501.24 per
person/supervisor per month from
November 1, 1998 up to the date of this
decision, for S-1; P5,663.24 per month per
supervisor, for S-2; P5,979.24 per supervisor
per month, for S-3; P7,065.75 per supervisor
per month for S-4 and P8,428.46 per
supervisor per month for S-5, and the
ATTORNEYS FEE which is 5% of the total
wage differential pay also within ten (10)
days from receipt of this decision.
SO ORDERED.[5]
Philex Supervisors Union filed a Motion for
Partial Reconsideration dated January 20,
2000, seeking, among others, the
modification of the effectivity of the
readjustment of the monthly rates of pay of
the locally hired supervisors and of the
computation of their wage differential from
November 1, 1998 to August 1, 1997
although the discrimination in wages started
upon the regularization of the ex-Padcal
supervisors on July 1, 1997.
On January 25, 2000, Philex Gold also filed a
motion for reconsideration, which was
allegedly filed a day late, contending that it
was denied due process as the Voluntary
Arbitrator decided the
case without its supplemental position
paper, that the decision undermined the
collective bargaining process between the
parties relative to wage differentials, and
that there was neither unlawful
discrimination nor wage distortion between
the ex-Padcal supervisors and the locally
hired supervisors.
On February 29, 2000, the Voluntary
Arbitrator issued the assailed Resolution
modifying his earlier Decision dated January
14, 2000, this time finding that there was no
discrimination in the determination of the
rates of pay of the supervisors. The
Voluntary Arbitrator, however, readjusted
the amount of wages of local supervisors by
adding or increasing their wages in the
uniform sum of P800.00 a month effective
October 1, 1999 to erase the shadows of
inequities among the various grades of
supervisors. The dispositive portion of the
Decision reads:
WHEREFORE, IN VIEW of the foregoing, the
Decision dated January 14, 2000 is hereby
modified in the following manner, to wit:
1. The respondent employer is
hereby ordered to re-adjust the wage rates
of S-1 to S-5 supervisors by adding or
increasing their wages in the uniform sum of
P800.00 a month each effective October 1,
1999; and to compute and pay their
differential pay from October 1, 1999 up to
the time it is paid and implemented;
2. The respondent is further ordered
to pay Attorneys Fee to the Unions lawyer at
5% of the total amount of WAGE
DIFFERENTIAL PAY;
3. Finally, the respondent employer
is ordered to deposit to the cashier of the
NCMB the WAGE DIFFERENTIAL PAY and the
Attorneys Fee adjudged within 10 days from
receipt of this Resolution.
SO ORDERED. [6]
On March 13, 2000, respondent Union filed
a petition for review before the Court of
Appeals raising the following issues: (1)
whether or not the Voluntary Arbitrator
erred in admitting petitioners motion for
reconsideration which was filed beyond the
reglementary period; (2) whether or not the
Voluntary Arbitrator erred in modifying his
decision by finding petitioner to be liable to
its locally hired members in the sum of P800
per month as wage adjustment effective
October 1999; and (3) whether or not the
Voluntary Arbitrator erred in failing to grant
10 percent attorneys fees on the total
awards.
On March 2, 2000, petitioners filed a
Manifestation of Compliance with the
Voluntary Arbitrator alleging that on account
of its payment to respondent union
members of monetary benefits (in the
amount of P1,000) provided by the
Amendments and Supplement to the CBA, it
has complied with the Resolution dated
February 29, 2000.
In a Resolution dated April 4, 2000, the
Voluntary Arbitrator denied[7] said
Manifestation of Compliance for lack of
merit.
While CA-G.R. SP No. 57701 was pending,
respondent Union filed on April 8, 2000 a
Motion for Issuance of Writ of Execution of
the Resolution dated February 29, 2000.
In an Order dated June 27, 2000, the
Voluntary Arbitrator issued a Writ of
Execution enforcing the Resolution dated
February 29, 2000.
On June 29, 2000, Philex Gold filed a Motion
to Lift Writ of Execution, which was not
acted upon by the Voluntary Arbitrator.
On July 10, 2000, Philex Gold filed a petition
for review before the Court of Appeals,
docketed as CA-G.R. SP No. 60065,
questioning the propriety and validity of the
Voluntary Arbitrators Order granting
execution pending appeal. Said petition was
denied for lack of merit.
On April 23, 2001, the Court of Appeals
rendered the assailed Decision, in CA-G.R. SP
No. 57701, finding that petitioners failed to
prove that they did not discriminate against
the locally hired supervisors in paying them
lower salaries than the ex-Padcal
supervisors. It HELD:, thus:
Philex Golds attempt to explain the disparity
in the salary rates between ex-Padcal
supervisors and the local-hires failed to
convince Us. It presented a salary structure
for supervisors classified into five categories,
namely: S-1, S-2, S-3, S-4, and S-5 with
different rates of pay. Each classification is
further divided in terms of wage rates into
minimum, medium, and maximum. While
the ex-Padcal supervisors received the
maximum for each category, presumably
because of seniority in employment, longer
work experience in gold mining, specialized
skills, and the dislocation factor, the local-
hires received the minimum.
This explanation is fraught with
inconsistencies. First, the CBA between the
parties did not disclose this multi-tiered
classification of supervisors (Rollo, pp. 36-
37, 46-74). Second, as found by the
voluntary arbitrator in his original decision,
the local-hires actually received salaries less
than those they were supposed to be
entitled (Rollo, p. 41). Third, the minimum
wage rate for a higher category happened to
be lesser than the maximum rate of a lower
category such that a supervisor with a rank
of S-1 maximum would get less upon his
promotion to S-2 minimum (Rollo, pp. 38-39,
90). And finally, this pay structure was kept
from the knowledge of the union and was
only revealed in the course of the
proceedings before the voluntary arbitrator.
These factors only accentuate the fact which
Philex Gold tried to hide, that is, it unduly
favored the ex-Padcal supervisors over the
local-hires through a system of confidential
salary structure.
The long honored legal truism of equal pay
for equal work, meaning, persons who work
with substantially equal qualification, skill,
effort and responsibility, under similar
conditions, should be paid similar salaries,
has been institutionalized in our jurisdiction.
Such that if an employer accords employees
the same position and rank, the
presumption is that these employees
perform equal work as borne by logic and
human experience. The ramification is that
(i)f the employer pays one employee less
than the rest, it is not for that employee to
explain why he receives less or why the
others receive more. That would be adding
insult to injury. The employer has
discriminated against that employee; it is for
the employer to explain why the employee is
treated unfairly. (International School
Alliance of Educators v. Quisumbing, et al.,
G.R. No. 128845, June 1, 2000).
Philex Gold having failed to discharge this
burden, We opt therefore to reinstate, albeit
with modification, the original decision
dated 14 January 2000 of the voluntary
arbitrator as the same is duly supported by
the pleadings filed before Us.[8]
The dispositive portion of the Decision
reads:
WHEREFORE, premises considered, the
assailed resolution of 29 February 2000 is
REVERSED and SET ASIDE and a new one
entered REINSTATING the 14 January 2000
decision subject to the MODIFICATION that
the readjustment of the monthly rates of pay
of locally hired supervisors as well as their
wage differential pay be made effective 1
August 1997 up to the finality of this
decision. This case is REMANDED to the
voluntary arbitrator for the proper
computation of wage differential and
attorneys fees. No costs.
SO ORDERED.[9]
Petitioners motion for reconsideration was
denied by the appellate court in its
Resolution dated August 29, 2001.
Petitioners thus filed this petition with a
prayer for the issuance of a temporary
restraining order. The Court issued a
temporary restraining order enjoining the
execution of the Decision of the Court of
Appeals dated April 23, 2001 and its
Resolution dated August 29, 2001 after
petitioners posted a cash bond.
Petitioners raise the following issues:
1. Section 4, Rule 43 and
Luzon Development Bank [v. Association of
Luzon Development Bank Employees, 249
SCRA 162 (1995)] provide that the decision
of a voluntary arbitrator becomes final after
15 days from notice of the award. Assuming
the validity of service on Philex Golds liaison
office, instead of its counsels address on
record, did the Court of Appeals commit an
error in law by stating that the Decision
dated 14 January 2000 of VA Sitjar became
final and executory after eleven days from
notice?
2. Granting arguendo that
Philex Gold had only a period of 10 days
within which to seek reconsideration of the
Sitjar Decision, did the period begin to run
upon service of said Decision at an address
which is not the address on record or upon
the actual receipt thereof by Philex Golds
counsel?
3. VA Sitjar found petitioners
Brimo, Josef and Jose B. Anievas, in their
capacity as corporate officers, jointly and
severally liable for the alleged obligation of
Philex Gold to pay wage differentials to
PBSU. Did the Court of Appeals commit an
error in law in affirming VA Sitjar when the
latter disposed of an issue not submitted to
him for arbitration and in directing solidary
liability between Philex Gold and its top
officers despite the absence of any finding of
malice, bad faith, or gross negligence?
4. In leveling the wages of
the Padcal Supervisors and the Locally-Hired
Supervisors, the Court of Appeals applied
the egalitarian doctrine of equal pay for
equal work in International School Alliance
of Educators v. Quisumbing. Does equal pay
for equal work unqualifiedly remove
management prerogative to institute
qualitative difference in pay and benefits on
the basis of seniority, skill, experience and
other valid factors in the same class of
workers doing the same kind of work?[10]
The relevant issues in this case are as
follows:
(1) Whether the notice sent through
petitioner companys Liaison Office can be
considered as notice to counsel;
(2) Whether the petitioners-corporate
officers are solidarily liable with Philex Gold
in any liability to respondent Union;
(3) Whether the doctrine of equal pay for
equal work should not remove management
prerogative to institute difference in salary
on the basis of seniority, skill, experience
and the dislocation factor in the same class
of supervisory workers doing the same kind
of work.
First Issue : Whether the notice sent through
petitioner
companys Liaison Office can be considered
as notice to counsel
Petitioners contend that the Court of
Appeals erred in holding that their motion
for reconsideration of the Decision of the
Voluntary Arbitrator dated January 14, 2000
was filed out of time.

Indeed, the Court of Appeals found that
[b]ased on the certification issued by the
voluntary arbitrator himself, the decision
was received by the respondents
(petitioners herein) on 14 January 2000
(Rollo, p. 123), and they filed their motion
for reconsideration on 25 January 2000, or
on the eleventh day from receipt of the
decision. The appellate court ruled that the
late filing rendered the decision final and
executory as regards the petitioners, and
that the Voluntary Arbitrator erred in
admitting petitioners motion
reconsideration.
Petitioners argue that the service of the
Voluntary Arbitrators Decision on Philex
Golds Liaison Office at Libertad St., Bacolod
City on January 14, 2000 was improper since
their counsels address of record was at Vista
Alegre, Nabulao, Sipalay, Negros Occidental
6113. Petitioners state that Philex Golds
Liaison Office forwarded said Decision to
their counsel only the next day or on January
15, 2000, which should be the date of notice
to counsel and the basis for computation of
the period to file a motion
reconsideration of said Decision
The contention is meritorious.
Section 4, Rule III of the NCMB Procedural
Guidelines in the Conduct of Voluntary
Arbitration Proceedings states:
Section 4. Service of Pleadings, Notices and
Awards. Copies of pleadings, notices or
copies of [an] award may be served through
personal service or by registered mails on
the parties to the dispute: Provided, that
where a party is represented by counsel or
authorized representative, service shall be
made on the latter. Service by registered
for mail is complete upon receipt by the
addressee or his agents.[11]
In this case, petitioners were represented
before the Voluntary Arbitrator by Attys.
Deogracias G. Contreras Jr. and Weldy U.
Manlong. Hence, under the NCMB
Guidelines, service of pleadings, notices and
awards should be made on petitioners
counsel.
The Court noted that in petitioners Position
Paper and Supplemental Position Paper filed
with the Voluntary Arbitrator, the address of
petitioners counsel was indicated as Vista
Alegre, Nabulao, Sipalay, Negros Occidental,
for 6113. However, the Decision of the
Voluntary Arbitrator dated January 14, 2000
was sent through the Liaison Office of Philex
Gold, thus:
ATTY. WENDY U. MANLONG
Counsel for the Respondents
PHILEX GOLD PHILIPPINES, INC.
GERARDO BRIMO, LEONARD P. JOSEF,
JOSE B. ANIEVAS
C/O Liaison Office, Libertad St.
Bacolod City
Even the Court of Appeals stated that based
on the certification issued by the voluntary
arbitrator himself, the decision was received
by the respondents on 14 January 2000. . . .
Said service on Philex Golds Liaison Office or
on the petitioners themselves cannot be
considered as notice in law to petitioners
counsel.
Under the circumstances, reliance may be
placed on the assertion of petitioners that a
copy of the Decision of the Voluntary
Arbitrator dated January 14, 2000 was
delivered to their counsel the next day or on
January 15, 2000, which must be deemed as
the date of notice to counsel of said
Decision.[12]
Hence, when petitioners motion for
reconsideration was filed on January 25,
2000, it was filed within the 10-day
reglementary period under Article 262-A of
the Labor Code. The Court of Appeals,
therefore, erred in holding that said motion
for reconsideration was filed out of time.
Second Issue : Whether the petitioners-
corporate officers are solidarily liable with
Philex Gold in any liability to respondent
Union
Petitioners officers contend that they should
not be adjudged solidarily liable with Philex
Gold.
The contention is meritorious.
A corporation is a juridical entity with legal
personality separate and distinct from those
acting for and in its behalf and, in general,
from the people comprising it.[13] The rule
is that obligations incurred by the
corporation, acting through its directors,
officers and employees, are its sole
liabilities.[14] However, it is possible for a
corporate director, trustee or officer to be
HELD: solidarily liable with the corporation
in the following instances:
1. When directors and trustees or, in
appropriate cases, the officers of a
corporation--
(a) vote for or assent to
patently unlawful acts of the corporation;

(b) act in bad faith or with
gross negligence in directing the corporate
affairs;
(c) are guilty of conflict of
interest to the prejudice of the corporation,
its stockholders or members, and other
persons.
2. When a director or officer
has consented to the issuance of watered
stocks or who, having knowledge thereof,
did not forthwith file with the corporate
secretary his written objection thereto.
3. When a director, trustee
or officer has contractually agreed or
stipulated to hold himself personally and
solidarily liable with the Corporation.
- their training and skill in the underground
4. When a director, trustee
or officer is made, by specific provision of
law, personally liable for his corporate
action.[15]
The corporate officers in this case have not
been proven to fall under any of the
aforecited instances; hence, they cannot be
HELD: solidarily liable with the company in
the payment of any liability.
Third Issue : Whether the doctrine of equal
pay for equal work should not remove
management prerogative to institute
difference in salary within the same
supervisory level.
Petitioners submit that the equal pay for
equal work doctrine in International School
Alliance of Educators v. Quisumbing,[16]
which the Court of Appeals cited to support
its Decision should be narrowly construed to
apply to a situation where invidious
discrimination exists by reason of race or
ethnicity, but not where valid factors exist to
justify distinctive treatment of employees
even if they do the same work.
Petitioners explained that the ex-Padcal
supervisors were paid higher because of
their longer years of service, experience,
mining method wanting in the local
supervisors, and their relocation to Bulawan,
Negros Occidental. They assert that the
differential treatment of the ex-Padcal
supervisors is not arbitrary, malicious or
discriminatory but justified by the
circumstances of their relocation and
integration in the new mining operation in
Bulawan.
The Court is not persuaded by petitioners
contention.
Petitioners admit that the same class of
workers [are] doing the same kind of work.
This means that an ex-Padcal supervisor and
a locally hired supervisor of equal rank do
the same kind of work. If an employer
accords employees the same position and
rank, the presumption is that these
employees perform equal work. Hence, the
doctrine of equal pay for equal work in
International School Alliance of Educators
was correctly applied by the Court of
Appeals.
Petitioners now contend that the doctrine of
equal pay for equal work should not remove
management prerogative to institute
difference in salary on the basis of seniority,
skill, experience and the dislocation factor in
the same class of supervisory workers doing
the same kind of work.
In this case, the Court cannot agree because
petitioners failed to adduce evidence to
show that an ex-Padcal supervisor and a
locally hired supervisor of the same rank are
initially paid the same basic salary for doing
the same kind of work. They failed to
differentiate this basic salary from any kind
of salary increase or additional benefit which
may have been given to the ex-Padcal
supervisors due to their seniority,
experience and other factors.
The records only show that an ex-Padcal
supervisor is paid a higher salary than a
locally hired supervisor of the same rank.
Therefore, petitioner failed to prove with
satisfactory evidence that it has not
discriminated against the locally hired
supervisor in view of the unequal salary.
To reiterate the ruling of Philippine-
Singapore Transport Services, Inc. v. NLRC,
which was cited by the Court of Appeals in its
Decision:
It is noteworthy to state that an employer is
free to manage and regulate, according to
his own discretion and judgment, all phases
of employment, which includes hiring, work
assignments, working methods, time, place
and manner of work, supervision of workers,
working regulations, transfer of employees,
lay-off of workers, and the discipline,
dismissal and recall of work. While the law
recognizes and safeguards this right of an
employer to exercise what are clearly
management prerogatives, such right should
not be abused and used as a tool of
oppression against labor. The companys
prerogative must be exercised in good faith
and with due regard to the rights of labor. A
priori, they are not absolute prerogatives but
are subject to legal limits, collective
bargaining agreements and the general
principles of fair play and justice.[20]
(Emphasis supplied.)

WHEREFORE, the petition is hereby DENIED.
No reversible error was committed by the
Court of Appeals in its Decision in CA-G.R. SP
No. 57701 and in its Resolution promulgated
on August 29, 2001. The Temporary
Restraining Order issued by the Court is
LIFTED.
No costs.
SO ORDERED.
79. Biboso vs Victorias Milling
FACTS: Individual complainants herein were
employed by Victoria’s Milling as academic
teachers in its school (St. Mary Mazzarello).
They were notified by the school Directress
that they were not going to be rehired for
the school year 1973-1974. The necessary
report for such was filed by the school with
the Department of Labor, informing that the
teacher’s services were thus terminated.
Complainants challenged such decision and
were quite successful with the Arbitrator,
the former National Labor Relations
Commission under Presidential Decree No.
21, and the Secretary of Labor. Victoria’s
Milling then appealed to the Office of the
President. Presidential Executive Assistant
Clave, dismissed the complaint for
reinstatement. The OP had examined and
analyzed the various contracts and found
out that complainants were hired as
teachers of the school on a year-to-year
basis and that they reapplied before the
expiration of the contracts and/or signed
new ones, as the case may be, if the school
decided to renew the same. That they all
signed identical contracts which provided for
a definite period of employment. The
complainants were hired as temporary and
when required or until the contract is
supposed to terminate.
The Labor Code recognizes the policy of the
Bureau of Private Schools settling the
maximum probationary period for teachers
at three years. and does not set the
maximum probationary period at six
months. Under the Labor Code, the
probationary period is the period required to
learn a skill, trade, occupation or profession.
It was likewise HELD: that the allegation of
unfair labor practice is untenable. Hence,
this petition.
ISSUE: W/N the worker’s security of tenure
is applicable to those whose employment
admittedly were on a basis.
HELD: NO. The Office of the President
exercised its discretion but it cannot be said
that an abuse could rightfully be imputed.
What is decisive is that petitioners were well
aware that their tenure was for a limited
duration. Upon its termination, both parties
to the employment relationship were free to
renew it or to let it lapse. It was the decision
of the company that it should cease. The
Office of the President could find nothing
objectionable when it determined that the
will of the parties as to the limited duration
thereof should be respected. This is by no
means to assert that the security of tenure
protection of the constitution does not apply
to probationary employees. The Labor code
has wisely provided for such a case thus:
"The termination of employment of
probationary employees and those
employed with a fixed period shall be subject
to such regulations as the Secretary of labor
may prescribe to prevent the circumvention
of the right of the employees to be secured
in their employment as provided herein."
There is no question here, as noted in the
assailed order of Presidential Executive
Assistant Clave, that petitioners did not
enjoy a permanent status. During such
period they could remain in their positions
and any circumvention of them of the rights,
in accordance with the statutory scheme,
subject to inquiry and thereafter correction
by the Department of Labor. Thus, there was
the safeguard as to the duration of their
employment being respected. To that
extent, their tenure was secure. The
moment, however, the period expired in
accordance with contracts freely entered
into, they could no longer invoke the
constitutional protection. To repeat, that
was what transpired in this case. The ruling
of the Office of the President, now assailed,
is not without support in law.
80. Mariwasa vs Leogario (Roxas)
FACTS:
Private respondent Joaquin A. Dequila (or
Dequilla) was hired on probation by
petitioner Mariwasa Manufacturing, Inc.
(hereafter, Mariwasa only) as a general
utility worker. Upon the expiration of the
probationary period of six months, Dequila
was informed by his employer that his work
had proved unsatisfactory and had failed to
meet the required standards. To give him a
chance to improve his performance and
qualify for regular employment, instead of
dispensing with his service then and there,
with his written consent Mariwasa extended
his probation period for another three
months from July 10 to October 9, 1979. His
performance, however, did not improve and
on that account Mariwasa terminated his
employment at the end of the extended
period.
Dequila thereupon filed with the Ministry of
Labor against Mariwasa and its Vice-
President for Administration, Angel T. Dazo,
a complaint for illegal dismissal and violation
of Presidential Decrees Nos. 928 and 1389.
However, his complaint was dismissed.
On appeal to the Office of the Minister,
however, said disposition was reversed.
Respondent Deputy Minister Vicente
Leogardo, Jr. HELD: that Dequila was already
a regular employee at the time of his
dismissal, therefore, could not have been
lawfully dismissed for failure to meet
company standards as a probationary
worker. He was ordered reinstated to his
former position without loss of seniority and managerial prerogatives in requiring a
with full back wages from the date of his longer period of probationary employment,
dismissal until actually reinstated. such as in the present case where the
probationary period was set for eighteen
Mariwasa and Dazo, now petitioners, (18) months, i.e. from May, 1980 to October,
thereafter be sought this Court to review 1981 inclusive, especially where the
Hon. Leogardo's decision on certiorari and employee must learn a particular kind of
prohibition, urging its reversal for having work such as selling, or when the job
been rendered with grave abuse of requires certain qualifications, skills
discretion and/or without or in excess of experience or training.”
jurisdiction.
In this case, the extension given to Dequila
ISSUE: whether employer and employee could not have been pre-arranged to avoid
may by agreement extend the probationary the legal consequences of a probationary
period of employment beyond the six period satisfactorily completed. In fact, it
months prescribed in Art. 282 of the Labor was ex gratia, an act of liberality on the part
Code of his employer affording him a second
chance to make good after having initially
HELD: YES. failed to prove his worth as an employee.
Such an act cannot now unjustly be turned
Agreements stipulating longer probationary against said employer’s account to compel it
periods may constitute lawful exceptions to to keep on its payroll one who could not
the statutory prescription limiting such perform according to its work standards.
periods to six months.
By voluntarily agreeing to an extension of
The SC in its decision in Buiser vs. Leogardo, the probationary period, Dequila in effect
Jr. (1984) said that “Generally, the waived any benefit attaching to the
probationary period of employment is completion of said period if he still failed to
limited to six (6) months. The exception to make the grade during the period of
this general rule is when the parties to an extension. By reasonably extending the
employment contract may agree otherwise, period of probation, the questioned
such as when the same is established by agreement actually improved the
company policy or when the same is probationary employee’s prospects of
required by the nature of work to be demonstrating his fitness for regular
performed by the employee. In the latter employment.
case, there is recognition of the exercise of
81. Intl. Catholic Migration vs NLRC (Soriano)
Topic: Probationary Employees
FACTS:
Petitioner International Catholic Migration
Commission (ICMC), a non-profit
organization dedicated to refugee service at
the Philippine Refugee Processing Center in
Morong, Bataan engaged the services of
private respondent Bernadette Galang on
January 24, 1983 as a probationary cultural
orientation teacher.
Private respondent was informed, orally and
in writing, that her services were being
terminated for her failure to meet the
prescribed standards of petitioner as
reflected in the performance evaluation of
her supervisors during the teacher
evaluation program she underwent along
with other newly-hired personnel.
Private respondent filed a complaint for
illegal dismissal, unfair labor practice and
unpaid wages against petitioner with the
then Ministry of Labor and Employment,
praying for reinstatement with backwages,
exemplary and moral damages.
On October 8, 1983, after the parties
submitted their respective position papers
and other pleadings, Labor Arbiter Pelagio A.
Carpio rendered his decision dismissing the
complaint for illegal dismissal as well as the
complaint for moral and exemplary damages
but ordering the petitioner to pay private
respondent the sum of P6,000.00 as
payment for the last three (3) months of the
agreed employment period pursuant to her
verbal contract of employment.
Both parties appealed the decision to the
National Labor Relations Commission. In her
appeal, private respondent contended that
her dismissal was illegal considering that it
was effected without valid cause. On the
other hand, petitioner countered that
private respondent who was employed for a
probationary period of three (3) months
could not rightfully be awarded P6,000.00
because her services were terminated for
failure to qualify as a regular employee in
accordance with the reasonable standards
prescribed by her employer.
On August 22, 1985, the NLRC, by a majority
vote of Commissioners Guillermo C. Medina
and Gabriel M. Gatchalian, sustained the
decision of the Labor Arbiter.
ISSUE:
Whether or not an employee who was
terminated during the probationary period
of her employment is entitled to her salary
for the unexpired portion of her six-month
probationary employment. (NO)
Ruling:
There is justifiable basis for the reversal of
public respondent's award of salary for the
unexpired three-month portion of private
respondent's six-month probationary
employment in the light of its express finding
that there was no illegal dismissal. There is
no dispute that private respondent was
terminated during her probationary period
of employment for failure to qualify as a
regular member of petitioner's teaching
staff in accordance with its reasonable
standards. Records show that private
respondent was found by petitioner to be
deficient in classroom management,
teacher-student relationship and teaching
techniques. Failure to qualify as a regular
employee in accordance with the reasonable
standards of the employer is a just cause for
terminating a probationary employee
specifically recognized under Article 282
(now Article 281) of the Labor Code which
provides thus:
ART. 281. Probationary employment. —
Probationary employment shall not exceed
six months from the date the employee
started working, unless it is covered by an
apprenticeship agreement stipulating a
longer period. The services of an employer
who has been engaged in a probationary
basis may be terminated for a just cause or
when he fails to qualify as a regular
employer in accordance with reasonable
standard made known by the employer to
the employer at the time of his engagement.
An employee who is allowed to work after a
probationary period shall be considered a
regular employee.
It must be noted that notwithstanding the
finding of legality of the termination of
private respondent, public respondent
justified the award of salary for the
unexpired portion of the probationary
employment on the ground that a
probationary employment for six (6) months
is an employment for a "definite period"
which requires the employer to exhaust the
entire probationary period to give the
employee the opportunity to meet the
required standards.
The legal basis of public respondent is
erroneous. A probationary employee, as
understood under Article 282 (now Article
281) of the Labor Code, is one who is on trial
by an employer during which the employer
determines whether or not he is qualified for
permanent employment. A probationary
appointment is made to afford the employer
an opportunity to observe the fitness of a
probationer while at work, and to ascertain
whether he will become a proper and
efficient employee. 9 The word
"probationary", as used to describe the
period of employment, implies the purpose
of the term or period, but not its length.
Being in the nature of a "trial period" the
essence of a probationary period of
employment fundamentally lies in the
purpose or objective sought to be attained
by both the employer and the employee
during said period. The length of time is
immaterial in determining the correlative
rights of both in dealing with each other
during said period. While the employer, as
stated earlier, observes the fitness, propriety
and efficiency of a probationer to ascertain
whether he is qualified for permanent
employment, the probationer, on the other,
seeks to prove to the employer, that he has
the qualifications to meet the reasonable
standards for permanent employment.
It is well settled that the employer has the
right or is at liberty to choose who will be
hired and who will be denied employment.
In that sense, it is within the exercise of the
right to select his employees that the
employer may set or fix a probationary
period within which the latter may test and
observe the conduct of the former before
hiring him permanently. The equality of right
that exists between the employer and the
employee as to the nature of the
probationary employment was aptly
emphasized by this Court in Grand Motor
Parts Corporation v. Minister of Labor, et al.,
130 SCRA 436 (1984), citing the 1939 case of
Pampanga Bus. Co., Inc. v. Pambusco
Employees Union, Inc. 68 Phil. 541, thus:
The right of a laborer to sell his labor to such
persons as he may choose is, in its essence,
the same as the right of an employer to
purchase labor from any person whom it
chooses. The employer and the employee
have thus an equality of right guaranteed by
the Constitution. If the employer can compel
the employee to work against the latter's
will, this is servitude. If the employee can
compel the employer to give him work
against the employer's will, this is
oppression.
As the law now stands, Article 281 of the
Labor Code gives ample authority to the
employer to terminate a probationary
employee for a just cause or when he fails to
qualify as a regular employee in accordance
with reasonable standards made known by
the employer to the employee at the time of
his engagement. There is nothing under
Article 281 of the Labor Code that would
preclude the employer from extending a
regular or a permanent appointment to an
employee once the employer finds that the
employee is qualified for regular
employment even before the expiration of
the probationary period. Conversely, if the
purpose sought by the employer is neither
attained nor attainable within the said
period, Article 281 of the Labor Code does
not likewise preclude the employer from
terminating the probationary employment
on justifiable causes as in the instant case.
We find unmeritorious, therefore, public
respondents argument that the security of
tenure of probationary employees within
the period of their probation, as in the case
of herein private respondent, justified the
award of salary for the unexpired portion of
her probationary employment.
There was no showing, as borne out by the
records, that there was circumvention of the
rights of private respondent when she was
informed of her termination. Her dismissal
does not appear to us as arbitrary, fanciful or
whimsical. Private respondent was duly
notified, orally and in writing, that her
services as cultural orientation teacher were
terminated for failure to meet the
prescribed standards of petitioner as
reflected in the performance evaluation
conducted by her supervisors during the
teacher evaluating program. The
dissatisfaction of petitioner over the
performance of private respondent in this
regard is a legitimate exercise of its
prerogative to select whom to hire or refuse
employment for the success of its program
or undertaking. More importantly, private
respondent failed to show that there was
unlawful discrimination in the dismissal.
It was thus a grave abuse of discretion on the
part of public respondent to order petitioner
to pay private respondent her salary for the
unexpired three-month portion of her six-
month probationary employment when she
was validly terminated during her
probationary employment.
82. Ver Buiser vs GTE Directories (Tado)
G.R. No. L-63316 July 31, 1984
ILUMINADA VER BUISER, MA. CECILIA
RILLOACUÑA and MA. MERCEDES P.
INTENGAN, petitioners,
vs.
HON. VICENTE LEOGARDO, JR., in his
capacity as Deputy Minister of the Ministry
of Labor & Employment, and GENERAL
TELEPHONE DIRECTORY, CO., respondents.
FACTS:
Petitioners were employed by the private
respondent GENERAL TELEPHONE
DIRECTORY COMPANY as sales
representatives and charged with the duty
of soliciting advertisements for inclusion in a
telephone directory. They entered into an
"Employment Contract (on Probationary
Status)"
Failing to meet their respective sales quotas,
the petitioners were dismissed from the
service by the private respondent.
May 27, 1981, petitioners filed with the
National Capital Region, Ministry of Labor
and Employment, a complaint for illegal
dismissal
The Regional Director of said ministry
dismissed the complaints of the petitioners.
On appeal, Deputy Minister of the Ministry
of Labor issued an Order affirming the
Regional Director's Order.
ISSUE: whether or not the dismissal was
valid
Petitioners contend that under Articles 281-
282 of the Labor Code, having served the
respondent company continuously for over
six (6) months, they have become
automatically regular employees
notwithstanding an agreement to the
contrary. It is petitioners' submission that
probationary employment cannot exceed six
(6) months, the only exception being
apprenticeship and learnership agreements
as provided in the Labor Code
RULING: YES
Generally, the probationary period of
employment is limited to six (6) months. The
exception to this general rule is When the
parties to an employment contract may
agree otherwise, such as when the same is
established by company policy or when the
same is required by the nature of work to be
performed by the employee. In the latter
case, there is recognition of the exercise of
managerial prerogatives in requiring a
longer period of probationary employment,
such as in the present case where the
probationary period was set for eighteen
(18) months, i.e. from May, 1980 to October,
1981 inclusive, especially where the
employee must learn a particular kind of
work such as selling, or when the job
requires certain qualifications, skills,
experience or training.
Policy Instruction No. 11 of the Minister of
Labor and Employment has clarified any and
all doubts on the period of probationary
employment. It states as follows:
Probationary Employment has been the
subject of misunderstanding in some
quarter. Some people believe six (6) months
is the probationary period in all cases. On the
other hand employs who have already
served the probationary period are
sometimes required to serve again on
probation.
Under the Labor Code, six (6) months is the
general probationary period ' but the
probationary period is actually the period
needed to determine fitness for the job. This
period, for lack of a better measurement is
deemed to be the period needed to learn the
job.
The purpose of this policy is to protect the
worker at the same time enable the
employer to make a meaningful employee
selection. This purpose should be kept in
mind in enforcing this provision of the Code.
This issuance shall take effect immediately.
In the case at bar, it is shown that private
respondent Company needs at least
eighteen (18) months to determine the
character and selling capabilities of the
petitioners as sales representatives. The
Company is engaged in advertisement and
publication in the Yellow Pages of the PLDT
Telephone Directories. Publication of
solicited ads are only made a year after the
sale has been made and only then win the
company be able to evaluate the efficiency,
conduct, and selling ability of its sales
representatives, the evaluation being based
on the published ads. Moreover, an eighteen
month probationary period is recognized by
the Labor Union in the private respondent
company, which is Article V of the Collective
Bargaining Agreement
And as indicated earlier, the very contracts
of employment signed and acquiesced to by
the petitioners specifically indicate that "the
company hereby employs the employee as
telephone sales representative on a period.
probationary status for a period of eighteen
(18) months, i.e. from May 1980 to October
1981, inclusive. This stipulation is not
contrary to law, morals and public policy.
83. University of the East, Dean Eleanor
Javier et. al. vs Analiz Pepanio and Mariti
Bueno (Tingson)
G.R. No. 193897 January 23, 2013
UNIVERSITY OF THE EAST, DEAN ELEANOR
JAVIER, RONNIE GILLEGO and DR. JOSE C.
BENEDICTO vs. ANALIZA F. PEPANIO and
MARITI D. BUENO
FACTS:
In 1992, DECS issued the Revised Manual of
Regulations for Private Schools, Article IX,
Section 44, paragraph 1 (a), of which
requires college faculty members to have a
master's degree as a minimum educational
qualification for acquiring regular status.
UE hired respondents Bueno and Pepanio,
both on a semester-to-semester basis to
teach in its college. They could not qualify for
probationary or regular status because they
lacked postgraduate degrees.
UE and the UE Faculty Association entered
into a new CBA that would have the school
extend probationary full-time appointments
to full-time faculty members who did not yet
have the required postgraduate degrees
provided that the latter comply with such
requirement within their probationary
The Dean of the UE College of Arts and
Sciences, petitioner Eleanor Javier, sent
notices to probationary faculty members,
reminding them of the expiration of the
probationary status. Pepanio replied that
she was enrolled at the Polytechnic
University of the Philippines Graduate
School. Bueno, on the other hand, replied
that she was not interested in acquiring
tenure as she was returning to her province.
Pepanio requested a three-semester
extension but Dean Javier denied this
request and directed Pepanio to ask for just
a two-semester extension.
Respondents filed cases of illegal dismissal
against the school before the Labor Arbiter
demanding that they be considered regular
employees.
They argue that since that CBA did not yet
require a master’s degree for acquiring a
regular status and since respondents had
already complied with the three
requirements of the CBA, namely, (a) that
they served full-time; (b) that they rendered
three consecutive years of service; and (c)
that their services were satisfactory, they
should be regarded as having attained
permanent or regular status.
ISSUE:
Whether UE illegally dismissed Bueno and
Pepanio?
RULING:
NO
A school CBA must be read in conjunction
with statutory and administrative
regulations governing faculty qualifications.
Such regulations form part of a valid CBA
without need for the parties to make express
reference to it.
The requirement of a masteral degree for
tertiary education teachers is not
unreasonable. The operation of educational
institutions involves public interest. The
government has a right to ensure that only
qualified persons, in possession of sufficient
academic knowledge and teaching skills, are
allowed to teach in such institutions.
Respondents were each given only
semester-to-semester appointments from
the beginning of their employment with UE
precisely because they lacked the required
master's degree. The school extended
petitioners a conditional probationary status
subject to their obtaining a master's degree
within their probationary period.
UE gave respondents Bueno and Pepanio
more than ample opportunities to acquire
the postgraduate degree required of them.
But they did not take advantage of such
opportunities.
84. Holiday Inn Manila vs NLRC (Vosotros)
Holiday Inn Manila
vs
NLRC
226 SCRA 417 September 14, 1993
Principle:
The employer has absolute discretion in
hiring his employees in accordance with his
standards of competence and probity. This is
his prerogative. Once hired, however, the
employees are entitled to the protection of
the law even during the probation period
and more so after they have become
members of the regular force. The employer
does not have the same freedom in the
hiring of his employees as in their dismissal.
FACTS:
Elena Honasan applied for employment with
the Holiday Inn and was on April 15, 1991,
accepted for "on-the-job training" as a
telephone operator for a period of three
weeks. On May 13, 1992, after completing
her training, she was employed on a
"probationary basis" for a period of six
months ending November 12, 1991.
Her employment contract stipulated that
the Hotel could terminate her probationary
employment at any time prior to the
expiration of the six-month period in the
event of her failure (a) to learn or progress in
her job; (b) to faithfully observe and comply
with the hotel rules and the instructions and
orders of her superiors; or (c) to perform her
duties according to hotel standards.
On November 8, 1991, four days before the
expiration of the stipulated deadline,
Holiday Inn notified her of her dismissal, on
the ground that her performance had not
come up to the standards of the Hotel.
Through counsel, Honasan filed a complaint
for illegal dismissal, claiming that she was
already a regular employee at the time of
her separation and so was entitled to full
security of tenure.
Labor Arbiter:
Dismissed the complaint hat her separation
was justified under Article 281 of the Labor
Code providing as follows:
Probationary employment shall not exceed
six (6) months from the date the employee
started working, unless it is covered by an
apprenticeship agreement stipulating a
longer period. The services of an employee
who has been engaged on a probationary
basis may be terminated for a just cause or
when he fails to qualify as a regular
employee in accordance with reasonable
standards made known by the employer to
the employee at the time of his engagement.
An employee who is allowed to work after a
probationary period shall be considered a
regular employee.
ISSUE:
Whether or not double probation arising
from training plus probationary period is
valid (NO)
HELD:
No. Double probation is not valid.
The Hotel's system of double probation a
transparent scheme to circumvent the plain
mandate of the law and make it easier for it
to dismiss its employees even after they shall
have already passed probation. The
petitioners had ample time to summarily
terminate Honasan's services during her
period of probation if they were deemed
unsatisfactory. Not having done so, they may
dismiss her now only upon proof of any of
the legal grounds for the separation of
regular employees, to be established
according to the prescribed procedure.
Probation is the period during which the
employer may determine if the employee is
qualified for possible inclusion in the regular
force. In the case at bar, the period was for
three weeks, during Honasan's on-the-job
training. When her services were continued
after this training, the petitioners in effect
recognized that she had passed probation
and was qualified to be a regular employee.
Honasan was certainly under observation
during her three-week on-the-job training. If
her services proved unsatisfactory then, she
could have been dropped as early as during
that period. But she was not. On the
contrary, her services were continued,
presumably because they were acceptable,
although she was formally placed this time
on probation.
Even if it be supposed that the probation did
not end with the three-week period of on-
the-job training, there is still no reason why
that period should not be included in the
stipulated six-month period of probation.
Honasan was accepted for on-the-job
training on April 15, 1991. Assuming that her
probation could be extended beyond that
date, it nevertheless could continue only up
to October 15, 1991, after the end of six
months from the earlier date.
Under this more lenient approach, she had
become a regular employee of Holiday Inn
and acquired full security of tenure as of
October 15, 1991.
The consequence is that she could no longer
be summarily separated on the ground
invoked by the petitioners. As a regular
employee, she had acquired the protection
of Article 279 of the Labor Code stating as
follows:
Art. 279. Security of Tenure — In cases
of regular employment, the employer shall
not terminate the services of an employee
except for a just cause or when authorized
by this Title. An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to his full
backwages, inclusive of allowances, and to
his other benefits or their monetary
equivalent computed from the time his
compensation was withHELD: from him up
to the time of his actual reinstatement.
The grounds for the removal of a regular
employee are enumerated in Articles 282,
283 and 284 of the Labor Code. The
procedure for such removal is prescribed in
Rule XIV, Book V of the Omnibus Rules
Implementing the Labor Code.
These rules were not observed in the case at
bar as Honasan was simply told that her
services were being terminated because
they were found to be unsatisfactory. No
administrative investigation of any kind was
undertaken to justify this ground. She was
not even accorded prior notice, let alone a
chance to be heard.
85. Phil Daily Inquirer vs Magtibay
(Banuelos)
TOPIC: No Need to Inform Probationary
Employee that he has to comply with all
Company Rules and Regulations
G.R. No. 164532 July 24, 2007
PHILIPPINE DAILY INQUIRER, INC., vs. LEON
M. MAGTIBAY, JR. and PHILIPPINE DAILY
INQUIRER EMPLOYEES UNION (PDIEU).
Ponente: GARCIA, J.
FACTS:
February 7, 1995, PDI hired Magtibay, on
contractual basis, to assist, for a period of
five months from February 17, 1995, the
regular phone operator. Before the
expiration of Magtibay’s contractual
employment, he and PDI agreed to a fifteen-
day contract extension, or from July 17, 1995
up to July 31, 1995, under the same
conditions as the existing contract.
After the expiration of Magtibay’s
contractual employment, as extended, PDI
announced the creation and availability of a
new position for a second telephone
operator who would undergo probationary
employment. Apparently, it was PDI’s policy
to accord regular employees preference for
new vacancies in the company. Thus, Ms.
Regina M. Layague, a PDI employee and
member of PDI Employees Union (PDIEU),
filed her application for the new position.
However, she later withdrew her
application, paving the way for outsiders or
non-PDI employees, like Magtibay in this
case, to apply.
After the usual interview for the second
telephone operator slot, PDI chose to hire
Magtibay on a probationary basis for a
period of six (6) months. The signing of a
written contract of employment followed.
On March 13, 1996, or a week before the
end the agreed 6-month probationary
period, PDI officer Benita del Rosario handed
Magtibay his termination paper, grounded
on his alleged failure to meet company
standards. Aggrieved, Magtibay immediately
filed a complaint for illegal dismissal and
damages before the Labor Arbiter. PDIEU
later joined the fray by filing a supplemental
complaint for unfair labor practice.
Magtibay anchored his case principally on
the postulate that he had become a regular
employee by operation of law, considering
that he had been employed by and had
worked for PDI for a total period of ten
months, i.e., four months more than the
maximum six-month period provided for by
law on probationary employment. He also
claimed that he was not apprised at the
beginning of his employment of the
performance standards of the company,
hence, there was no basis for his dismissal.
Finally, he described his dismissal as tainted
with bad faith and effected without due
process.
PDI, for its part, denied all the factual
allegations of Magtibay, adding that his
previous contractual employment was
validly terminated upon the expiration of the
period stated therein. Pressing the point, PDI
alleged that the period covered by the
contractual employment cannot be counted
with or tacked to the period for probation,
inasmuch as there is no basis to consider
Magtibay a regular employee. PDI
additionally claimed that Magtibay was
dismissed for violation of company rules and
policies, such as allowing his lover to enter
and linger inside the telephone operator’s
booth and for failure to meet prescribed
company standards which were allegedly
made known to him at the start through an
orientation seminar conducted by the
company.
Labor Arbiter: ruled in favor of PDI. Labor
Arbiter further ruled that Magtibay’s
dismissal from his probationary employment
was for a valid reason. Albeit the basis for
termination was couched in the abstract,
i.e., "you did not meet the standards of the
company," there were three specific reasons
for Magtibay’s termination, to wit: (1) he
repeatedly violated the company rule
prohibiting unauthorized persons from
entering the telephone operator’s room; (2)
he intentionally omitted to indicate in his
application form his having a dependent
child; and (3) he exhibited lack of sense of
responsibility by locking the door of the
telephone operator’s room on March 10,
1996 without switching the proper lines to
the company guards so that incoming calls
may be answered by them.
NLRC: reversed and set aside said decision,
effectively ruling that Magtibay was illegally
dismissed. According to the NLRC,
Magtibay’s probationary employment had
ripened into a regular one.
With the NLRC’s denial of its motion for
reconsideration, PDI went to the CA on a
petition for certiorari.
Court of Appeals: PDI failed to prove that
such rules and regulations were included in
or form part of the standards that were
supposed to be made known to MAGTIBAY
at the time of his engagement as telephone
operator.
Legal ISSUE: W/N there is a need to inform a
probationary employee to comply with the
Company’s rules and regulations.
HELD:
NO. There is no need as it is expected to be
part of their responsibilities as an employee
of the company.
It is well settled that the employer has the
right or is at liberty to choose who will be
hired and who will be denied employment.
In that sense, it is within the exercise of the
right to select his employees that the
employer may set or fix a probationary
period within which the latter may test and
observe the conduct of the former before
hiring him permanently. x x x.
Within the limited legal six-month
probationary period, probationary
employees are still entitled to security of
tenure. It is expressly provided in the afore-
quoted Article 281 that a probationary
employee may be terminated only on two
grounds: (a) for just cause, or (b) when he
fails to qualify as a regular employee in
accordance with reasonable standards made
known by the employer to the employee at
the time of his engagement.
PDI invokes the second ground under the
premises. In claiming that it had adequately
apprised Magtibay of the reasonable
standards against which his performance
will be gauged for purposes of permanent
employment, PDI cited the one-on-one
seminar between Magtibay and its
Personnel Assistant, Ms. Rachel Isip-Cuzio.
PDI also pointed to Magtibay’s direct
superior, Benita del Rosario, who diligently
briefed him about his responsibilities in PDI.
These factual assertions were never denied
nor controverted by Magtibay. Neither did
he belie the existence of a specific rule
prohibiting unauthorized persons from
entering the telephone operator’s booth nor
that did he violate that prohibition. This
notwithstanding, the NLRC and the CA
proceeded nonetheless to rule that the
records of the case are bereft of any
evidence showing that these rules and
regulations form part of the so-called
company standards.
We do not agree with the appellate court
when it cleared the NLRC of commission of
grave abuse of discretion despite the latter’s
disregard of clear and convincing evidence
that there were reasonable standards made
known by PDI to Magtibay during his
probationary employment. It is on record
that Magtibay committed obstinate
infractions of company rules and
regulations, which in turn constitute
sufficient manifestations of his inadequacy
to meet reasonable employment norms. The
suggestion that Magtibay ought to have
been made to understand during his briefing
and orientation that he is expected to obey
and comply with company rules and
regulations strains credulity for acceptance.
The CA’s observation that "nowhere can it
be found in the list of Basic Responsibility
and Specific Duties and Responsibilities of
MAGTIBAY that he has to abide by the
duties, rules and regulations that he has
allegedly violated" is a strained
rationalization of an unacceptable conduct
of an employee. Common industry practice
and ordinary human experience do not
support the CA’s posture. All employees, be
they regular or probationary, are expected
to comply with company-imposed rules and
regulations, else why establish them in the
first place. Probationary employees
unwilling to abide by such rules have no right
to expect, much less demand, permanent
employment. We, therefore find sufficient
factual and legal basis, duly established by
substantial evidence, for PDI to legally
terminate Magtibay’s probationary
employment effective upon the end of the 6-
month probationary period.
86. Pines CIty Educational Center vs NLRC
(Caubang)
87. Lacuesta vs Ateneo de Manila (Chiu)
88. Woodbridge vs Pe Benito (Dosdos)
89. Yolanda Mercado vs AMA Computer
College Paranaque (Dulay)
90. Colegio del Santissimo Rosario vs Rojo
(Macatol)
COLEGIO DEL SANTISIMO ROSARIO v.
EMMANUEL ROJO GR No. 170388, Sep 04,
2013 DEL CASTILLO, J.:
FACTS:
Petitioner Colegio del Santisimo Rosario
(CSR) hired respondent as a high school
teacher on probationary basis for the school
years 1992-1993, 1993-1994[7] and 1994-
1995.[8]
On April 5, 1995, CSR, through petitioner Sr.
Zenaida S. Mofada, OP (Mofada), decided
not to renew respondent's services.
Thus, on July 13, 1995, respondent filed a
Complaint for illegal dismissal. He alleged
that since he had served three consecutive
school years which is the maximum number
of terms allowed for probationary
employment, he should be extended
permanent employment. Citing paragraph
75 of the 1970 Manual of Regulations for
Private Schools (1970 Manual), respondent
asserted that "full- time teachers who have
rendered three (3) consecutive years of
satisfactory services shall be considered
permanent."
On the other hand, petitioners argued that
respondent knew that his Teacher's Contract
for school year 1994-1995 with CSR would
expire on March 31, 1995. Accordingly,
respondent was not dismissed but his
probationary contract merely expired and
was not renewed. Petitioners also claimed
that the "three years" mentioned in
paragraph 75 of the 1970 Manual refer to
"36 months," not three school years. And
since respondent served for only three
school years of 10 months each or 30
months, then he had not yet served the
"three years" or 36 months mentioned in
paragraph 75 of the 1970 Manual.
ISSUE:
WHETHER A BASIC EDUCATION
(ELEMENTARY) TEACHER HIRED FOR THREE
(3) CONSECUTIVE SCHOOL YEARS AS A
PROBATIONARY EMPLOYEE
AUTOMATICALLY AND/OR BY LAW
BECOMES A PERMANENT EMPLOYEE UPON
COMPLETION OF HIS THIRD YEAR OF
PROBATION PERIOD. Yes, in this case.
HELD:
It is HELD: that "in a situation where the
probationary status overlaps with a fixed-
term contract not specifically used for the
fixed term it offers, Article 281 should
assume primacy and the fixed-period
character of the contract must give way."
An example given of a fixed-term contract
specifically used for the fixed term it offers is
a replacement teacher or a reliever
contracted for a period of one year to
temporarily take the place of a permanent
teacher who is on leave. The expiration of
the reliever's fixed-term contract does not
have probationary status implications as he
or she was never employed on probationary
basis. This is because his or her employment
is for a specific purpose with particular focus
on the term. There exists an intent to end his
or her employment with the school upon
expiration of this term.
However, for teachers on probationary
employment, in which case a fixed term
contract is not specifically used for the fixed
term it offers, it is incumbent upon the
school to have not only set reasonable
standards to be followed by said teachers in
determining qualification for regular
employment, the same must have also been
communicated to the teachers at the start of
the probationary period, or at the very least,
at the start of the period when they were to
be applied. These terms, in addition to those
expressly provided by the Labor Code, would
serve as the just cause for the termination of
the probationary contract. The specific
details of this finding of just cause must be
communicated to the affected teachers as a
matter of due process.[42] Corollarily,
should the teachers not have been apprised
of such reasonable standards at the time
specified above, they shall be deemed
regular employees.
In Tamson's Enterprises, Inc. v. Court of
Appeals,[43] we HELD: that "[t]he law is
clear that in all cases of probationary
employment, the employer shall [convey] to
the employee the standards under which he
will qualify as a regular employee at the time
of his engagement. Where no standards are
made known to the employee at that time,
he shall be deemed a regular employee.
In this case, glaringly absent from
petitioners' evidence are the reasonable
standards that respondent was expected to
meet that could have served as proper
guidelines for purposes of evaluating his
performance. Nowhere in the Teacher's
Contract could such standards be found.
Neither was it mentioned that the same
were ever conveyed to respondent. Even
assuming that respondent failed to meet the
standards set forth by CSR and made known
to the former at the time he was engaged as
a teacher on probationary status, still, the
termination was flawed for failure to give
the required notice to respondent. This is
because Book VI, Rule I, Section 2 of the IRR
of the Labor Code provides:
Section 2. Security of Tenure. (a) In cases of
regular employment, the employer shall not
terminate the services of an employee
except for just or authorized causes as
provided by law, and subject to the
requirements of due process.
(b) The foregoing shall also apply in cases of
probationary employment; provided,
however, that in such cases, termination of
employment due to failure of the employee
to qualify in accordance with the standards
of the employer made known to the former
at the time of engagement may also be a
ground for termination of employment.
(d) In all cases of termination of
employment, the following standards of due
process shall be substantially observed:
If the termination is brought about by the
completion of a contract or phase thereof, or
by failure of an employee to meet the
standards of the employer in the case of
probationary employment, it shall be
sufficient that a written notice is served the
employee, within a reasonable time from
the effective date of termination.
Curiously, despite the absence of standards,
Mofada mentioned the existence of alleged
performance evaluations in respondent's
case. We are, however, in a quandary as to
what could have been the basis of such
evaluation, as no evidence were adduced to
show the reasonable standards with which
respondent's performance was to be
assessed or that he was informed thereof.
Notably too, none of the supposed
performance evaluations were presented.
These flaws violated respondent's right to
due process. As such, his dismissal is, for all
intents and purposes, illegal.
As a matter of due process, teachers on
probationary employment, just like all
probationary employees, have the right to
know whether they have met the standards
against which their performance was
evaluated. Should they fail, they also have
the right to know the reasons therefor.
It should be pointed out that absent any
showing of unsatisfactory performance on
the part of respondent, it can be presumed
that his performance was satisfactory,
especially taking into consideration the fact
that even while he was still more than a year
into his probationary employment, he was
already designated Prefect of Discipline. In
such capacity, he was able to uncover the
existence of a drug syndicate within the
school and lessen the incidence of drug use
therein. Yet despite respondent's substantial
contribution to the school, petitioners chose
to disregard the same and instead
terminated his services; while most of those
who were involved in drug activities within
the school were punished with a slap on the
wrist as they were merely made to write
letters promising that the incident will not
happen again.
Mofada would also have us believe that
respondent chose to resign as he feared for
his life, thus, the school's decision not to
renew his contract. However, no resignation
letter was presented. Besides, this is
contrary to respondent's act of immediately
filing the instant case against petitioners.
Other discussions:
In Mercado v. AMA Computer College-
Parañaque City, Inc., we had occasion to rule
that cases dealing with employment on
probationary status of teaching personnel
are not governed solely by the Labor Code as
the law is supplemented, with respect to the
period of probation, by special rules found in
the Manual of Regulations for Private
Schools (the Manual). With regard to the
probationary period, Section 92 of the 1992
Manual provides:
Section 92. Probationary Period. Subject in
all instances to compliance with the
Department and school requirements, the
probationary period for academic personnel
shall not be more than three (3) consecutive
years of satisfactory service for those in the
elementary and secondary levels, six (6)
consecutive regular semesters of
satisfactory service for those in the tertiary
level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary
level where collegiate courses are offered on
a trimester basis.
In this case, petitioners' teachers who were
on probationary employment were made to
enter into a contract effective for one school
year. Thereafter, it may be renewed for
another school year, and the probationary
employment continues. At the end of the
second fixed period of probationary
employment, the contract may again be
renewed for the last time.
Such employment for fixed terms during the
teachers' probationary period is an accepted
practice in the teaching profession. In Magis
Young Achievers' Learning Center v.
Manalo,[34] we noted that:
The common practice is for the employer
and the teacher to enter into a contract,
effective for one school year. At the end of
the school year, the employer has the option
not to renew the contract, particularly
considering the teacher's performance. If
the contract is not renewed, the
employment relationship terminates. If the
contract is renewed, usually for another
school year, the probationary employment
continues. Again, at the end of that period,
the parties may opt to renew or not to renew
the contract. If renewed, this second
renewal of the contract for another school
year would then be the last year since it
would be the third school year of
probationary employment. At the end of this
third year, the employer may now decide
whether to extend a permanent
appointment to the employee, primarily on
the basis of the employee having met the
reasonable standards of competence and
efficiency set by the employer. For the entire
duration of this three-year period, the
teacher remains under probation. Upon the
expiration of his contract of employment,
being simply on probation, he cannot
automatically claim security of tenure and
compel the employer to renew his
employment contract. It is when the yearly
contract is renewed for the third time that
Section 93 of the Manual becomes
operative, and the teacher then is entitled to
regular or permanent employment status.
However, this scheme "of fixed-term
contract is a system that operates during the
probationary period and for this reason is
subject to Article 281 of the Labor Code,"
which provides:
x x x The services of an employee who has
been engaged on a probationary basis may
be terminated for a just cause or when he
fails to qualify as a regular employee in
accordance with reasonable standards made
known by the employer to the employee at
the time of his engagement. An employee
who is allowed to work after a probationary
period shall be considered a regular
employee.
In Mercado, we HELD: that "[u]nless this
reconciliation is made, the requirements of
[Article 281] on probationary status would
be fully negated as the school may freely
choose not to renew contracts simply
because their terms have expired."[36] This
will have an unsettling effect in the
equilibrium vis-a-vis the relations between
labor and management that the Constitution
and Labor Code have worked hard to
establish.
That teachers on probationary employment
also enjoy the protection afforded by Article
281 of the Labor Code is supported by
Section 93 of the 1992 Manual which
provides:
Sec. 93. Regular or Permanent Status. -
Those who have served the probationary
period shall be made regular or permanent.
Full-time teachers who have satisfactorily
completed their probationary period shall be
considered regular or permanent.
The above provision clearly provides that
full-time teachers become regular or
permanent employees once they have
satisfactorily completed*556 the
probationary period of three school
years.[37] The use of the term satisfactorily
necessarily connotes the requirement for
schools to set reasonable standards to be
followed by teachers on probationary
employment. For how else can one
determine if probationary teachers have
satisfactorily completed the probationary
period if standards therefor are not
provided?
As such, "no vested right to a permanent
appointment shall accrue until the employee
has completed the prerequisite three-year
period necessary for the acquisition of a
permanent status. [However, it must be
emphasized that] mere rendition of service
for three consecutive years does not
automatically ripen into a permanent
appointment. It is also necessary that the
employee be a full-time teacher, and that
the services he rendered are satisfactory."
In Mercado, this Court, speaking through J.
Brion, HELD: that:
The provision on employment on
probationary status under the Labor Code is
a primary example of the fine balancing of
interests between labor and management
that the Code has institutionalized pursuant
to the underlying intent of the Constitution.
On the one hand, employment on
probationary status affords management
the chance to fully scrutinize the true worth
of hired personnel before the full force of
the security of tenure guarantee of the
Constitution comes into play. Based on the
standards set at the start of the probationary
period, management is given the widest
opportunity during the probationary period
to reject hirees who fail to meet its own
adopted but reasonable standards. These
standards, together with the just and
authorized causes for termination of
employment [which] the Labor Code
expressly provides, are the grounds available
to terminate the employment of a teacher
on probationary status. x x x
Labor, for its part, is given the protection
during the probationary period of knowing
the company standards the new hires have
to meet during the probationary period, and
to be judged on the basis of these standards,
aside from the usual standards applicable to
employees after they achieve permanent
status. Under the terms of the Labor Code,
these standards should be made known to
the teachers on probationary status at the
start of their probationary period, or at the
very least under the circumstances of the
present case, at the start of the semester or
the trimester during which the probationary
standards are to be applied. Of critical
importance in invoking a failure to meet the
probationary standards, is that the school
should show as a matter of due process how
these standards have been applied. This is
effectively the second notice in a dismissal
situation that the law requires as a due
process guarantee supporting the security of
tenure provision, and is in furtherance, too,
of the basic rule in employee dismissal that
the employer carries the burden of justifying
a dismissal. These rules ensure compliance
with the limited security of tenure guarantee
the law extends to probationary employees.
When fixed-term employment is brought
into play under the above probationary
period rules, the situation as in the present
case may at first blush look muddled as
fixed-term employment is in itself a valid
employment mode under Philippine law and
jurisprudence. The conflict, however, is
more apparent than real when the
respective nature of fixed-term employment
and of employment on probationary status
are closely examined.
The fixed-term character of employment
essentially refers to the period agreed upon
between the employer and the employee;
employment exists only for the duration of
the term and ends on its own when the term
expires. In a sense, employment on
probationary status also refers to a period
because of the technical meaning
"probation" carries in Philippine labor law a
maximum period of six months, or in the
academe, a period of three years for those
engaged in teaching jobs. Their similarity
ends there, however, because of the
overriding meaning that being "on
probation" connotes, i.e., a process of
testing and observing the character or
abilities of a person who is new to a role or
job.
Understood in the above sense, the
essentially protective character of
probationary status for management can
readily be appreciated. But this same
protective character gives rise to the
countervailing but equally protective rule
that the probationary period can only last for
a specific maximum period and under
reasonable, well-laid and properly
communicated standards. Otherwise stated,
within the period of the probation, any
employer move based on the probationary
standards and affecting the continuity of the
employment must strictly conform to the
probationary rules.
x x x If we pierce the veil, so to speak, of the
parties' so-called fixed-term employment
contracts, what undeniably comes out at the
core is a fixed-term contract conveniently
used by the school to define and regulate its
relations with its teachers during their
probationary period.
91. Brent School vs Zamora (Pacquiao, L)
G.R. No. L-48494 February 5, 1990
BRENT SCHOOL, INC., and REV. GABRIEL
DIMACHE, petitioners,
vs.
RONALDO ZAMORA, the Presidential
Assistant for Legal Affairs, Office of the
President, and DOROTEO R. ALEGRE,
respondents.
FACTS
Private respondent Alegre was engaged as
athletic director by petitioner Brent School,
Inc. at a yearly compensation of P20,000.00.
The contract fixed a specific term for its
existence, five (5) years, i.e., from July 18,
1971, the date of execution of the
agreement, to July 17, 1976. Subsequent
subsidiary agreements dated March 15,
1973, August 28, 1973, and September 14,
1974 reiterated the same terms and
conditions, including the expiry date, as
those contained in the original contract of
July 18, 1971.
On April 20,1976, Alegre was given a copy of
the report filed by Brent School with the
Department of Labor advising of the
termination of his services effective on July
16, 1976. The stated ground for the
termination was "completion of contract,
expiration of the definite period of
employment." Although protesting the
announced termination stating that his
services were necessary and desirable in the
usual business of his employer, and his
employment lasted for 5 years - therefore he
had acquired the status of regular employee
- Alegre accepted the amount of P3,177.71,
and signed a receipt therefor containing the
phrase, "in full payment of services for the
period May 16, to July 17, 1976 as full
payment of contract."
The Regional Director considered Brent
School's report as an application for
clearance to terminate employment (not a
report of termination), and accepting the
recommendation of the Labor Conciliator,
refused to give such clearance and instead
required the reinstatement of Alegre, as a
"permanent employee," to his former
position without loss of seniority rights and
with full back wages.
ISSUE
Whether or not the provisions of the Labor
Code as amended (regarding
probationary/regular employees), have
anathematized "fixed period employment"
or employment for a term
(anathematized- curse; condemn)
HELD:
No. Before the Labor Code, there was no
doubt about the validity of term
employment. It was implied but clearly
recognized by the Termination Pay law, RA
1052.The employment contract between
Brent School and Alegre was executed on
July 18, 1971, at a time when the Labor Code
of the Philippines (P.D. 442) had not yet been
promulgated. Indeed, the Code did not come
into effect until November 1, 1974, some
three years after the perfection of the
employment contract, and rights and
obligations there under had arisen and been
mutually observed and enforced.At that
time, i.e., before the advent of the Labor
Code, there was no doubt whatever about
the validity of term employment. It was
impliedly but nonetheless clearly recognized
by the Termination Pay Law, R.A. 1052, 11 as
amended by R.A. 1787.
Respondent Alegre's contract of
employment with Brent School having
lawfully terminated with and by reason of
the expiration of the agreed term of period
thereof, he is declared not entitled to
reinstatement.
It is plain then that when the employment
contract was signed between Brent School
and Alegre, it was perfectly legitimate for
them to include in it a stipulation fixing the
duration thereof Stipulations for a term
were explicitly recognized as valid by this
Court.
The status of legitimacy continued to be
enjoyed by fixed-period employment
contracts under the Labor Code (PD 442),
which went into effect on November 1,
1974. The Code contained explicit
references to fixed period employment, or
employment with a fixed or definite period.
Nevertheless, obscuration of the principle of
licitness of term employment began to take
place at about this time.
Article 320 originally stated that the
"termination of employment of
probationary employees and those
employed WITH A FIXED PERIOD shall be
subject to such regulations as the Secretary
of Labor may prescribe." Article 321
prescribed the just causes for which an
employer could terminate "an employment
without a definite period." And Article 319
undertook to define "employment without a
fixed period" in the following manner:
…where the employee has been engaged to
perform activities which are usually
necessary or desirable in the usual business
or trade of the employer, except where the
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined
at the time of the engagement of the
employee or where the work or service to be
performed is seasonal in nature and the
employment is for the duration of the
season.
92. Pakistan Air Line vs Ople
FACT: Pakistan International Airline (PIA) is a
foreign corporation licensed to do business
in the PH. 2 separate contracts of
employment with Farrales and Mamasig
were entered into by PIA in Manila. The
contracts became effective in 1979. After
their training period, Farrales and Mamasig
commenced their services as flight
attendants with base station in Manila. 1
year and 4 months before the lapse of the 3-
year period, counsel for the local branch of
PIA sent Farrales and Mamasig notices
expressing that their services will be
terminated a month thereafter. Farrales and
Mamasig filed a joint complaint for illegal
termination and non-payment of company
benefits before the then Ministry of Labor
and Employment (MOLE) PIA submitted a
position paper claiming that Farrales and
Mamasig were habitual absentees; that both
were in the habit of bringing in from abroad
sizeable quantities of "personal effects"; and
that PIA personnel at the Manila
International Airport had been discreetly
warned by customs officials to advise private
respondents to discontinue that practice.
Regional Director ordered reinstatement
and payment of full back wages or in the
alternative payment of their salaries for the
remainder of the 3-year period stating that
they have attained status of regular
employees, the provision stipulating a three-
year period of employment is null and void
for violating Labor Code provisions on
regular employment Deputy Minister
affirmed the RD’s order. PIA filed a petition
for certiorari before the SC.
ISSUE: What law governs the relationship of
the parties to the contract? PHILIPPINE LAW.
HELD: A contract freely entered into should,
of course, be respected, as PIA argues, since
a contract is the law between the parties.
The principle of party autonomy in contracts
is not, however, an absolute principle. The
rule in Article 1306, of our Civil Code is that
the contracting parties may establish such
stipulations as they may deem convenient,
"provided they are not contrary to law,
morals, good customs, public order or public
policy." Thus, counter-balancing the
principle of autonomy of contracting parties
is the equally general rule that provisions of
applicable law, especially provisions relating
to matters affected with public policy, are
deemed written into the contract. Put a little
differently, the governing principle is that
parties may not contract away applicable
provisions of law especially peremptory
provisions dealing with matters heavily
impressed with public interest. The law
relating to labor and employment is clearly
such an area and parties are not at liberty to
insulate themselves and their relationships
from the impact of labor laws and
regulations by simply contracting with each
other. It is thus necessary to appraise the
contractual provisions invoked by petitioner
PIA in terms of their consistency with
applicable Philippine law and regulations.
The employment contracts were
inconsistent with Arts. 280-281 of the Labor
Code. In the case of Brent School vs Zamora,
the Court ruled that contracts
employment providing for a fixed period are
not necessarily unlawful. The presence or
absence of a substantial indication that the
period specified in an employment
agreement was designed to circumvent the
security of tenure of regular employees
which is provided for in Articles 280 and 281
of the Labor Code is crucial. The provision in
the contracts with PIA allowing
termination of services upon notice or
payment of one month’s salary was intended
to prevent any security of tenure from
accruing in favor of private respondents
even during the limited period of three (3)
years, and thus to escape completely the
thrust of Articles 280 and 281 of the Labor
Code by rendering their employment at the
pleasure of PIA.
93. Cielo vs NLRC (Roxas)
ZOSIMO CIELO, petitioner,
vs.
THE HONORABLE NATIONAL LABOR
RELATIONS COMMISSION, HENRY LEI and/or
HENRY LEI TRUCKING respondents.
FACTS
Henry Lei Trucking hired Zosimo Cielo as a
truck driver under 6-month Agreement with
stipulations that the term is can be earlier
terminated at the option of either party. The
Agreement also stipulated that there was no
of employer-employee relationship between
the parties and that the nature of the
relationship is merely contractual. Lei asked
Cielo to sign an affidavit of having received
full payment of wages, which Cielo refused
to sign. A week before the Agreement was
supposed to end, Lei notified Cielo of the
termination of his services. Apparently in the
Agreements with the drivers, Lei merely fills
for in the blanks with the corresponding data
such as the driver’s name and address, etc.
ISSUE: WON the Agreement was valid
RULING: NO
Where from the circumstances it is apparent
that the periods were imposed in order to
preclude the acquisition of tenurial security
by the employee, they should be struck
down or disregarded for being contrary to
public policy, morals,etc.
The Agreement is void ab initio for having a
purpose contrary to public policy. The
agreement was a clear attempt to exploit the
employee and deprive him of the protection
of the Labor Code by making it appear that
the stipulations are governed by the Civil
Code as in ordinary private transactions. In
reality the agreement was a contract of
employment into which were read the
provisions of the Labor Code and the social
justice policy of the Constitution. That Cielo
refused to sign the affidavit was not a just
cause for his termination as he was only
protecting his interest against unguarded
waiver of the benefits due him under the
Labor Code. Said affidavit which stipulated
payment of wages even suggested that there
was indeed an employer-employee
relationship.
94. Phil Village Hotel vs NLRC (Soriano)
FACTS:
It appears on record that
respondents Juanito Acuin,
Mangubat, Raul Sonon, Elgar Pemis, Orlando
Paraguison, Ferdinand Velasco,
Astulero, Magno Decalso, Nenita Orosea,
Jose Timing, Antonio Manalili, Rodelio
Queria and Reynaldo Santos
employees of petitioner Philippine Village
Hotel. However, on May 19, 1986, petitioner
had to close and totally discontinue its
operations due to serious financial and
business reverses resulting
termination of the services of its employees.
Thereafter, the Philippine Village Hotel
Employees and Workers Union filed against
petitioner a complaint for separation pay,
unfair labor practice and illegal lock-out.
On February 1, 1989, petitioner decided to
have a one (1) month dry-run operation to
ascertain the feasibility of resuming its
business operations. In order to carry out its
dry-run operation, petitioner hired casual
workers, including private respondents, for a
one (1) month period, or from February 1,
1989 to March 1, 1989, as evidenced by the
latter's Contract of Employment.
After evaluating the individual performance
of all the employees and upon the lapse of
the contractual one-month period or on
March 2, 1989, petitioner terminated the
services of private respondents.
private On April 6, 1989, private respondents and
Mamerta Tupas Local Chapter No. 1362 filed a
complaint against petitioner for illegal
Mike dismissal and unfair labor practice with the
NLRC-NCR Arbitration Branch.
were
ISSUE:
Whether respondents were validly
dismissed. (YES)
in the
Ruling:
An examination of the contents of the
private respondents' contracts of
employment shows that indeed private
respondents voluntarily and knowingly
agreed to be employed only for a period of
one (1) month or from February 1, 1989 to
March 1, 1989.
The fact that private respondents were
required to render services usually
necessary or desirable in the operation of
petitioner's business for the duration of the
one (1) month dry-run operation period
does not in any way impair the validity of the
contractual nature of private respondents'
contracts of employment which specifically
stipulated that the employment of the
private respondents was only for one (1)
month.
In upholding the validity of a contract of
employment with a fixed or specific period,
we have HELD: that the decisive
determinant in term employment should not
be the activities that the employee is called
upon to perform, but the day certain agreed
upon by the parties for the commencement
and termination of their employment
relationship, a day certain being understood
to be that which must necessarily come,
although it may not be known when. The
term period was further defined to be the
length of existence; duration. A point of time
marking a termination as of a cause or an
activity; an end, a limit, a bound; conclusion;
termination. A series of years, months or
days in which something is completed. A
time of definite length or the period from
one fixed date to another fixed date. This
ruling is only in consonance with Article 280
of the Labor Code which provides:
Art. 280. Regular and Casual
Employment. — The provisions of written
agreement to the contrary notwithstanding
and regardless of the oral agreement of the
parties, an employment shall be deemed to
be regular where the employee has been
engaged to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer, except
where the employment has been fixed for a
specific project or undertaking the
completion or termination of which has
been determined at the time of the
engagement of the employee or where the
work or services to be performed is seasonal
in nature and the employment is for the
duration of the season.
An employment shall be deemed to be
casual if it is not covered by the preceding
paragraph: Provided, That, any employee
who has rendered at least one year of
service, whether such service is continuous
or broken, shall be considered a regular
employee with respect to the activity in
which he is employed and his employment
shall continue while such actually exists.
Inasmuch as private respondents' contracts
of employment categorically provided a
fixed period and their termination had
already been agreed upon at the time of
their engagement, private respondents'
employment was one with a specific period
or day certain agreed upon by the parties. In
Philippine National Oil Company-Energy
Development Corporation vs. NLRC, we
HELD: that:
As can be gleaned from the said case (Brent
School, Inc. vs. Zamora, 181 SCRA 702), the
two guidelines by which fixed contracts of
employments can be said NOT to circumvent
security of tenure, are either:
1. The fixed period of employment was
knowingly and voluntarily agreed upon by
the parties, without any force, duress or
improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent; or
2. It satisfactorily appears that the employer
and employee dealt with each other on more
or less equal terms with no moral dominance
whatever being exercised by the former on
the latter."
In the instant case, private respondents
were validly terminated by the petitioner
when the latter had to close its business due
to financial losses. Following the directives
of the NLRC to give priority in hiring private
respondents should it resume its business,
petitioner hired private respondents during
their one (1) month dry-run operation.
However, this does not mean that private
respondents were deemed to have
continued their regular employment status,
which they had enjoyed before their
aforementioned termination due to
petitioner's financial losses. As stated by the
Labor Arbiter in his decision:
It should be borne in mind that when
complainants were first terminated as a
result of the company's cessation from
operation in May, 1986 the employer-
employee relationship between the parties
herein was totally and completely severed.
Such being the case, respondent acted well
within its discretion when in rehiring the
complainants (herein private respondents) it
made them casual and for a specific period.
The complainants are no better than the
new employees of respondent (petitioner)
for the matter of what status or designation
to be given them exclusively rests in the
discretion of management.8
95. Anderson vs NLRC (Tado)
[G.R. No. 111212. January 22, 1996]
GEORGE ANDERSON, petitioner, vs. THE
LABOR RELATIONS COMMISSION, PACIFIC
BUSINESS VENTURES INC. and KAMAL AL
BITAR, respondents.
FACTS:
Petitioner was recruited by respondent
Pacific Business Ventures, Inc. to work as
foreman of the Fiberglass Division of the
Bitar Metal Fabrication Factory in Damman,
Kingdom of Saudi Arabia. The period of
employment was two (2) years, starting
February 16, 1988, and the salary was
SR1,000.00 a month, plus food allowance of
SR200.00 a month, or the equivalent of
US$320.00 in all.
After nine (9) months on the job, petitioner
was told on November 6, 1988 by the
proprietor and general manager,
respondent Kamal Al Bitar, that his services
were being terminated. Four days after his
lay off, petitioner returned to the
Philippines.
On March 30, 1989, petitioner filed with the
POEA a complaint for illegal dismissal.
Private respondents denied petitioners
allegations. They alleged that petitioner had
been dismissed for loss of confidence.[1] In
a supplemental position paper filed by them
on July 6, 1989, private respondents claimed
that petitioner lacked the leadership and
motivation required of the head of the
fiberglass division.
POEA: petitioner to have been illegally
dismissed
NLRC set aside the decision of the POEA and
dismissed petitioners complaint.
ISSUE: whether or not the termination was
valid. If not, what is the employee entitled to
with respect to the unexpired portion of his
contract
RULING: No. He is entitled to be paid his
salary for 15 months corresponding the
balance of the contract.
There is no dispute that loss of confidence
constitutes a just cause for terminating an
employer-employee relationship.[4] Proof
beyond reasonable doubt is not even
required to terminate employment on this
ground.[5] But the loss of confidence cited in
this case to justify the dismissal of petitioner
is not based on any act of dishonesty or
disloyalty[6] on the part of petitioner but on
alleged lack of leadership, and technical
know-how and on the allegation that worse,
he exhibited a negative attitude toward his
work.
Kamal Al Bitars affidavit cites no specific acts
or omissions constituting unsatisfactory
performance by petitioner of his work.[7]
What qualities of leadership and technical
knowledge petitioner was required to
possess as supervisor of a fiberglass
company has not been specified. On the
contrary, what is established is that before
petitioner was hired, Kamal Al Bitar required
him to demonstrate his knowledge and skill
and it was only after he had done so was he
hired for the job of supervisor of the
fiberglass division. In fact petitioner had
already been on the job for nine months
when Kamal Al Bitar terminated petitioners
employment. On the other hand, what
negative attitude petitioner had shown
toward his work is anybodys guess. There
are no specific instances cited to show
petitioners negative attitude toward his
work.
The rule is that an employee cannot be
dismissed except for cause as provided by
law (i.e., Labor Code, Arts. 282-283) and only
after due notice and hearing.[12] If an
employee is dismissed without cause, he has
a right to be reinstated without loss of
seniority rights and other privileges and to
be paid full backwages, inclusive of
allowances and other benefits.[13] If he is
dismissed without notice and hearing,
although for a just cause, he will be entitled
to the payment of indemnity.[14]
If the contract is for a fixed term and the
employee is dismissed without just cause, he
is entitled to the payment of his salaries
corresponding to the unexpired portion of
his contract.[15] In this case, as petitioners
contract was for two years and his dismissal
was not for a just cause, he is entitled to be
paid his salary for 15 months corresponding
the balance of the contract. The grant to him
of a termination pay under his employment
contract may be considered indemnity for
his dismissal without prior notice and
hearing.
96. AMA Computer College Paranaque vs
Austria (Tingson)
G.R. No. 164078, November 23, 2007
AMA COMPUTER COLLEGE, PARAAQUE, et.
al vs. ROLANDO A. AUSTRIA
FACTS:
Petitioner AMA Computer College, Paraaque
(AMA) is an educational institution duly
organized under the laws of the Philippines.
Respondent Austria was hired by AMA on
probationary employment as a college dean.
Thereafter, respondent’s appointment as
dean was confirmed by AMAs Officer-in-
Charge (OIC), Academic Affairs effective
April 17, 2000 to September 17, 2000.
Respondent was charged with violating
AMAs Employees Conduct and Discipline
provided in its Orientation Handbook
(Handbook), as follows:
(1) leaking of test questions; (2) failure to
monitor general requirements vital to the
operations of the company; and (3) gross
inefficiency.
Eventually, respondent was informed of his
dismissal and he filed a Complaint for Illegal
Dismissal, Illegal Suspension, Non-Payment
of Salary.
Petitioners argue that respondent's
employment was for a fixed term as found
by the Labor Arbiter but the same was
terminated earlier due to just causes.
respondent counters that he is a regular
employee and that he was illegally
dismissed.
ISSUE:
1. What is the nature of respondent's
employment?
2. Was he lawfully dismissed?
RULING:
1. The letter of appointment was clear, that
by way of practice and tradition, the position
of dean is normally an EMPLOYMENT FOR A
FIXED TERM.
Deanship may be rotated among the other
members of the faculty.
From the premise that the duties of an
employee entail "activities which are usually
necessary or desirable in the usual business
or trade of the employer" the conclusion
does not necessarily follow that the
employer and employee should be
forbidden to stipulate any period of time for
the performance of those activities. There is
nothing essentially contradictory between a
definite period of an employment contract
and the nature of the employee's duties.
Logically, the decisive determinant in term
employment should not be the activities that
the employee is called upon to perform, but
the day certain agreed upon by the parties
for the commencement and termination of
their employment relationship, a day certain
being understood to be "that which must
necessarily come, although it may not be
known when."
The fact that respondent did not sign the
letter of appointment is of no moment. It
should have no application to instances
where a fixed period of employment was
agreed upon knowingly and voluntarily by
the parties, without any force, duress or
improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent, or
where it satisfactorily appears that the
employer and employee dealt with each
other on more or less equal terms with no
moral dominance whatever being exercised
by the former over the latter.
The fact that respondent voluntarily
accepted the employment, assumed the
position, and performed the functions of
dean is clear indication that he knowingly
and voluntarily consented to the terms and
conditions of the appointment, including the
fixed period of his deanship.
2. NO.
Petitioners erred in dismissing the
respondent, acting on the mistaken belief
that respondent was liable for the charges
leveled against him. petitioners failed to
establish the grounds for respondent's
dismissal.
But respondent also cannot claim Alumamay Jamias Manual Editor August
entitlement to any benefit flowing from such 7, 1995 to August 7, 1996
employment after September 17, 2000, Marietha V. Delos Santos Manual Editor
because the employment, which is the August 7, 1995 to August 7, 1996
source of the benefits, had, by then, already Lilian R. Guamil Manual Editor August
ceased to exist. 16, 1995 to August 16, 1996
Rina C. Duque Manual Editor August 7, 1995
A contract of employment for a definite to August 7, 1996
period terminates on its own force at the Marilen Agabayani Manual Editor August
end of such period. The lack of notice of 23, 1995 to August 23, 1996
termination is of no consequence because Alvin V. Patnon Production Personnel
when the contract specifies the length of its September 1, 1995 to September 1,
duration, it comes to an end upon the 1996
expiration of such period. Analyn I. BeterType Reader September 18,
1995 to September 18, 1996
97. Jamaias vs NLRC (Vosotros) Jerry O. Soldevilla Production Personnel
September 18, 1995 to September
18, 1996
Alumamay O. Jamias Ma. Concepcion A. Dela Cruz Production
vs NLRC Personnel September 18, 1995 to
September 18, 1996
G. R. No. 159350 March 09, Jennifer Cruz Data Encoder November 20,
2016 1995 to November 20, 1996
Jennifer Matuguinas Data Encoder
November 20, 1995 to November 20,
FACTS: 1996

Respondent Innodata Philippines, Inc.

(Innodata), a domestic corporation engaged
in the business of data processing and
conversion for foreign clients, hired the
following individuals on various dates and
under the following terms, to wit:
Name Position Duration of Contract
After their respective contracts expired, the
aforenamed individuals filed a complaint for
illegal dismissal claiming that Innodata had
made it appear that they had been hired as
project employees in order to prevent them
from becoming regular employees.
Labor Arbiter:
Dismissed the complaint for lack of merit. He
found and HELD: that the petitioners had
knowingly signed their respective contracts
in which the durations of their engagements
were clearly stated; and that their fixed term
contracts, being exceptions to Article 280 of
the Labor Code, precluded their claiming
regularization.
National Labor Relations Commission (NLRC)
affirmed the decision of the Labor Arbiter.
The CA (Court of Appeals) upHELD: the NLRC.
It observed that the desirability and
necessity of the functions being discharged
by the petitioners did not make them regular
employees; that Innodata and the
employees could still validly enter into their
contracts of employment for a fixed period
provided they had agreed upon the same at
the time of the employees' engagement;
that Innodata's operations were contingent
on job orders or undertakings for its foreign
clients; and that the availability of contracts
from foreign clients, and the duration of the
employments could not be treated as
permanent, but coterminous with the
projects.
ISSUE:
Whether or not a fixed period in a contract
of employment signify an intention to
circumvent Article 280 of the Labor Code.
(NO)
HELD:
No. A fixed period in a contract of
employment does not by itself signify an
intention to circumvent Article 280 of the
Labor Code.
Article 280 of the Labor Code provides:
Art. 280. Regular and Casual Employment. -
The provisions of written agreement to the
contrary notwithstanding and regardless of
the oral agreements of the parties, an
employment shall be deemed to be regular
where the employee has been engaged to
perform activities which are usually
necessary or desirable in the usual business
or trade of the employer except where the
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined
at the time of the engagement of the
employee or where the work or service to be
performed is seasonal in nature and the
employment is for the duration of the
season.
An employment shall be deemed casual if it
is not covered by the preceding paragraph:
Provided, That, any employee who has
rendered at least one year of service,
whether such service is continuous or
broken, shall be considered a regular
employee with respect to the activity in
which he is employed and his employment
shall continue while such actually exists.
The provision contemplates three kinds of
employees, namely: (a) regular employees;
(b) project employees; and (c) casuals who
are neither regular nor project employees.
The nature of employment of a worker is
determined by the factors provided in Article
280 of the Labor Code, regardless of any
stipulation in the contract to the contrary.
Thus, in Brent School, Inc. v. Zamora, we
explained that the clause referring to written
contracts should be construed to refer to
agreements entered into for the purpose of
circumventing the security of tenure.
Obviously, Article 280 does not preclude an
agreement providing for a fixed term of
employment knowingly and voluntarily
executed by the parties.
98. VIernes, et. al. vs NLRC (Banuelos)
TOPIC: Term Employment (contra)
G.R. No. 108405 April 4, 2003
JAIME D. VIERNES, CARLOS R. GARCIA,
BERNARD BUSTILLO, DANILO C. BALANAG,
FERDINAND DELLA, EDWARD A. ABELLERA,
ALEXANDER ABANAG, DOMINGO ASIA,
FRANCISCO BAYUGA, ARTHUR M. ORIBELLO,
BUENAVENTURA DE GUZMAN, JR., ROBERT
A. ORDOÑO, BERNARD V. JULARBAL,
IGNACIO C. ALINGBAS and LEODEL N.
SORIANO vs. NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION), and
BENGUET ELECTRIC COOPERATIVE, INC.
(BENECO).
Ponente: AUSTRIA-MARTINEZ, J.
FACTS:
Fifteen (15) in all, these are consolidated
cases for illegal dismissal, underpayment of
wages and claim for indemnity pay against
the Benguet Electric Cooperative, Inc.,
(BENECO for short) represented by its Acting
General Manager, Gerardo P. Versoza.
Complainants’ services as meter readers
were contracted for hardly a month’s
duration, or from October 8 to 31, 1990.
Their employment contracts, couched in
identical terms, read:
You are hereby appointed as METER READER
(APPRENTICE) under BENECO-NEA
Management with compensation at the rate
of SIXTY-SIX PESOS AND SEVENTY-FIVE
CENTAVOS (P66.75) per day from October 08
to 31, 1990.

The said term notwithstanding, the
complainants were allowed to work beyond
October 31, 1990, or until January 2, 1991.
On January 3, 1991, they were each served
their identical notices of termination dated
December 29, 1990. The same read:
Please be informed that effective at the
close of office hours of December 31, 1990,
your services with the BENECO will be
terminated. Your termination has nothing to
do with your performance. Rather, it is
because we have to retrench on personnel
as we are already overstaffed.
On the same date, the complainants filed
separate complaints for illegal dismissal. And
following the amendment of said
complaints, they submitted their joint
position paper on April 4, 1991.
It is the contention of the complainants that
they were not apprentices but regular
employees whose services were illegally and
unjustly terminated in a manner that was
whimsical and capricious. On the other
hand, BENGUET ELECTRIC COOPERATIVE,
INC. invokes Article 283 of the Labor Code in
defense of the questioned dismissal.
x x x x ART. 283. Closure of establishment
and reduction of personnel. - The employer
may also terminate the employment of any
employee due to the installation of labor-
saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation
of operation of the establishment or
undertaking x x x x.
Legal ISSUE: W/N the said illegal dismissed
employees are considered to be regular.
HELD:
YES. VIERNES, et. al., notwithstanding only
serving hardly a month’s duration, are
considered regular employees in the
BENGUET ELECTRIC COOPERATIVE.
Reinstatement means restoration to a state
or condition from which one had been
removed or separated.10 In case of
probationary employment, Article 281 of the
Labor Code requires the employer to make
known to his employee at the time of the
latter’s engagement of the reasonable
standards under which he may qualify as a
regular employee.
A review of the records shows that VIERNES,
ET. AL. have never been probationary
employees. There is nothing in the letter of
appointment, to indicate that their
employment as meter readers was on a
probationary basis. It was not shown that
VIERNES, ET. AL. were informed by the
BENGUET ELECTRIC COOPERATIVE, INC., at
the time of the latter’s employment, of the
reasonable standards under which they
could qualify as regular employees. Instead,
VIERNES, ET. AL. were initially engaged to
perform their job for a limited duration, their
employment being fixed for a definite
period, from October 8 to 31, 1990.
BENGUET ELECTRIC COOPERATIVE, INC.’s
reliance on the case of Brent School, Inc. vs.
Zamora, wherein we HELD: as follows is
misplaced:
Accordingly, and since the entire purpose
behind the development of legislation
culminating in the present Article 280 of the
Labor Code clearly appears to have been, as
already observed, to prevent circumvention
of the employee’s right to be secure in his
tenure, the clause in said article
indiscriminately and completely ruling out all
written or oral agreements conflicting with
the concept of regular employment as
defined therein should be construed to refer
to the substantive evil that the Code itself
has singled out: agreements entered into
precisely to circumvent security of tenure. It
should have no application to instances
where a fixed period of employment was
agreed upon knowingly and voluntarily by
the parties, without any force, duress or
improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent, or
where it satisfactorily appears that the
employer and employee dealt with each
other on more or less equal terms with no
moral dominance whatever being exercised
by the former over the latter.
The principle we have enunciated in Brent
applies only with respect to fixed term
employments. While it is true that VIERNES,
ET. AL. were initially employed on a fixed
term basis as their employment contracts
were only for October 8 to 31, 1990, after
October 31, 1990, they were allowed to
continue working in the same capacity as
meter readers without the benefit of a new
contract or agreement or without the term
of their employment being fixed anew. After
October 31, 1990, the employment of
VIERNES, ET. AL. is no longer on a fixed term
basis. The complexion of the employment
relationship of VIERNES, ET. AL. and
BENGUET ELECTRIC COOPERATIVE, INC. is
thereby totally changed. VIERNES, ET. AL.
have attained the status of regular
employees.
Under Article 280 of the Labor Code, a
regular employee is one who is engaged to
perform activities which are necessary or
desirable in the usual business or trade of
the employer, or a casual employee who has
rendered at least one year of service,
whether continuous or broken, with respect
to the activity in which he is employed.
In De Leon vs. NLRC, and Abasolo vs. NLRC,
we laid down the test in determining regular
employment, to wit:
The primary standard, therefore, of
determining regular employment is the
reasonable connection between the
particular activity performed by the
employee in relation to the usual trade or
business of the employer. The test is
whether the former is usually necessary or
desirable in the usual business or trade of
the employer. The connection can be
determined by considering the nature of the
work performed and its relation to the
scheme of the particular business or trade in
its entirety. Also if the employee has been
performing the job for at least a year, even if
the performance is not continuous and
merely intermittent, the law deems
repeated and continuing need for its
performance as sufficient evidence of the
necessity if not indispensability of that
activity to the business. Hence, the
employment is considered regular, but only
with respect to such activity and while such
activity exists.15
Clearly therefrom, there are two separate
instances whereby it can be determined that
an employment is regular: (1) The particular
activity performed by the employee is
necessary or desirable in the usual business
or trade of the employer; or (2) if the
employee has been performing the job for at
least a year.
Herein VIERNES, ET. AL. fall under the first
category. They were engaged to perform
activities that are necessary to the usual
business of BENGUET ELECTRIC
COOPERATIVE, INC.. We agree with the labor
arbiter’s pronouncement that the job of a
meter reader is necessary to the business of
BENGUET ELECTRIC COOPERATIVE, INC.
because unless a meter reader records the
electric consumption of the subscribing
public, there could not be a valid basis for
billing the customers of BENGUET ELECTRIC
COOPERATIVE, INC.. The fact that the
VIERNES, ET. AL. were allowed to continue
working after the expiration of their
employment contract is evidence of the
necessity and desirability of their service to
BENGUET ELECTRIC COOPERATIVE, INC.’s
business. In addition, during the preliminary
hearing of the case on February 4, 1991,
BENGUET ELECTRIC COOPERATIVE, INC.
even offered to enter into another
temporary employment contract with
VIERNES, ET. AL.. This only proves BENGUET
ELECTRIC COOPERATIVE, INC.’s need for the
services of herein VIERNES, ET. AL.. With the
continuation of their employment beyond
the original term, VIERNES, ET. AL. have
become full-fledged regular employees. The
fact alone that VIERNES, ET. AL. have
rendered service for a period of less than six
months does not make their employment
status as probationary.
Since VIERNES, ET. AL. are already regular
employees at the time of their illegal
dismissal from employment, they are
entitled to be reinstated to their former
position as regular employees, not merely
probationary.
99. Cocomangas Hotel Beach Resort vs Visca
(Caubang)
100. HANJIN HEAVY INDUSTRIES AND Petitioners maintained that respondents
CONSTRUCTION CO. LTD., HAK KON KIM were hired as project employees for the
and/or JHUNIE ADAJAR, vs. FELICITO IBAÑEZ, construction of the LRT/MRT Line 2 Package
ALIGWAS CAROLINO, ELMER GACULA, 2 and 3 Project. HANJIN and respondents
ENRIQUE DAGOTDOT AND RUEL CALDA purportedly executed contracts of
Petitioner HANJIN is a foreign company duly employment, in which it was clearly
registered with the Securities and Exchange stipulated that the respondents were to be
Commission to engage in the construction hired as project employees for a period of
business. Petitioners Hak Kon Kim and only three months, but that the contracts
Jhunie Adajar were employed as Project may be renewed.
Director and Supervisor, respectively, by
HANJIN. Petitioners emphasized that the project
director notified respondents of the
Respondents filed a complaint before the company's intention to reduce its manpower
NLRC for illegal dismissal with prayer for due to the completion of the LRT/MRT Line
reinstatement and full backwages against 2 Package 2 and 3 Project. Respondents
petitioners. were among the project employees who
were thereafter laid off.
Respondents stated that their tasks were
usual and necessary or desirable in the usual Petitioners attached copies of the
business or trade of HANJIN. Respondents Quitclaims,12 executed by the respondents,
additionally averred that they were which uniformly stated that the latter
employed as members of a work pool from received all wages and benefits that were
which HANJIN draws the workers to be due them and released HANJIN and its
dispatched to its various construction representatives from any claims in
projects; with the exception of Ruel Calda, connection with their employment. These
who as a warehouseman was required to Quitclaims also contained Clearance
work in HANJIN's main office. Certificates which confirmed that the
employees concerned were cleared of all
Hanjin dismissed respondents from accountabilities at the close of the working
employment. Respondents claimed that at hours on 15 April 2002.
the time of their dismissal, HANJIN had
several construction projects that were still W/N they were project employees.
in progress.
No. Article 280 of the Labor Code
distinguishes a "project employee" from a
"regular employee" thus:
Article 280. Regular and Casual
Employment-The provisions of written
agreement to the contrary notwithstanding
and regardless of the oral agreement of the
parties, an employment shall be deemed to
be regular where the employee has been
engaged to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer, except
where the employment has been fixed for a
specific project or undertaking the
completion or termination of which has
been determined at the time of the
engagement of the employee or where the
work or services to be performed is seasonal
in nature and the employment is for the
duration of the season.
An employment shall be deemed to be
casual if it is not covered by the preceding
paragraph: Provided, That, any employee
who has rendered at least one year service,
whether such service is continuous or
broken, shall be considered a regular
employee with respect to the activity in
which he is employed and his employment
shall continue while such activity exists.
(Emphasis supplied.)
From the foregoing provision, the principal
test for determining whether particular
employees are properly characterized as
"project employees" as distinguished from
"regular employees" is whether or not the
project employees were assigned to carry
out a "specific project or undertaking," the
duration and scope of which were specified
at the time the employees were engaged for
that project.
Employees who are hired for carrying out a
separate job, distinct from the other
undertakings of the company, the scope and
duration of which has been determined and
made known to the employees at the time of
the employment, are properly treated as
project employees and their services may be
lawfully terminated upon the completion of
a project.26 Should the terms of their
employment fail to comply with this
standard, they cannot be considered project
employees.
During the proceedings before the Labor
Arbiter, the petitioners' failure to produce
respondents' contracts of employment was
already noted, especially after they alleged
in their pleadings the existence of such
contracts stipulating that respondents'
employment would only be for the duration
of three months, automatically renewed in
the absence of notice, and terminated at the
completion of the project. Respondents
denied having executed such contracts with
HANJIN. In their appeal before the NLRC until
the present, petitioners now claim that due
to a lapse in management procedure, no
such employment contracts were executed;
nonetheless, the absence of a written
contract does not remove respondents from
the ambit of being project employees.30
While the absence of a written contract does
not automatically confer regular status, it
has been construed by this Court as a red flag
in cases involving the question of whether
the workers concerned are regular or project
employees. In cases where this Court ruled
that construction workers repeatedly
rehired retained their status as project
employees, the employers were able to
produce employment contracts clearly
stipulating that the workers' employment
was coterminous with the project to support
their claims that the employees were
notified of the scope and duration of the
project.
Hence, even though the absence of a written
contract does not by itself grant regular
status to respondents, such a contract is
evidence that respondents were informed of
the duration and scope of their work and
their status as project employees. In this
case, where no other evidence was offered,
the absence of an employment contract puts
into serious question whether the
employees were properly informed at the
onset of their employment status as project
employees. It is doctrinally entrenched that
in illegal dismissal cases, the employer has
the burden of proving with clear, accurate,
consistent and convincing evidence that a
dismissal was valid.35 Absent any other
proof that the project employees were
informed of their status as such, it will be
presumed that they are regular employees
in accordance with Clause 3.3(a) of
Department Order No. 19, Series of 1993,
which states that:
a) Project employees whose aggregate
period of continuous employment in a
construction company is at least one year
shall be considered regular employees, in
the absence of a "day certain" agreed upon
by the parties for the termination of their
relationship. Project employees who have
become regular shall be entitled to
separation pay.
A "day" as used herein, is understood to be
that which must necessarily come, although
it may not be known exactly when. This
means that where the final completion of a
project or phase thereof is in fact
determinable and the expected completion
is made known to the employee, such
project employee may not be considered
regular, notwithstanding the one-year
duration of employment in the project or
phase thereof or the one-year duration of
two or more employments in the same
project or phase of the project. (Emphasis
provided.)
Petitioners were not able to offer evidence
to refute or controvert the respondents'
claim that they were assigned to various
construction projects. Had respondents'
allegations been false, petitioners could
simply present as evidence documents and
records in their custody to disprove the
same, i.e., payroll for such projects or
termination reports, which do not bear
respondents' names. Petitioners, instead,
chose to remain vague as to
circumstances surrounding the hiring of the
respondents. This Court finds it unusual that
petitioners cannot even categorically state
the exact year when HANJIN employed
respondents.
101. PNOC Energy Development vs NLRC
(Dosdos)
102. Mercado vs NLRC (Dulay)
103. Hacienda Fatima vs Natl Federation of
Sugarcane Workers (Macatol)
HACIENDA FATIMA and/or PATRICIO
VILLEGAS, ALFONSO VILLEGAS and CRISTINE
SEGURA, petitioners, vs. NATIONAL
FEDERATION OF SUGARCANE WORKERS-
FOOD AND GENERAL TRADE, respondents.
G.R. No. 149440. January 28,
PANGANIBAN, J.:
FACTS:
The petitioner disfavored the fact that the
private respondent employees have formed
a union. When the union became the
collective bargaining representative in the
certification election, the petitioner refused
to sit down to negotiate a CBA. Moreover,
the respondents were not given work for a
month amounting to unjustified dismissal.
As a result, the complainants staged a strike
to protest but was settled through a
memorandum of agreement which
contained a list of those considered as
regular employees for the payroll.
the The NLRC HELD: that there was illegal
dismissal and this was affirmed by the Court
of Appeals.
ISSUE:
Whether respondents, admittedly seasonal
workers, were regular employees.
Respondents were regular employees.
HELD:
Article 280 of the Labor Code, as amended,
states:
Art. 280. Regular and Casual Employment. -
The provisions of written agreement to the
contrary notwithstanding and regardless of
the oral agreement of the parties, an
2003 employment shall be deemed to be regular
where the employee has been engaged to
perform activities which are usually
necessary or desirable in the usual business
or trade of the employer, except where the
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined
at the time of the engagement of the
employee or where the work or services to
be performed is seasonal in nature and the
employment is for the duration of the
season.

An employment shall be deemed to be
casual if it is not covered by the preceding
paragraph: Provided, That, any employee
who has rendered at least one year of
service, whether such service is continuous
or broken, shall be considered a regular
employee with respect to the activity in
which he is employed and his employment
shall continue while such activity exist.
For respondents to be excluded from those
classified as regular employees, it is not
enough that they perform work or services
that are seasonal in nature. They must have
also been employed only for the duration of
one season. The evidence proves the
existence of the first, but not of the second,
condition. The fact that respondents -- with
the exception of Luisa Rombo, Ramona
Rombo, Bobong Abriga and Boboy Silva --
repeatedly worked as sugarcane workers for
petitioners for several years is not denied by
the latter. Evidently, petitioners employed
respondents for more than one season.
Therefore, the general rule of regular
employment is applicable.
In Abasolo v. National Labor Relations
Commission,[13] the Court issued this
clarification:
[T]he test of whether or not an employee is
a regular employee has been laid down in De
Leon v. NLRC, in which this Court HELD:
The primary standard, therefore, of
determining regular employment is the
reasonable connection between the
particular activity performed by the
employee in relation to the usual trade or
business of the employer. The test is
whether the former is usually necessary or
desirable in the usual trade or business of
the employer. The connection can be
determined by considering the nature of the
work performed and its relation to the
scheme of the particular business or trade in
its entirety. Also if the employee has been
performing the job for at least a year, even if
the performance is not continuous and
merely intermittent, the law deems
repeated and continuing need for its
performance as sufficient evidence of the
necessity if not indispensability of that
activity to the business. Hence, the
employment is considered regular, but only
with respect to such activity and while such
activity exists.
x x x [T]he fact that [respondents] do not
work continuously for one whole year but
only for the duration of the x x x season does
not detract from considering them in regular
employment since in a litany of cases this
Court has already settled that seasonal
workers who are called to work from time to
time and are temporarily laid off during off-
season are not separated from service in said
period, but merely considered on leave until
re-employed.
The sudden changes in work assignments
reeked of bad faith. These changes were
implemented immediately after
respondents had organized themselves into
a union and started demanding collective
bargaining. Those who were union members
were effectively deprived of their jobs.
Petitioners move actually amounted to
unjustified dismissal of respondents, in
violation of the Labor Code.
Where there is no showing of clear, valid and
legal cause for the termination of
employment, the law considers the matter a
case of illegal dismissal and the burden is on
the employer to prove that the termination
was for a valid and authorized cause. In the
case at bar, petitioners failed to prove any
such cause for the dismissal of respondents
who, as discussed above, are regular
employees.
104. Gapayao vs Fulo and SSS (Pacquiao, L)
G.R. No. 193493 June 13, 2013
JAIME N. GAPAYAO, Petitioner,
Vs. ROSARIO FULO, SOCIAL SECURITY
SYSTEM and SOCIAL SECURITY
COMMISSION, Respondents.
FACTS:
Jaime Fulo had been working in a farm
owned by Jaime Gapayao since 1983. In
November 1997, Jaime Fulo was
electrocuted while working in the said farm.
Jaime Fulo died. Thereafter, Rosario Fulo,
the widow of Jaime Fulo, filed a claim for
death benefits before the SSS (Social
Security System). It turned out however that
Jaime Fulo was never registered with the
SSS. Eventually, SSS ordered Gapayao, as the
employer, to pay the SSS contributions due
with penalty.
Gapayao averred he cannot be made liable
to pay the SSS contributions because
according to him there was no employer-
employee relationship between him and
Jaime Fulo. He argued, among others, that
Jaime Fulo was not his employee because:
1. he did not work regular hours as he was
only called when needed and that Fulo can
even look for other jobs elsewhere if he
wanted to. In fact, Fulo also worked for some
other people;
2. he was only an “extra” in the farm;
3. Gapayao had no control over him (lack of
control);
Petitioner alleges that the deceased is a
freelance worker. Since he was engaged on
a pakyaw basis and worked for a short period
of time, in the nature of a farm worker every
season, he was not precluded from working
with other persons and in fact worked for
them. Under Article 280 of the Labor Code,
seasonal employees are not covered by the
definitions of regular and casual employees.
Petitioner cites Mercado, Sr. v. NLRC, in
which the Court HELD: that seasonal workers
do not become regular employees by the
mere fact that they have rendered at least
one year of service, whether continuous or
broken.
ISSUES
1. Whether or not Jaime Fulo was an
employee of Jaime Gapayao (YES)
2. Whether or not farm workers may be
considered regular seasonal employees
(YES)
HELD:
1. Yes. Fulo was a regular employee and was
thus entitled to receive SSS benefits, among
others. The Supreme Court agreed with the
Court of Appeals in ruling that it “does not
follow that a person who does not observe
normal hours of work cannot be deemed an
employee.” It is also not material that
Gapayao never supervised Fulo.
In this case, the number of hours worked is
not material. Gapayao is considered a
pakyaw worker. Pakyaw workers are
considered regular employees for as long as
their employers have control over them. The
power of the employer to control the work
of the employee is considered the most
significant determinant of the existence of
an employer-employee relationship. This is
the so-called control test and is premised on
whether the person for whom the services
are performed reserves the right to control
both the end achieved and the manner and
means used to achieve that end.” It should
be remembered that the control test merely
calls for the existence of the right to control,
and not necessarily the exercise thereof. It is
not essential that the employer actually
supervises the performance of duties by the
employee. It is enough that the former has a
right to wield the power.
2. Yes. Farm workers generally fall under the
definition of seasonal employees. We have
consistently HELD: that seasonal employees
may be considered as regular employees.
Regular seasonal employees are those called
to work from time to time. The nature of
their relationship with the employer is such
that during the off season, they are
temporarily laid off; but reemployed during
the summer season or when their services
may be needed. They are in regular
employment because of the nature of their
job,and not because of the length of time
they have worked.
The rule, however, is not absolute.
A reading of the records reveals that the
deceased was indeed a farm worker who
was in the regular employ of petitioner.
From year to year, starting January 1983 up
until his death, the deceased had been
working on petitioner’s land by harvesting
abaca and coconut, processing copra, and
clearing weeds. His employment was
continuous in the sense that it was done for
more than one harvesting season.
Moreover, no amount of reasoning could
detract from the fact that these tasks were
necessary or desirable in the usual business
of petitioner.
105. Universal Robina Sugar Milling
Corporation and Rene (GR No. 186439)
FACTS:FERDINAND ACIBO, et al. were
employees of UNIVERSAL ROBINA SUGAR
MILLING CORPORATION (URSUMCO). Acibo,
et al. signed contracts of employment for a
given period and after its expiration,
URSUMCO repeatedly hired these
employees to perform the same duties and
obligations.
Acibo, et al. filed a complaint before the
Labor Arbiter for regularization however it
was denied because the LA argued that they
were seasonal employees. Seven of the 22
complainants filed an appeal to the NLRC.
The latter reversed the LA’s ruling claiming
that they were regular employees. The CA
affirmed NLRC’s decision but excluded the
Acibo, et al. from monetary benefits under
the CBA.
ISSUE: Whether or not Acibo, et al. are
regular employees of URSUMCO.
HELD: Plantation workers or mill employees
only work on seasonal basis. This, however,
does not exclude them from the benefits of
regularization. Being in such nature, Acibo,
et al. are considered to be regular
employees.
Regular employment means that there was
an arrangement between the employee and
the employer that the former will be
engaged to perform activities which are
necessary or desirable to the usual business
or trade of the latter. On the other hand, a
project employment is an arrangement for a
specific project or undertaking whose
termination is determined by the
completion of the project.
The nature of the employment does not
depend solely on the will or word of the
employer or on the procedure for hiring and
the manner of designating the employee.
Rather, the nature of the employment
depends on the nature of the activities to be
performed by the employee, considering the
nature of the employer’s business, the
duration and scope to be done. Accordingly,
Acibo, et al. are neither project nor seasonal
employees.
Acibo, et al. were made to perform tasks that
does not pertain to milling operations of
URSUMCO. However, their duties are
regularly and habitually needed in
URSUMCO’s operation. Moreover, they
were regularly and repeatedly hired to
perform the same tasks. Being repeatedly
hired for the same purpose makes them
regularized employees.
The plantation workers or the mill
employees do not work continuously for 1
whole year but only for the duration of the
growing or the sugarcane or the milling
season. Their seasonal work, however, does
not detract from considering them in regular
employment.
106. Rural Bank of Cantilan vs Julve (Roxas)
RURAL BANK OF CANTILAN, INC., and
WILLIAM HOTCHKISS III, Petitioners,
vs.
ARJAY RONNEL H. JULVE, Respondent.
FACTS:
On August 1, 1997, the Rural Bank of
Cantilan, Inc., petitioner, hired Arjay Ronnel
H. Julve as a management trainee. Later, he
was appointed as planning and marketing
officer.
On June 18, 2001, William Hotchkiss III (also
a petitioner), president of petitioner bank,
issued a memorandum addressed to all its
branch managers informing them of the
abolition of the positions of planning and
marketing officer and remedial officer; that
this was undertaken in accordance with the
bank’s Personnel Streamlining Program; and
that the operations officer shall absorb the
functions of the abolished offices.
On July 18, 2001, Hotchkiss sent Julve a
memorandum stating that he has been
appointed bookkeeper I at the bank’s branch
in Madrid, Surigao del Sur effective
immediately with the same salary
corresponding to his old position. Initially,
Julve agreed to accept the appointment, but
eventually, he changed his mind and
withdrew because he felt that this was a
demotion.
Julve filed with the Regional Arbitration
Branch, NLRC a complaint for constructive
dismissal against Rural Bank.
ISSUE: WON the transfer was valid
Ruling: Yes
Under the doctrine of management
prerogative, every employer has the
inherent right to regulate, according to his
own discretion and judgment, all aspects of
employment, including hiring, work
assignments, working methods, the time,
place and manner of work, work supervision,
transfer of employees, lay-off of workers,
and discipline, dismissal, and recall of
employees. The only limitations to the
exercise of this prerogative are those
imposed by labor laws and the principles of
equity and substantial justice.
While the law imposes many obligations
upon the employer, nonetheless, it also
protects the employer’s right to expect from
its employees not only good performance,
adequate work, and diligence, but also good
conduct and loyalty. In fact, the Labor Code
does not excuse employees from complying
with valid company policies and reasonable
regulations for their governance and
guidance.

Concerning the transfer of employees, these
are the following jurisprudential guidelines:
(a) a transfer is a movement from one
position to another of equivalent rank, level
or salary without break in the service or a
lateral movement from one position to
another of equivalent rank or salary; (b) the
employer has the inherent right to transfer
or reassign an employee for legitimate
business purposes; (c) a transfer becomes
unlawful where it is motivated by
discrimination or bad faith or is effected as a
form of punishment or is a demotion
without sufficient cause; (d) the employer
must be able to show that the transfer is not
unreasonable, inconvenient, or prejudicial
to the employee.
Constructive dismissal is defined as "quitting
when continued employment is rendered
impossible, unreasonable, or unlikely as the
offer of employment involves a demotion in
rank and diminution of pay."
Julve contends that the abolition of his
position as planning and marketing officer
and his appointment as bookkeeper I and
assistant branch head of the Madrid Branch
is a demotion. However, a look at the
functions of his new position shows the
contrary. The bookkeeper and assistant
branch head is not only charged with
preparing financial reports and monthly
bank reconciliations, he is also the head of
the Accounting Department of a branch.
Under any standard, these are supervisory
and administrative tasks which entail great
responsibility. Moreover, respondent’s
transfer did not decrease his pay.
Nor was respondent’s transfer motivated by
ill-will or prejudice on the part of petitioners.
His position was not the only one abolished
pursuant to the bank’s Personnel
Streamlining Program. We recall that the
position of remedial officer was likewise
abolished. Petitioners’ reason was to acquire
savings from the salaries it would pay to full-
time personnel in these positions.
Finally, we note that despite respondent’s
refusal to accept the new appointment,
petitioners did not dismiss him. Rather, it
was he who opted to terminate his
employment when he purposely failed to
report for work
107. Echevarria vs Venutek Medika (Soriano)
108. Benguet Electric Cooperative vs. Caleja,
180 SCRA 740 (Banuelos)
TOPIC: Who cannot unionize for purposes of
collective bargaining (member of
cooperative)
G.R. No. 79025. December 29, 1989
BENGUET ELECTRIC COOPERATIVE, INC. vs.
HON. PURA FERRER-CALLEJA, Director of the
Bureau of Labor Relations, and BENECO
EMPLOYEES LABOR UNION.
Ponente: CORTES, J.
FACTS:
On June 21, 1985 Beneco Worker's Labor
Union-Association of Democratic Labor
Organizations (hereinafter referred to as
BWLU- ADLO) filed a petition for direct
certification as the sole and exclusive
bargaining representative of all the rank and
file employees of Benguet Electric
Cooperative, Inc. (hereinafter referred to as
BENECO) at Alapang, La Trinidad, Benguet
alleging, inter alia, that BENECO has in its
employ two hundred and fourteen (214)
rank and file employees; that one hundred
and ninety-eight (198) or 92.5% of these
employees have supported the filing of the
petition; that no certification election has
been conducted for the last 12 months; that
there is no existing collective bargaining
representative of the rank and file
employees sought to represented by BWLU-
ADLO; and, that there is no collective
bargaining agreement in the cooperative.
An opposition to the petition was filed by the
Beneco Employees Labor Union (hereinafter
referred to as BELU) contending that it was
certified as the sole and exclusive bargaining
representative of the subject workers
pursuant to an order issued by the med-
arbiter on October 20,1980; that pending
resolution by the National Labor Relations
Commission are two cases it filed against
BENECO involving bargaining deadlock and
unfair labor practice; and, that the pendency
of these cases bars any representation
question.
BENECO, on the other hand, filed a motion
to dismiss the petition claiming that it is a
non-profit electric cooperative engaged in
providing electric services to its members
and patron-consumers in the City of Baguio
and Benguet Province; and, that the
employees sought to be represented by
BWLU-ADLO are not eligible to form, join or
assist labor organizations of their own
choosing because they are members and
joint owners of the cooperative.
BENECO asserts that the certification
election HELD: on October 1, 1986 was null
and void since members-employees of
BENGUET ELECTRIC COOPERATIVE, INC. who
are not eligible to form and join a labor union
for purposes of collective bargaining were
allowed to vote therein.
HON. CALLEJA and BELU on the other hand
submit that members of a cooperative who
are also rank and file employees are eligible
to form, assist or join a labor union.
HON. CALLEJA argues that to deny the
members of BENGUET ELECTRIC
COOPERATIVE, INC. the right to form, assist
or join a labor union of their own choice for
purposes of collective bargaining would
amount to a patent violation of their right to
self-organization. She points out that:
Albeit a person assumes a dual capacity as
rank and file employee and as member of a
certain cooperative does not militate, as in
the instant case, against his/her exercise of
the right to self-organization and to
collective bargaining guaranteed by the
Constitution and Labor Code because, while
so doing, he/she is acting in his/her capacity
as rank and file employee thereof. It may be
added that while the employees concerned
became members of BENGUET ELECTRIC
COOPERATIVE, INC., their status
employment as rank and filers who are hired
for fixed compensation had not changed.
They still do not actually participate in the
management of the cooperative as said
function is entrusted to the Board of
Directors and to the elected or appointed
officers thereof. They are not vested with
the powers and prerogatives to lay down
and execute managerial policies; to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees; and/or to
effectively recommend such managerial
functions [Comment of HON. CALLEJA, p. 4;
Rollo, p. 125.]
BELU concurs with the above contention of
HON. CALLEJA and, additionally, claims that
since membership in BENGUET ELECTRIC
COOPERATIVE, INC. is only nominal, the rank
and file employees who are members
thereof should not be deprived of their right
to self-organization.
Legal ISSUE: W/N members of the
cooperative, who are also part-owners
thereof, is eligible to form a union.
HELD:
NO. Cooperative members, being part-
owners, are not entitled to the right of
forming a union.
Under Article 256 of the Labor Code [Pres.
Decree 442] to have a valid certification
election, "at least a majority of all eligible
voters in the unit must have cast their votes.
The labor union receiving the majority of the
valid votes cast shall be certified as the
exclusive bargaining agent of all workers in
the unit."
The issue of whether or not employees of a
cooperative are qualified to form or join a
labor organization for purposes of collective
bargaining has already been resolved and
clarified in the case of Cooperative Rural
Bank of Davao City, Inc. vs. Ferrer Calleja, et
al. [G.R. No. 7795, September 26,1988] and
reiterated in the cases of Batangas-Electric
Cooperative Labor Union v. Young, et al.
[G.R. Nos. 62386, 70880 and 74560
November 9, 1988] and San Jose City Electric
Service Cooperative, Inc. v. Ministry of Labor
and Employment, et al. [G.R. No. 77231, May
31, 1989] wherein the Court had stated that
the right to collective bargaining is not
available to an employee of a cooperative
who at the same time is a member and co-
owner thereof. With respect, however, to
employees who are neither members nor
co-owners of the cooperative they are
entitled to exercise the rights to self-
organization, collective bargaining and
negotiation as mandated by the 1987
Constitution and applicable statutes.
Contrary to HON. CALLEJA AND BELU's claim,
the fact that the members-employees of
BENGUET ELECTRIC COOPERATIVE, INC. do
not participate in the actual management of
the cooperative does not make them eligible
to form, assist or join a labor organization for
the purpose of collective bargaining with
BENGUET ELECTRIC COOPERATIVE, INC. The
Court's ruling in the Davao City case that
members of cooperative cannot join a labor
union for purposes of collective bargaining
was based on the fact that as members of
the cooperative they are co-owners thereof.
As such, they cannot invoke the right to
collective bargaining for "certainly an owner
cannot bargain with himself or his co-
owners." [Cooperative Rural Bank of Davao
City, Inc. v. Ferrer-Calleja, et al., supra]. It is
the fact of ownership of the cooperative,
and not involvement in the management
thereof, which disqualifies a member from
joining any labor organization within the
cooperative.
Thus, irrespective of the degree of their
participation in the actual management of
the cooperative, all members thereof cannot
form, assist or join a labor organization for
the purpose of collective bargaining.
109. Republic of the Philippines represented
by SSS vs. AsiaPro Cooperative,
G.R. No. 172101, 23 Nov 2007 (Caubang)
FACTS:
Respondent Asiapro, as a cooperative, is
composed of owners-members. Under its
by-laws, owners-members are of two
categories, to wit: (1) regular member, who
is entitled to all the rights and privileges of
membership; and (2) associate member,
who has no right to vote and be voted upon
and shall be entitled only to such rights and
privileges provided in its by-laws. Its primary
objectives are to provide savings and credit
facilities and to develop other livelihood
services for its owners-members. In the
discharge of the aforesaid primary
objectives, respondent cooperative entered
into several Service Contracts with Stanfilco.
The owners-members do not receive
compensation or wages from the
respondent cooperative. Instead, they
receive a share in the service surplus which
the respondent cooperative earns from Respondent cooperative, through its
different areas of trade it engages in, such as counsel, sent a reply to petitioner SSSs letter
the income derived from the said Service asserting that it is not an employer because
Contracts with Stanfilco. The owners- its owners-members are the cooperative
members get their income from the service itself; hence, it cannot be its own employer.
surplus generated by the quality and amount Again, petitioner SSS sent a letter to
of services they rendered, which is respondent cooperative ordering the latter
determined by the Board of Directors of the to register as an employer and report its
respondent cooperative. owners-members as employees for
compulsory coverage with the petitioner
In order to enjoy the benefits under the SSS. Respondent cooperative continuously
Social Security Law of 1997, the owners- ignored the demand of petitioner SSS.
members of the respondent cooperative,
who were assigned to Stanfilco requested Accordingly, petitioner SSS filed a Petition
the services of the latter to register them before petitioner SSC against the
with petitioner SSS as self-employed and to respondent cooperative and Stanfilco
remit their contributions as such. praying that the respondent cooperative or,
in the alternative, Stanfilco be directed to
However, petitioner SSS through its Vice- register as an employer and to report
President for Mindanao Division, Atty. Eddie respondent cooperatives owners-members
A. Jara, sent a letter to the respondent as covered employees under the compulsory
cooperative, addressed to its Chief Executive coverage of SSS and to remit the necessary
Officer (CEO) and General Manager Leo G. contributions in accordance with the Social
Parma, informing the latter that based on Security Law of 1997. Respondent
the Service Contracts it executed with cooperative filed its Answer with Motion to
Stanfilco, respondent cooperative is actually Dismiss alleging that no employer-employee
a manpower contractor supplying relationship exists between it and its
employees to Stanfilco and for that reason, owners-members, thus, petitioner SSC has
it is an employer of its owners-members no jurisdiction over the respondent
working with Stanfilco. Thus, respondent cooperative.
cooperative should register itself with
petitioner SSS as an employer and make the Petitioner SSC issued an Order denying the
corresponding report and remittance of Motion to Dismiss filed by the respondent
premium contributions in accordance with cooperative. Respondent cooperative filed a
the Social Security Law of 1997. Petition for Certiorari before the Court of
Appeals.

The Court of Appeals rendered a Decision
granting the petition filed by the respondent
cooperative. Hence, this Petition. In its
Memorandum, petitioners raise the issue of
whether or not the Court of Appeals erred in
not finding that the SSC has jurisdiction over
the subject matter and it has a valid basis in
denying respondents Motion to Dismiss.
ISSUE:
Whether the petitioner SSC has jurisdiction
over the petition-complaint filed before it by
petitioner SSS against the respondent
cooperative. (YES)
Ruling:
Petitioner SSCs jurisdiction is clearly stated
in Section 5 of Republic Act No. 8282 as well
as in Section 1, Rule III of the 1997 SSS
Revised Rules of Procedure.
Section 5 of Republic Act No. 8282 provides:
SEC. 5. Settlement of Disputes. (a) Any
dispute arising under this Act with respect to
coverage, benefits, contributions and
penalties thereon or any other matter
related thereto, shall be cognizable by the
Commission, x x x.
Similarly, Section 1, Rule III of the 1997 SSS
Revised Rules of Procedure states:
Section 1. Jurisdiction. Any dispute arising
under the Social Security Act with respect to
coverage, entitlement of benefits, collection
and settlement of contributions and
penalties thereon, or any other matter
related thereto, shall be cognizable by the
Commission after the SSS through its
President, Manager or Officer-in-charge of
the Department/Branch/Representative
Office concerned had first taken action
thereon in writing.
It is important to note, though, that the
mandatory coverage under the SSS Law is
premised on the existence of an employer-
employee relationship except in cases of
compulsory coverage of the self-employed.
In this case, the petition-complaint filed by
the petitioner SSS before the petitioner SSC
against the respondent cooperative and
Stanfilco alleges that the owners-members
of the respondent cooperative are subject to
the compulsory coverage of the SSS because
they are employees of the respondent
cooperative. Consequently, the respondent
cooperative being the employer of its
owners-members must register as employer
and report its owners-members as covered
members of the SSS and remit the necessary
premium contributions in accordance with
the Social Security Law of 1997. Accordingly,
based on the aforesaid allegations in the
petition-complaint filed before the
petitioner SSC, the case clearly falls within its
jurisdiction.

Nonetheless, since the existence of an
employer-employee relationship between
the respondent cooperative and its owners-
members was put in issue and considering
that the compulsory coverage of the SSS Law
is predicated on the existence of such
relationship, it behooves the petitioner SSC
to determine if there is really an employer-
employee relationship that exists between
the respondent cooperative and its owners-
members.
In determining the existence of an employer-
employee relationship, the following
elements are considered: (1) the selection
and engagement of the workers; (2) the
payment of wages by whatever means; (3)
the power of dismissal; and (4) the power to
control the workers conduct, with the latter
assuming primacy in the overall
consideration. The most important element
is the employers control of the employees
conduct, not only as to the result of the work
to be done, but also as to the means and
methods to accomplish. The power of
control refers to the existence of the power
and not necessarily to the actual exercise
thereof. It is not essential for the employer
to actually supervise the performance of
duties of the employee; it is enough that the
employer has the right to wield that power.
All the aforesaid elements are present in this
case.
It is true that the Service Contracts executed
between the respondent cooperative and
Stanfilco expressly provide that there shall
be no employer-employee relationship
between the respondent cooperative and its
owners-members. This Court, however,
cannot give the said provision force and
effect.
As previously pointed out by this Court, an
employee-employer relationship actually
exists between the respondent cooperative
and its owners-members. The four elements
in the four-fold test for the existence of an
employment relationship have been
complied with. The respondent cooperative
must not be allowed to deny its employment
relationship with its owners-members by
invoking the questionable Service Contracts
provision, when in actuality, it does exist.
The existence of an employer-employee
relationship cannot be negated by expressly
repudiating it in a contract, when the terms
and surrounding circumstances show
otherwise.
The agreed terms and conditions must not
be contrary to law, morals, customs, public
policy or public order. The Service Contract
provision in question must be struck down
for being contrary to law and public policy
since it is apparently being used by the
respondent cooperative merely to
circumvent the compulsory coverage of its
employees, who are also its owners-
members, by the Social Security Law.

This Court is not unmindful of the
pronouncement it made in Cooperative
Rural Bank of Davao City, Inc. v. Ferrer-
Calleja wherein it HELD: that:
A cooperative, therefore, is by its nature
different from an ordinary business concern,
being run either by persons, partnerships, or
corporations. Its owners and/or members
are the ones who run and operate the
business while the others are its employees
x x x.
An employee therefore of such a bargain collectively with the cooperative.
cooperative who is a member and co-owner
thereof cannot invoke the right to collective
bargaining for certainly an owner cannot
bargain with himself or his co-owners. In the
opinion of August 14, 1981 of the Solicitor
General he correctly opined that employees
of cooperatives who are themselves
members of the cooperative have no right to
form or join labor organizations for purposes
of collective bargaining for being themselves
co-owners of the cooperative.
However, in so far as it involves cooperatives
with employees who are not members or co-
owners thereof, certainly such employees
are entitled to exercise the rights of all
workers to organization, collective
bargaining, negotiations and others as are
enshrined in the Constitution and existing
laws of the country.
The situation in the aforesaid case is very
much different from the present case. The
declaration made by the Court in the
aforesaid case was made in the context of
whether an employee who is also an owner-
member of a cooperative can exercise the
right to bargain collectively with the
employer who is the cooperative wherein he
is an owner-member. Obviously, an owner-
member cannot bargain collectively with the
cooperative of which he is also the owner
because an owner cannot bargain with
himself. In the instant case, there is no issue
regarding an owner-members right to
The question involved here is whether an
employer-employee relationship can exist
between the cooperative and an owner-
member. In fact, a closer look at Cooperative
Rural Bank of Davao City, Inc. will show that
it actually recognized that an owner-
member of a cooperative can be its own
employee.
It bears stressing, too, that a cooperative
acquires juridical personality upon its
registration with the Cooperative
Development Authority. It has its Board of
Directors, which directs and supervises its
business; meaning, its Board of Directors is
the one in charge in the conduct and
management of its affairs. With that, a
cooperative can be likened to a corporation
with a personality separate and distinct from
its owners-members. Consequently, an
owner-member of a cooperative can be an
employee of the latter and an employer-
employee relationship can exist between
them.
In the present case, it is not disputed that the
respondent cooperative had registered itself
with the Cooperative Development
Authority, as evidenced by its Certificate of
Registration No. 0-623-2460. In its by-laws,
its Board of Directors directs, controls, and
supervises the business and manages the
property of the respondent cooperative.
Clearly then, the management of the affairs
of the respondent cooperative is vested in its
Board of Directors and not 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 Directors, can
enter into an employment with its owners-
members.
In sum, having declared that there is an
employer-employee relationship between
the respondent cooperative and its owners-
member, we conclude that the petitioner
SSC has jurisdiction over the petition-
complaint filed before it by the petitioner
SSS.
110. CORAZON C. SIM vs. NATIONAL LABOR
RELATIONS COMMISSION and EQUITABLE
PCI-BANK
Corazon Sim (petitioner) filed a case for
illegal dismissal with the Labor Arbiter,
alleging that she working at Equitable PCI-
Bank as Manager until she received a letter
informing her that she was being dismissed
due to loss of trust and confidence based on
alleged mismanagement and
misappropriation of funds.
Respondent denied any employer-employee
relationship between them, and sought the
dismissal of the complaint.
ISSUE: W/N there was illegal dismissal.
No. Petitioner does not deny having
withdrawn the amount of P3,000,000.00 lire
from the bank's account. What petitioner
submits is that she used said amount for the
Radio Pilipinas sa Roma radio program of the
company. Respondent, however, countered
that at the time she withdrew said amount,
the radio program was already off the air.
Respondent is a managerial employee. Thus,
loss of trust and confidence is a valid ground
for her dismissal. The mere existence of a
basis for believing that a managerial
employee has breached the trust of the
employer would suffice for his/her
dismissal.15
[w]hen an employee accepts a promotion to
a managerial position or to an office
requiring full trust and confidence, she gives
up some of the rigid guaranties available to
ordinary workers. Infractions which if
committed by others would be overlooked
or condoned or penalties mitigated may be

111. Philips industrial Development vs.
NLRC, 210 SCRA 339 (Dosdos)
PHILIPS INDUSTRIAL DEVELOPMENT, INC.,
petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and PHILIPS EMPLOYEES
ORGANIZATION (FFW), respondents.G.R.
No. 88957 June 25, 1992
PIDI is a domestic corporation engaged in
the manufacturing and marketing of
electronic products Since 1971, it had a total
of six (6) collective bargaining agreements
(CBAs) with private respondent Philips
Employees Organization-FFW (PEO-FFW), a
registered labor union and the certified
bargaining agent of all the rank and file
employees of PIDI. In the first CBA (1971-
1974), the supervisors referred to in R.A. No.
875, confidential employees, security
guards, temporary employees and sales
representatives were excluded from the
bargaining unit. In the second to the fifth
CBAs (1975-1977; 1978-1980; 1981-1983;
and 1984-1986), the sales force, confidential
employees and heads of small units,
together with the managerial employees,
temporary employees and security
personnel, were specifically excluded from
the bargaining unit. 1 The confidential
employees are the division secretaries of
light/telecom/data and consumer
electronics, marketing managers,
secretaries of the corporate planning and
business manager, fiscal and financial
system manager and audit and EDP
manager, and the staff of both the General
Management and the Personnel
Department. 2
In the sixth CBA covering the years 1987 to
1989, it was agreed upon, among others,
that the subject of inclusion or exclusion of
service engineers, sales personnel and
confidential employees in the coverage of
the bargaining unit would be submitted for
arbitration.
June 1987, PEO-FFW filed a petition before
the Bureau of Labor Relations (BLR) praying
for an order "directing the parties to select a
voluntary arbitrator in accordance with its
rules and regulations."
As the parties failed to agree on a voluntary
arbitrator, the BLR endorsed the petition to
the Executive Labor Arbiter of the National
Capital Region for compulsory arbitration
pursuant to Article 228 of the Labor Code.
LA: ordered the respondent to conduct a
referendum to determine the will of the
service engineers, sales representatives as to
their inclusion or exclusion in the bargaining
unit; declared that the Division Secretaries
and all Staff of general management,
personnel and industrial relations
department, secretaries of audit, EDP,
financial system are confidential employees
and as such are hereby deemed excluded in
the bargaining unit

NLRC: reversed LA;
ISSUE: whether or not SERVICE ENGINEERS,
SALES REPRESENTATIVES AND
CONFIDENTIAL EMPLOYEES OF PETITIONER
ARE QUALIFIED TO BE PART OF THE EXISTING
BARGAINING UNIT.
RULING: NO
Section 6 of E.O. No. 111, enacted on 24
December 1986, repealed the original
provisions of Article 245 of the Labor Code,
reading as follows:
Art. 245. Ineligibility of security personnel to
join any labor organization. — Security
guards and other personnel employed for
the protection and security of the person,
properties and premises of the employer
shall not be eligible for membership, in any
labor organization.
and substituted it with the following
provision:
Art. 245. Right of employees in the public
service. — 10
xxx xxx xxx
By virtue of such repeal and substitution,
security guards became eligible for
membership in any labor organization. 11
On the main issue raised before Us, it is quite
obvious that respondent NLRC committed
grave abuse of discretion in reversing the
decision of the Executive Labor Arbiter and
in decreeing that PIDI's "Service Engineers,
Sales Force, division secretaries, all Staff of
General Management, Personnel and
Industrial Relations Department, Secretaries
of Audit, EDP and Financial Systems are
included within the rank and file bargaining
unit."
In the first place, all these employees, with
the exception of the service engineers and
the sales force personnel, are confidential
employees. Their classification as such is not
seriously disputed by PEO-FFW; the five (5)
previous CBAs between PIDI and PEO-FFW
explicitly considered them as confidential
employees. By the very nature of their
functions, they assist and act in a
confidential capacity to, or have access to
confidential matters of, persons who
exercise managerial functions in the field of
labor relations. 12 As such, the rationale
behind the ineligibility of managerial
employees to form, assist or join a labor
union equally applies to them.
As regards the service engineers and the
sales representatives, two (2) points which
respondent NLRC likewise arbitrarily and
erroneously ruled upon agreed to be
discussed. Firstly, in holding that they are
included in the bargaining unit for the rank
and file employees of PIDI, the NLRC
practically forced them to become members
of PEO-FFW or to be subject to its sphere of
influence, it being the certified bargaining
agent for the subject bargaining unit. This
violates, obstructs, impairs and impedes the
service engineers' and the sales
representatives' constitutional right to form
unions or associations 15 and to self-
organization.
The decision then of the Executive Labor
Arbiter in merely directing the holding of a
referendum "to determine the will of the
service engineers, sales representatives as to
their inclusion or exclusion in (sic) the
bargaining unit" is the most appropriate
procedure that conforms with their right to
form, assist or join in labor union or
organization. However, since this decision
was rendered before the effectivity of R.A.
No. 6715, it must now be stressed that its
future application to the private parties in
this case should, insofar as service engineers
and sales representatives holding
supervisory positions or functions are
concerned, take into account the present
Article 245 20 of the Labor Code which, as
amended by R.A. No. 6715, now reads:
ARTICLE 245. Ineligibility of managerial
employees to join any labor organization;
right of supervisory employees. — managerial employees.
Managerial employees are not eligible to
join, assist or form any labor organization.
Supervisory employees shall not be eligible
for membership in a labor organization of
the rank-and-file employees but may join,
assist or form separate labor organizations
of their own. (emphasis supplied)
112. Golden Farms vs. Sec. of Labor, 234
SCRA 517 (Dulay)
GOLDEN FARMS, INC., petitioner, Vs.
SECRETARY OF LABOR and THE
PROGRESSIVE FEDERATION OF LABOR,
respondents. G.R. No. 102130 July 26, 1994
FACTS:
c
PFL opposed petitioner's Motion to Dismiss.
It countered that the monthly paid office and
technical employees should be allowed to
form a separate bargaining unit because
they were expressly excluded from coverage
in the Collecting Bargaining Agreement
(CBA) between petitioner and NFL. It also
contended that the case invoked by
petitioner was inapplicable to the present
case.
Golden argued that the monthly paid office
and technical employees should have joined
the existing collective bargaining unit of the
rank-and-file employees if they are not
Med-Arbiter: granted the petition and
ordered that a certification election be
conducted; ordered that the designated
representation officer is hereby directed to
call the parties to a pre-election conference
to thresh out the mechanics of the election
and to conduct and supervise the same
within twenty (20) days from receipt by the
parties of this Order. The "Masterlist of
Office and Technical Employees" shall be the
basis in determining the employees qualified
to vote during the certification election.
Secretary of Labor: denying the appeal for
lack of merit of Golden
ISSUE:
WON the monthly paid office and technical
rank-and-file employees of Golden Farms
enjoy the constitutional right to self-
organization and collective bargaining.
whether or not petitioner's monthly paid
rank-and file employees can constitute a
bargaining unit separate from the existing
bargaining unit of its daily paid rank-and-file
employees.
HELD: YES.
Right to self-organization and collective
bargaining
The monthly paid office and technical rank-
and-file employees of Golden Farms enjoy
the constitutional right to self-organization
and collective bargaining. A "bargaining
unit" has been defined as a group of
employees of a given employer, comprised
of all or less than all of the entire body of
employees, which the collective interest of
all the employees, consistent with equity to
the employer, indicate to be the best suited
to serve the reciprocal rights and duties of
the parties under the collective bargaining
provisions of the law. The community or
mutuality of interest is therefore the
essential criterion in the grouping. "And this
is so because 'the basic test of an asserted
bargaining unit's acceptability is whether or
not it is fundamentally the combination
which will best assure to all employees the
exercise of their collective bargaining rights.'
In the case at bench, the evidence
established that the monthly paid rank-and-
file employees of petitioner primarily
perform administrative or clerical work. In
contradistinction, the petitioner's daily paid
rank-and-file employees mainly work in the
cultivation of bananas in the fields. It is
crystal clear the monthly paid rank-and-file
employees of petitioner have very little in
common with its daily paid rank-and-file
employees in terms of duties and
obligations, working conditions, salary rates,
and skills. To be sure, the said monthly paid
rank-and-file employees have even been
excluded from the bargaining unit of the
daily paid rank-and-file employees. This
dissimilarity of interests warrants the
formation of a separate and distinct
bargaining unit for the monthly paid rank-
and-file employees of the petitioner. To rule
otherwise would deny this distinct class of
employees the right to self-organization for
purposes of collective bargaining. Without
the shield of an organization, it will also
expose them to the exploitations of
management.
So we HELD: in University of the Philippines
vs. Ferrer-Calleja, where we sanctioned the
formation of two (2) separate bargaining
units within the establishment, viz:
[T]he dichotomy of interests, the
dissimilarity in the nature of the work and
duties as well as in the compensation and
working conditions of the academic and non-
academic personnel dictate the separation
of these two categories of employees for
purposes of collective bargaining. The
formation of two separate bargaining units,
the first consisting of the rank-and-file non-
academic employees, and the second, of the
rank-and-file academic employees, is the
set-up that will best assure to all the
employees the exercise of their collective
bargaining rights.
WON monthly paid office and technical
employees are managerial employees. (NO)
Golden Farms, next contends that these
monthly paid office and technical employees
are managerial employees. They allegedly
include those in the accounting and
personnel department, cashier, and other
employees holding positions with access to
classified information.
We are not persuaded.
Article 212, paragraph (m) of the Labor
Code, as amended, defines as managerial
employee as follows:
"Managerial employee" is one who is vested
with power or prerogatives to lay down and
execute management policies and/or to
hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees.
Supervisory employees are those who, in the
interest of the employer, effectively
recommend such managerial actions if the
exercise of such authority is not merely
routinary or clerical in nature but requires
the use of independent judgment. All
employees not falling within any of the
above definitions are considered rank-and-
file employees for purposes of this Book.
Given this definition, the monthly paid office
and technical employees, accountants, and
cashiers of the petitioner are NOT
managerial employees for they do NOT
participate in policy-making but are given cut
out policies to execute and standard
practices to observe. In the main, the
discharge of their duties does not involve the
use of independent judgment. As factually
found by the Med-Arbiter, to wit:
A perusal of the list of the office and
technical employees sought to be
represented in the instant case, with their
corresponding designation does NOT show
that said Office and Technical employees
exercises supervisory or managerial
functions.
The office believes and so hold that the
employees whose names appear in the
"Masterlist of Office and Technical
Employees" submitted during the hearing
are eligible to join/form a labor organization
of their own choice.
WON the principle of Res judicata applies.
(NO)
Our decision in Golden Farms, Inc., vs.
Honorable Pura Ferrer-Calleja, op. cit., does
not pose any obstacle in holding a
certification election among petitioner's
monthly paid rank-and-file employees. The
issue brought to fore in that case was totally
different, i.e., whether or not petitioner's
confidential employees, considering the
nature of their work, should be included in
the bargaining unit of the daily paid rank-
and-file employees. In the case at bench, the
monthly paid rank-and-file employees of
petitioner are being separated as a
bargaining unit from its daily paid rank-and-
file employees, on the ground that they have
different interest to protect. The principle of
res judicata is, therefore, inapplicable.
The second assigned error which was not
raised in the proceedings below must
necessarily fail. The alleged error involves a
question of fact which this Court cannot
resolve. Petitioner submitted this
contention only in its Memorandum dated
February 12, 1993.10 In this Memorandum,
petitioner cited LRD Case No. OXI-UR-70 for
Direct Recognition/Certification Election.
But even a side glance of the cited case will
reveal that it involves a petition for direct
certification among the rank-and-file office
and technical employees of the Golden
Farms Inc., (not supervisory employees)
under the House of Investment, Ladislawa
Village, Buhaning, Davao City filed by the
National Federation of Labor (not the
respondent Progressive Federation of
Labor). The averment of petitioner is
baseless and its recklessness borders the
contemptuous.
WON Golden farms has standing to question
a certification of election. (NO)
Finally, we note that it was petitioner
company that filed the motion to dismiss the
petition for election. The general rule is that
an employer has no standing to question a
certification election since this is the sole
concern of the workers. Law and policy
demand that employers take a strick, hands-
off stance in certification elections. The
bargaining representative of employees
should be chosen free from any extraneous
influence of management. A labor
bargaining representative, to be effective,
must owe its loyalty to the employees alone
and to no other.

113. Sugbuanon Rural Bank vs. NLRC, 324
SCRA 425 (Macatol)
SUGBUANON RURAL BANK, INC., Petitioner,
v. HON. UNDERSECRETARY BIENVENIDO E.
LAGUESMA, DEPARTMENT OF LABOR AND
EMPLOYMENT, MED-ARBITER ACHILLES
MANIT, DEPARTMENT OF LABOR AND
EMPLOYMENT, REGIONAL OFFICE NO. 7,
CEBU CITY, AND SUGBUANON RURAL BANK,
INC.-ASSOCIATION OF PROFESSIONAL,
SUPERVISORY, OFFICE, AND TECHNICAL
EMPLOYEES UNION-TRADE UNIONS
CONGRESS THE PHILIPPINES, Respondents. |
[G.R. No. 116194. February 2, 2000.] |
QUISUMBING, J.:
Petitioner Sugbuanon Rural Bank, Inc., (SRBI,
for brevity) is a duly-registered banking
institution with principal office in Cebu City
and a branch in Mandaue City.
Private respondent SRBI — Association of
Professional, Supervisory, Office, and
Technical Employees Union (APSOTEU) is a
legitimate labor organization affiliated with
the Trade Unions Congress of the Philippines
(TUCP).
FACTS:
On October 8, 1993, the DOLE Regional
Office in Cebu City granted Registration to
APSOTEU-TUCP, hereafter referred to as the
union.
On October 26, 1993, the union filed a
petition for certification election of the
supervisory employees of SRBI. It alleged,
among others, that: (1) APSOTEU-TUCP was
a labor organization duly-registered with the
Labor Department; (2) SRBI employed 5 or
more supervisory employees; (3) a majority
of these employees supported the petition;
(4) there was no existing collective
bargaining agreement (CBA) between any
union and SRBI; and (5) no certification
election had been HELD: in SRBI during the
past 12 months prior to the petition.
On October 28, 1993, the Med-Arbiter gave
due course to the petition. The pre-
certification election conference between
SRBI and APSOTEU-TUCP was set.
Contentions of SRBI:
SRBI filed a motion to dismiss the union’s
petition. It sought to prevent the holding of
a certification election on two grounds: First,
that the members of APSOTEU-TUCP were in
fact managerial or confidential employees.
They were disqualified from forming, joining,
or assisting any labor organization. Second,
the Association of Labor Unions-Trade
Unions Congress of the Philippines or ALU-
TUCP was representing the union. Since ALU-
TUCP also sought to represent the rank-and-
file employees of SRBI, there was a violation
of the principle of separation of unions.
Contentions of respondent-union:
It argued that its members were not
managerial employees but merely HELD:
supervisory employees. The members Article 212 (m) of the Labor Code defines the
attached their affidavits describing the terms "managerial employee" and
nature of their respective duties. The union "supervisory employees" as follows:
pointed out that Article 245 of the Labor (m) ‘Managerial employee’ is one who is
Code expressly allowed supervisory vested with powers or prerogatives to lay
employees to form, join, or assist their own down and execute management policies
unions. and/or hire, transfer, suspend, lay-off, recall,
discharge, assign or discipline employees.
Med-Arbiter denied petitioner’s motion to Supervisory employees are those who, in the
dismiss. interest of the employer, effectively
recommend such managerial actions if the
Secretary of Labor and Employment denied exercise of such authority is note merely
for lack of merit. routinary or clerical in nature but requires
the use of independent judgment. All
Med-Arbiter identified the following SRBI employees not falling within any of the
personnel as the voting supervisory above definitions are considered rank-and-
employees in the election: the Cashier of the file employees for purposes of this Book."
Main Office, the Cashier of the Mandaue
Branch, the Accountant of the Mandaue Why Tabacalera and Panday ruling does not
Branch, and the Acting Chief of the Loans apply in this case?
Department. Petitioner contended that the union
members are managerial employees and/or
DOLE Undersecretary denied SRBI’s appeal confidential employees proscribed from
for lack of merit. engaging in labor activities. Petitioner
vehemently argues that the functions and
ISSUE: responsibilities of the employees involved
Whether the members of the respondent constitute the "very core of the bank’s
union are managerial employees and/or business, lending of money to clients and
highly-placed confidential employees, hence borrowers, evaluating their capacity to pay,
prohibited by law from joining labor approving the loan and its amount,
organizations and engaging in union scheduling the terms of repayment, and
activities? No, they are not endorsing delinquent accounts to counsel
managerial/supervisory employees nor for collection." Hence, they must be deemed
confidential employees. managerial employees. In Tabacalera, we
sustained the classification of a credit and Here, we find that the Cashiers, Accountant,
collection supervisor by management as a and Acting Chief of the Loans Department of
managerial/supervisory personnel. But in the petitioner did not possess managerial
that case, the credit and collection powers and duties. We are, therefore,
supervisor "had the power to recommend constrained to conclude that they are not
the hiring and appointment of his managerial employees.
subordinates, as well as the power to
recommend any promotion and/or Now may the said bank personnel be
increase." For this reason he was deemed to deemed confidential employees? No
be a managerial employee. In the present
case, however, petitioner failed to show that Confidential employees are those who (1)
the employees in question were vested with assist or act in a confidential capacity, in
similar powers. At best they only had regard (2) to persons who formulate,
recommendatory powers subject to determine, and effectuate management
evaluation, review, and final decision by the policies specifically in the field of labor
bank’s management. The job description relations. The two criteria are cumulative,
forms submitted by petitioner clearly show and both must be met if an employee is to
that the union members in question may not be considered a confidential employee —
transfer, suspend, lay-off, recall, discharge, that is, the confidential relationship must
assign, or discipline employees. Moreover, exist between the employee and his superior
the forms also do not show that the Cashiers, officer; and that officer must handle the
Accountants, and Acting Chiefs of the Loans prescribed responsibilities relating to labor
Department formulate and execute relations.
management policies which are normally
expected of management officers. Article 245 of the Labor Code does not
directly prohibit confidential employees
In Panday, we HELD: that a branch from engaging in union activities. Under the
accountant is a managerial employee doctrine of necessary implication, the
because the said employee had managerial disqualification of managerial employees
powers, similar to the supervisor in equally applies to confidential employees.
Tabacalera. Their powers included The confidential-employee rule justifies
recommending the hiring and appointment exclusion of confidential employees because
of his subordinates, as well as the power to in the normal course of their duties, they
recommend any promotion and/or increase. become aware of management policies
relating to labor relations. It must be
stressed, however, that when the employee
does not have access to confidential labor
relations information, there is no legal
prohibition against confidential employees
from forming, assisting, or joining a union.
Petitioner contends that it has only 5 officers
running its day-to-day affairs. They assist in
confidential capacities and have complete
access to the bank’s confidential data:
"(1) the Head of the Loans Department
initially approves the loan applications
before they are passed on to the Board for
confirmation. As such, no loan application is
even considered by the Board and approved
by petitioner without his stamp of approval
based upon his interview of the applicant
and determination of his (applicant’s) credit
standing and financial capacity. The same
holds true with respect to renewals or
restructuring of loan accounts. He himself
determines what account should be
collected, whether extrajudicially or
judicially, and settles the problems or
complaints of borrowers regarding their
accounts;
"(2) the Cashier is one of the approving
officers and authorized signatories of
petitioner. He approves the opening of
accounts, withdrawals and encashment, and
acceptance of check deposits. He deals with
other banks and, in the absence of the
regular Manager, manages the entire office
or branch and approves disbursements of
funds for expenses; and
"(3) the Accountant, who heads the
Accounting Department, is also one of the
authorized signatories of petitioner and, in
the absence of the Manager or Cashier, acts
as substitute approving officer and assumes
the management of the entire office. She
handles the financial reports and reviews the
debit/credit tickets submitted by the other
departments."
Petitioner’s explanation does not state who
among the employees has access to
information specifically relating to its labor
relations policies. Even Cashier Patricia
Maluya, who serves as the secretary of the
bank’s Board of Directors may not be so
classified. True, the board of directors is
responsible for corporate policies, the
exercise of corporate powers, and the
general management of the business and
affairs of the corporation. As secretary of the
bank’s governing body, Patricia Maluya
serves the bank’s management, but could
not be deemed to have access to
confidential information specifically relating
to SRBI’s labor relations policies, absent a
clear showing on this matter. Thus, while
petitioner’s explanation confirms the regular
duties of the concerned employees, it shows
nothing about any duties specifically
connected to labor relations.
114. Tunay na Pagkakaisa ng Manggagawa
sa Asia Brewery vs. Asia Brewery (Pacquiao
L)
TUNAY NA PAGKAKAISA NG MANGGAGAWA 3. Section Heads
SA ASIA BREWERY, Petitioner, 4. Supervisors
Vs. ASIA BREWERY, INC., Respondent. 5. Superintendents
6. Confidential and Executive Secretaries
GR No. 162025 ; 03 August 2010 7. Personnel, Accounting and Marketing
Staff
FACTS 8. Communications Personnel
Respondent Asia Brewery, Inc. (ABI) is 9. Probationary Employees
engaged in the manufacture, sale and 10. Security and Fire Brigade Personnel
distribution of beer, shandy, bottled water 11. Monthly Employees
and glass products. ABI entered into a 12. Purchasing and Quality Control Staff
Collective Bargaining Agreement (CBA), [EMPHASIS SUPPLIED]
effective for five 5 years with Bisig at Lakas
ng mga Manggagawa sa Asia-Independent Subsequently, a dispute arose when ABIs
(BLMA-INDEPENDENT), the exclusive management stopped deducting union dues
bargaining representative of ABIs rank-and- from 81 employees, believing that their
file employees. The CBA provides: membership in BLMA-INDEPENDENT
Section 1. Recognition. The COMPANY violated the CBA. 18 of these affected
recognizes the UNION as the sole and employees are QA Sampling
exclusive bargaining representative of all the Inspectors/Inspectresses and Machine
regular rank-and-file daily paid employees Gauge Technician who formed part of the
within the scope of the appropriate Quality Control Staff. 20 checkers are
bargaining unit with respect to rates of pay, assigned at the Materials Department of the
hours of work and other terms and Administration Division, Full Goods
conditions of employment. The UNION shall Department of the Brewery Division and
not represent or accept for membership Packaging Division. The rest are
employees outside the scope of the secretaries/clerks directly under their
bargaining unit herein defined. respective division managers.
Section 2. Bargaining Unit. The bargaining
unit shall be comprised of all regular rank- BLMA-INDEPENDENT claimed that ABIs
and-file daily-paid employees of the actions restrained the employees right to
COMPANY. However, the following self-organization and brought the matter to
jobs/positions as herein defined shall be the grievance machinery. They lodged a
excluded from the bargaining unit, to wit: complaint before the National Conciliation
1. Managers and Mediation Board (NCMB).
2. Assistant Managers
Voluntary Arbitrator (VA) – VA Bienvenido
Devera sustained the BLMA-INDEPENDENT
after finding that the records submitted by
ABI showed that the positions of the subject
employees qualify under the rank-and-file
category because their functions are merely
routinary and clerical.
CA - reversed the Voluntary Arbitrator
ISSUES
1. Whether or not respondent AIB violated
the employee’s right to self-organization
(NO)
2. Whether or not the secretaries/clerks
are confidential employees? (NO)
3. Whether or not respondent AIB’s act of
unilaterally stopping the deduction of union
dues from these employees constitutes
unfair labor practice (NO)
HELD:
1. No. Considering that the herein dispute
arose from a simple disagreement in the
interpretation of the CBA provision on
excluded employees from the bargaining
unit, respondent AIB cannot be said to have
committed unfair labor practice that
restrained its employees in the exercise of
their right to self-organization, nor have
thereby demonstrated an anti-union stance.
Unfair labor practice refers to acts that
violate the workers right to organize. The
prohibited acts are related to the workers
right to self-organization and to the
observance of a CBA. For a charge of unfair
labor practice to prosper, it must be shown
that ABI was motivated by ill will, bad faith,
or fraud, or was oppressive to labor, or done
in a manner contrary to morals, good
customs, or public policy, and, of course,
that social humiliation, wounded feelings or
grave anxiety resulted x x x from ABIs act in
discontinuing the union dues deduction
from those employees it believed were
excluded by the CBA.
2. No. We thus hold that the
secretaries/clerks, numbering about forty
(40), are rank-and-file employees and not
confidential employees.
Confidential employees are defined as those
who:
(1) assist or act in a confidential capacity,
(2) to persons who formulate, determine,
and effectuate management policies in the
field of labor relations.
Those 2 criteria are cumulative, and both
must be met if an employee is to be
considered a confidential employee that is,
the confidential relationship must exist
between the employee and his supervisor,
and the supervisor must handle the
prescribed responsibilities relating to labor
relations.
The exclusion from bargaining units of
employees who, in the normal course of
their duties, become aware of management
policies relating to labor relations is a
principal objective sought to be
accomplished by the confidential employee
rule.
There is no showing in this case that the
secretaries/clerks and checkers assisted or
acted in a confidential capacity to
managerial employees and obtained
confidential information relating to labor
relations policies. Moreover, even assuming
that they had exposure to internal business
operations of the company, respondent
claimed, this is not per se ground for their
exclusion in the bargaining unit of the daily-
paid rank-and-file employees.
Not being confidential employees, the
secretaries/clerks and checkers are not
disqualified from membership in the union
of respondents rank-and-file employees.
3. No. Unfair labor practice refers to acts
that violate the workers right to organize.
The prohibited acts are related to the
workers right to self-organization and to the
observance of a CBA. For a charge of unfair
labor practice to prosper, it must be shown
that ABI was motivated by ill will, bad faith,
or fraud, or was oppressive to labor, or done
in a manner contrary to morals, good
customs, or public policy, and, of course,
that social humiliation, wounded feelings or
grave anxiety resulted x x x from ABIs act in
discontinuing the union dues deduction
from those employees it believed were
excluded by the CBA.
Considering that the herein dispute arose
from a simple disagreement in the
interpretation of the CBA provision on
excluded employees from the bargaining
unit, respondent cannot be said to have
committed unfair labor practice that
restrained its employees in the exercise of
their right to self-organization, nor have
thereby demonstrated an anti-union stance.
115. De la Salle Univ. vs. DLSU-Employees
Assn., 330 SCRA 363 [2000]
FACTS: On December 1986, Dela Salle
University (hereinafter referred to as
UNIVERSITY) and Dela Salle University
Employees Association - National Federation
of Teachers and Employees Union (DLSUEA-
NAFTEU), which is composed of regular non-
academic rank and file employees,
(hereinafter referred to as UNION) entered
into a collective bargaining agreement with
a life span of three (3) years. During the
freedom period, or 60 days before the
expiration of the said collective bargaining
agreement, the Union initiated negotiations
with the University for a new collective
bargaining agreement which, however,
turned out to be unsuccessful, hence, the
Union filed a Notice of Strike with the
National Conciliation and Mediation Board,
National Capital Region. After several
conciliation-mediation meetings, five (5) out
of the eleven (11) issues raised in the Notice
of Strike were resolved by the parties. A
partial collective bargaining agreement was
thereafter executed by the parties.
On March 18, 1991, the parties entered into
a Submission Agreement, identifying the
remaining six (6) unresolved issues for
arbitration, namely: "(1) scope of the
bargaining unit, (2) union security clause, (3)
security of tenure, (4) salary increases for
the third and fourth years [this should
properly read second and third years] of the
collective bargaining agreement, (5)
indefinite union leave, reduction of the
union presidents workload, special leave,
and finally, (6) duration of the agreement."
The parties appointed Buenaventura
Magsalin as voluntary arbitrator. On January
19, 1993, the voluntary arbitrator rendered
the assailed decision. It resolved the issue
regarding the propriety of the inclusion of a
union shop clause in the collective
bargaining agreement, in addition to the
existing maintenance of membership clause,
the voluntary arbitrator opined that a union
shop clause "is not a restriction on the
employees right of (sic) freedom of
association but rather a valid form of union
security while the CBA is in force and in
accordance with the Constitutional policy to
promote unionism and collective bargaining
and negotiations. The parties therefore
should incorporate such union shop clause in
their CBA.
ISSUE: WHETHER OR NOT GRAVE ABUSE OF
DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE
UPHELD: THE UNIONS DEMAND FOR THE
INCLUSION OF A UNION SHOP CLAUSE IN
THE PARTIES COLLECTIVE BARGAINING
AGREEMENT.
HELD: NO. As to the issue involving the
inclusion of a union shop clause in addition
to the existing maintenance of membership
clause in the collective bargaining
agreement, the University avers that "it is in
the spirit of the exercise of the constitutional
right to self-organization that every
individual should be able to freely choose
whether to become a member of the Union
or not. The right to join a labor organization
should carry with it the corollary right not to
join the same. This position of the University
is but in due recognition of the individuals
free will and capability for judgment." The
University assails the Unions demand for a
union shop clause as "definitely unjust and
amounts to oppression. Moreover, such a
demand is repugnant to democratic
principles and the constitutionally
guaranteed freedom of individuals to join or
not to join an association as well as their
right to security of tenure, particularly, on
the part of present employees."
The Union, on the other hand, counters that
the Labor Code, as amended, recognizes the
validity of a union shop agreement in Article
248 thereof which reads:

"ART. 248. Unfair labor practices of
employers.
xxx......xxx......xxx
(e) To discriminate in regard to hire or tenure
of employment or any term or condition of
employment in order to encourage or
discourage membership in any labor
organization. Nothing in this Code or in any
other law shall prevent the parties from
requiring membership in a recognized
collective bargaining agent as a condition for
employment, except of those employees
who are already members of another union
at the time of the signing of the collective
bargaining agreement. xxx xxx." (emphasis
supplied) Ol-d
miso
We affirm the ruling of the voluntary
arbitrator for the inclusion of a union shop
provision in addition to the existing
maintenance of membership clause in the
collective bargaining agreement. As the
Solicitor General asserted in his consolidated
Comment, the University's reliance on the
case of Victoriano vs. Elizalde Rope Workers
Union is clearly misplaced. In that case, we
ruled that "the right to join a union includes
the right to abstain from joining any union.
xxx xxx. The right to refrain from joining
labor organizations recognized by Section 3
of the Industrial Peace Act is, however,
limited. The legal protection granted to such
right to refrain from joining is withdrawn by
operation of law, where a labor union and an
employer have agreed on a closed shop, by
virtue of which the employer may employ
only members of the collective bargaining
union, and the employees must continue to
be members of the union for the duration of
the contract in order to keep their jobs.
116. San Miguel Cor. Supervisory and
Exempt Employees Union vs. Laguesma, 277
SCRA 37 (Roxas)
FACTS:
San Miguel Corporation Supervisors and
Exempt Union (SMCSEU) filed before the
Department of Labor and Employment
(DOLE) a Petition for District Certification or
Certification Election among the supervisors
and exempt employees of the SMC Magnolia
Poultry Products Plants of Cabuyao, San
Fernando and Otis.
Med-Arbiter Danilo L. Reynante issued an
Order ordering the conduct of certification
election among the abovementioned
employees of the different plants as one
bargaining unit.
San Miguel Corporation filed a Notice of
Appeal with Memorandum on Appeal,
pointing out, among others, the Med-
Arbiter’s error in grouping together all three
(3) separate plants, into one bargaining unit,
and in including supervisory levels 3 and
above whose positions are confidential in
nature.
The public respondent, Undersecretary Issues:
Laguesma, granted respondent company’s 1. Whether Supervisory employees 3 and 4
Appeal and ordered the remand of the case and the exempt employees of the company
to the Med-Arbiter of origin for are considered confidential employees,
determination of the true classification of hence ineligible from joining a union.
each of the employees sought to be included 2. Whether the employees of San Miguel
in the appropriate bargaining unit. Corporation Magnolia Poultry Products
Plants of Cabuyao, San Fernando, and Otis
Upon petitioner-union’s motion, constitute a single bargaining unit
Undersecretary Laguesma granted the Ruling:
reconsideration prayed for and directed the
conduct of separate certification elections On the first issue, the SC ruled that said
among the supervisors ranked as employees do not fall within the term
supervisory levels 1 to 4 (S1 to S4) and the confidential employees who may be
exempt employees in each of the three prohibited from joining a union.
plants at Cabuyao, San Fernando and Otis.
There is no question that the said
San Miguel Corporation filed a Motion for employees, supervisors and the exempt
Reconsideration with Motion to suspend employees, are not vested with the powers
proceedings, which was granted citing the and prerogatives to lay down and execute
doctrine enunciated in Philips Industrial management policies and/or to hire,
Development, Inc. v. NLRC which HELD: that: transfer, suspend, layoff, recall, discharge or
Confidential employees, like managerial dismiss employees. They are, therefore, not
employees, are not allowed to form, join or qualified to be classified as managerial
assist a labor union for purposes of collective employees who, under Article 245 of the
bargaining. Labor Code, are not eligible to join, assist or
form any labor organization. In the very
In this case, S3 and S4 and the so-called same provision, they are not allowed
exempt employees are admittedly membership in a labor organization of the
confidential employees and therefore, they rank-and-file employees but may join, assist
are not allowed to form, join or assist a labor or form separate labor organizations of their
union for purposes of collective bargaining own.
following the above courts ruling.
Consequently, they are not allowed to Confidential employees are those who (1)
participate in the certification election. assist or act in a confidential capacity, (2) to
persons who formulate, determine, and
effectuate management policies in the field
of labor relations. The two criteria are
cumulative, and both must be met if an
employee is to be considered a confidential
employee that is, the confidential
relationship must exist between the
employees and his supervisor, and the
supervisor must handle the prescribed
responsibilities relating to labor relations.
The exclusion from bargaining units of
employees who, in the normal course of
their duties, become aware of management
policies relating to labor relations is a
principal objective sought to be
accomplished by the confidential employee
rule. The broad rationale behind this rule is
that employees should not be placed in a
position involving a potential conflict of
interests. Management should not be
required to handle labor relations matters
through employees who are represented by
the union with the company is required to
deal and who in the normal performance of
their duties may obtain advance information
of the companys position with regard to
contract negotiations, the disposition of
grievances, or other labor relations matters.
An important element of the confidential
employee rule is the employees need to use
labor relations information. Thus, in
determining the confidentiality of certain
employees, a key questions frequently
considered is the employees necessary
access to confidential labor relations
information.
Granting arguendo that an employee has
access to confidential labor relations
information but such is merely incidental to
his duties and knowledge thereof is not
necessary in the performance of such duties,
said access does not render the employee a
confidential employee. If access to
confidential labor relations information is to
be a factor in the determination of an
employees confidential status, such
information must relate to the employers
labor relations policies. Thus, an employee
of a labor union, or of a management
association, must have access to confidential
labor information with respect to his
employer, the union, or the association, to
be regarded a confidential employee, and
knowledge of labor relations information
pertaining to the companies with which the
union deals, or which the association
represents, will not clause an employee to
be excluded from the bargaining unit
representing employees of the union or
association. Access to information which is
regarded by the employer to be confidential
from the business standpoint, such as
financial information or technical trade
secrets, will not render an employee a
confidential employee.
In the case at bar, it can be gleaned that the
confidential information said employees
have access to concern the employers
internal business operations. As HELD: in hours, working conditions and other
Westinghouse Electric Corporation v. subjects of collective bargaining.
National Labor Relations Board, an
employee may not be excluded from It is readily seen that the employees in the
appropriate bargaining unit merely because instant case have community or mutuality of
he has access to confidential information interest, which is the standard in
concerning employers internal business determining the proper constituency of a
operations and which is not related to the collective bargaining unit. It is undisputed
field of labor relations. that they all belong to the Magnolia Poultry
Division of San Miguel Corporation. This
It must be borne in mind that Section 3 of means that, although they belong to three
Article XIII of the 1987 Constitution different plants, they perform work of the
mandates the State to guarantee to all same nature, receive the same wages and
workers the right to self-organization. compensation, and most importantly, share
Hence, confidential employees who may be a common stake in concerted activities.
excluded from bargaining unit must be
strictly defined so as not to needlessly The fact that the three plants are located in
deprive many employees of their right three different places, namely, in Cabuyao,
bargain collectively through representatives Laguna, in Otis, Pandacan, Metro Manila,
of their choosing. and in San Fernando, Pampanga is
immaterial.
2. An appropriate bargaining unit may be
defined as a group of employees of a given
employer, comprised of all or less than all of 117. German Agency for Technical
the entire body of employees, which the Cooperation (GTZ) vs. CA, GR No. 152318, 16
collective interest of all the employees, April 2009 (Soriano)
consistent with equity to the employer,
indicate to be best suited to serve the Topic: Employees of International
reciprocal rights and duties of the parties Organizations or Specialised Agencies which
under the collective bargaining provisions of are registered with the United Nations and
the law. enjoys diplomatic immunity

A unit to be appropriate must effect a FACTS:

grouping of employees who have The governments of the Federal Republic of
substantial, mutual interests in wages, Germany and the Republic of the Philippines
ratified an Agreement concerning Technical
Co-operation (Agreement) in Bonn, capital
of what was then West Germany. This
Arrangement affirmed the common
commitment of both governments to
promote jointly a project called, Social
Health Insurance Networking and
Empowerment (SHINE), which was designed
to enable Philippine families especially poor
ones to maintain their health and secure
health care of sustainable quality.
Both governments likewise named their
respective implementing organizations for
SHINE. The Philippines designated the
Department of Health (DOH) and the
Philippine Health Insurance Corporation
(Philhealth) with the implementation of
SHINE. For their part, the German
government charge[d] the Deustche
Gesellschaft fr Technische Zusammenarbeit
(GTZ) GmbH, Eschborn, with the
implementation of its contributions.
Private respondents were engaged as
contract employees hired by GTZ to work for
SHINE on various dates between December
of 1998 to September of 1999.
Anne Nicolay (Nicolay), a Belgian national,
assumed the post of SHINE Project Manager.
Disagreements eventually arose between
Nicolay and private respondents in matters
such as proposed salary adjustments, and
the course Nicolay was taking in the
implementation of SHINE different from her
predecessors. The dispute culminated in a
letter dated 8 June 2000, signed by the
private respondents, addressed to Nicolay,
and copies furnished officials of the DOH,
Philheath, and the director of the Manila
office of GTZ.
The letter ended with these ominous words:
The issues that we [the private respondents]
have stated here are very crucial to us in
working for the project. We could no longer
find any reason to stay with the project
unless ALL of these issues be addressed
immediately and appropriately.
In response, Nicolay wrote each of the
private respondents a letter dated 21 June
2000, all similarly worded except for their
respective addressees. She informed private
respondents that the projects orientations
and evolution were decided in consensus
with partner institutions, Philhealth and the
DOH, and thus no longer subject to
modifications. More pertinently, she stated:
You have firmly and unequivocally stated in
the last paragraph of your 8th June 2000
letter that you and the five other staff could
no longer find any reason to stay with the
project unless ALL of these issues be
addressed immediately and appropriately.
Under the foregoing premises and
circumstances, it is now imperative that I am
to accept your resignation, which I expect to
receive as soon as possible.
Taken aback, private respondents replied
with a common letter, clarifying that their
earlier letter was not intended as a
resignation letter, but one that merely
intended to raise attention to what they
perceived as vital issues.
The private respondents filed a complaint
for illegal dismissal with the NLRC. Named as
respondents therein where GTZ, the Director
of its Manila office Hans Peter Paulenz, its
Assistant Project Manager Christian Jahn,
and Nicolay.
GTZ, through counsel, filed a Motion to
Dismiss, on the ground that the Labor
Arbiter had no jurisdiction over the case, as
its acts were undertaken in the discharge of
the governmental functions and sovereign
acts of the Government of the Federal
Republic of Germany. This was opposed by
private respondents with the arguments
that GTZ had failed to secure a certification
that it was immune from suit from the
Department of Foreign Affairs, and that it
was GTZ and not the German government
which had implemented the SHINE Project
and entered into the contracts of
employment.
The Labor Arbiter issued an Order denying
the Motion to Dismiss. The Order cited,
among others, that GTZ was a private
corporation which entered into an
employment contract; and that GTZ had
failed to secure from the DFA a certification
as to its diplomatic status.
GTZ did not file a motion for reconsideration
to the Labor Arbiters Decision or elevate said
decision for appeal to the NLRC. Instead, GTZ
opted to assail the decision by way of a
special civil action for certiorari filed with the
Court of Appeals. The Court of Appeals
promulgated a Resolution dismissing GTZs
petition.
Thus, the present petition for review under
Rule 45, assailing the decision and
resolutions of the Court of Appeals and of
the Labor Arbiter. GTZs arguments center on
whether the Court of Appeals could have
entertained its petition for certiorari despite
its not having undertaken an appeal before
the NLRC; and whether the complaint for
illegal dismissal should have been dismissed
for lack of jurisdiction on account of GTZs
insistence that it enjoys immunity from suit.
No special arguments are directed with
respect to petitioners Hans Peter Paulenz
and Anne Nicolay, respectively the then
Director and the then Project Manager of
GTZ in the Philippines; so we have to
presume that the arguments raised in behalf
of GTZs alleged immunity from suit extend to
them as well.
The OSG took the side of GTZ, with the
prayer that the petition be granted on the
ground that GTZ was immune from suit,
citing in particular its assigned functions in
implementing the SHINE programa joint
undertaking of the Philippine and German
governments which was neither proprietary
nor commercial in nature.
The arguments raised by GTZ and the OSG
are rooted in several indisputable FACTS.
The SHINE project was implemented
pursuant to the bilateral agreements
between the Philippine and German
governments. GTZ was tasked, under the
1991 agreement, with the implementation
of the contributions of the German
government. The activities performed by
GTZ pertaining to the SHINE project are
governmental in nature, related as they are
to the promotion of health insurance in the
Philippines. The fact that GTZ entered into
employment contracts with the private
respondents did not disqualify it from
invoking immunity from suit.
ISSUE:
Is GTZ, by conception, able to enjoy the
Federal Republics immunity from suit? (NO)
Ruling:
The principle of state immunity from suit,
whether a local state or a foreign state, is
reflected in Section 9, Article XVI of the
Constitution, which states that the State
may not be sued without its consent.
If the instant suit had been brought directly
against the Federal Republic of Germany,
there would be no doubt that it is a suit
brought against a State, and the only
necessary inquiry is whether said State had
consented to be sued. However, the present
suit was brought against GTZ. It is necessary
for us to understand what precisely are the
parameters of the legal personality of GTZ.
Is GTZ an incorporated agency of the
German government? There is some
mystery surrounding that question. Neither
GTZ nor the OSG go beyond the claim that
petitioner is the implementing agency of the
Government of the Federal Republic of
Germany. On the other hand, private
respondents asserted before the Labor
Arbiter that GTZ was a private corporation
engaged in the implementation of
development projects. The Labor Arbiter
accepted that claim in his Order denying the
Motion to Dismiss, though he was silent on
that point in his Decision. Nevertheless,
private respondents argue in their Comment
that the finding that GTZ was a private
corporation was never controverted, and is
therefore deemed admitted. In its Reply,
GTZ controverts that finding, saying that it is
a matter of public knowledge that the status
of petitioner GTZ is that of the implementing
agency, and not that of a private
corporation.
In truth, private respondents were unable to
adduce any evidence to substantiate their
claim that GTZ was a private corporation,
and the Labor Arbiter acted rashly in
accepting such claim without explanation.
But neither has GTZ supplied any evidence
defining its legal nature beyond that of the
bare descriptive implementing agency.
There is no doubt that the 1991 Agreement
designated GTZ as the implementing agency
in behalf of the German government. Yet the
catch is that such term has no precise
definition that is responsive to our concerns.
Inherently, an agent acts in behalf of a
principal, and the GTZ can be said to act in
behalf of the German state. But that is as far
as implementing agency could take us. The
term by itself does not supply whether GTZ
is incorporated or unincorporated, whether
it is owned by the German state or by private
interests, whether it has juridical personality
independent of the German government or
none at all.
GTZ itself provides a more helpful clue,
inadvertently, through its own official
Internet website. In the Corporate Profile
section of the English language version of its
site.
GTZs own website elicits that petitioner is
federally owned, a federal enterprise, and
founded in 1975 as a company under private
law. GTZ clearly has a very meaningful
relationship with the Federal Republic of
Germany, which apparently owns it. At the
same time, it appears that GTZ was actually
organized not through a legislative public
charter, but under private law, in the same
way that Philippine corporations can be
organized under the Corporation Code even
if fully owned by the Philippine government.
This self-description of GTZ in its own official
website gives further cause for pause in
adopting petitioners argument that GTZ is
entitled to immunity from suit because it is
an implementing agency. The above-quoted
statement does not dispute the
characterization of GTZ as an implementing
agency of the Federal Republic of Germany,
yet it bolsters the notion that as a company
organized under private law, it has a legal
personality independent of that of the
Federal Republic of Germany.
The Federal Republic of Germany, in its own
official website, also makes reference to GTZ
and describes it in this manner:
x x x Going by the principle of sustainable
development, the German Technical
Cooperation (Deutsche Gesellschaft fr
Technische Zusammenarbeit GmbH, GTZ)
takes on non-profit projects in international
technical cooperation. The GTZ is a private
company owned by the Federal Republic of
Germany.
Again, we are uncertain of the
corresponding legal implications under
German law surrounding a private company
owned by the Federal Republic of Germany.
Yet taking the description on face value, the
apparent equivalent under Philippine law is
that of a corporation organized under the
Corporation Code but owned by the
Philippine government, or a government-
owned or controlled corporation without
original charter. And it bears notice that
Section 36 of the Corporate Code states that
every corporation incorporated under this
Code has the power and capacity x x x to sue
and be sued in its corporate name.
It is entirely possible that under German law,
an entity such as GTZ or particularly GTZ
itself has not been vested or has been
specifically deprived the power and capacity
to sue and/or be sued. Yet in the
proceedings below and before this Court,
GTZ has failed to establish that under
German law, it has not consented to be sued
despite it being owned by the Federal
Republic of Germany. We adhere to the rule
that in the absence of evidence to the
contrary, foreign laws on a particular subject
are presumed to be the same as those of the
Philippines, and following the most
intelligent assumption we can gather, GTZ is
akin to a governmental owned or controlled
corporation without original charter which,
by virtue of the Corporation Code, has
expressly consented to be sued. At the very
least, like the Labor Arbiter and the Court of
Appeals, this Court has no basis in fact to
conclude or presume that GTZ enjoys
immunity from suit.
This absence of basis in fact leads to another
important point, alluded to by the Labor
Arbiter in his rulings. Our ruling in Holy See
v. Del Rosario provided a template on how a
foreign entity desiring to invoke State
immunity from suit could duly prove such
immunity before our local courts. The
principles enunciated in that case were
derived from public international law. We
stated then:
In Public International Law, when a state or
international agency wishes to plead
sovereign or diplomatic immunity in a
foreign court, it requests the Foreign Office
of the state where it is sued to convey to the
court that said defendant is entitled to
immunity.
In the United States, the procedure followed
is the process of "suggestion," where the
foreign state or the international
organization sued in an American court
requests the Secretary of State to make a
determination as to whether it is entitled to
immunity. If the Secretary of State finds that
the defendant is immune from suit, he, in
turn, asks the Attorney General to submit to
the court a "suggestion" that the defendant
is entitled to immunity.
In the Philippines, the practice is for the
foreign government or the international
organization to first secure an executive
endorsement of its claim of sovereign or
diplomatic immunity.

It is to be recalled that the Labor Arbiter, in
both of his rulings, noted that it was
imperative for petitioners to secure from the
Department of Foreign Affairs a certification
of respondents diplomatic status and
entitlement to diplomatic privileges
including immunity from suits. The
requirement might not necessarily be
imperative. However, had GTZ obtained
such certification from the DFA, it would
have provided factual basis for its claim of
immunity that would, at the very least,
establish a disputable evidentiary
presumption that the foreign party is indeed
immune which the opposing party will have
to overcome with its own factual evidence.
We do not see why GTZ could not have
secured such certification or endorsement
from the DFA for purposes of this case.
Certainly, it would have been highly
prudential for GTZ to obtain the same after
the Labor Arbiter had denied the motion to
dismiss. Still, even at this juncture, we do not
see any evidence that the DFA, the office of
the executive branch in charge of our
diplomatic relations, has indeed endorsed
GTZs claim of immunity. It may be possible
that GTZ tried, but failed to secure such
certification, due to the same concerns that
we have discussed herein.
Would the fact that the Solicitor General has
endorsed GTZs claim of States immunity
from suit before this Court sufficiently
substitute for the DFA certification? Note
that the rule in public international law
quoted in Holy See referred to endorsement
by the Foreign Office of the State where the
suit is filed, such foreign office in the
Philippines being the Department of Foreign
Affairs. Nowhere in the Comment of the OSG
is it manifested that the DFA has endorsed
GTZs claim, or that the OSG had solicited the
DFAs views on the issue. The arguments
raised by the OSG are virtually the same as
the arguments raised by GTZ without any
indication of any special and distinct
perspective maintained by the Philippine
government on the issue. The Comment
filed by the OSG does not inspire the same
degree of confidence as a certification from
the DFA would have elicited.
Holy See made reference to Baer v. Tizon,
and that in the said case, the United States
Embassy asked the Secretary of Foreign
Affairs to request the Solicitor General to
make a suggestion to the trial court,
accomplished by way of a Manifestation and
Memorandum, that the petitioner therein
enjoyed immunity as the Commander of the
Subic Bay Naval Base. Such circumstance is
actually not narrated in the text of Baer itself
and was likely supplied in Holy See because
its author, Justice Camilio Quiason, had
appeared as the Solicitor in behalf of the
OSG in Baer. Nonetheless, as narrated in
Holy See, it was the Secretary of Foreign
Affairs which directed the OSG to intervene
in behalf of the United States government in
the Baer case, and such fact is manifest
enough of the endorsement by the Foreign ASSOCIATION-KAISAHAN NG
Office. We do not find a similar circumstance MANGGAWANG PILIPINO (KAMPIL-
that bears here. KATIPUNAN), respondents. G.R. No. 96566
January 6, 1992
The Court is thus holds and so rules that GTZ
consistently has been unable to establish FACTS:
with satisfaction that it enjoys the immunity
from suit generally enjoyed by its parent On July 16, 1990, the supervisory,
country, the Federal Republic of Germany. administrative personnel, production,
Consequently, both the Labor Arbiter and accounting and confidential employees of
the Court of Appeals acted within proper the petitioner Atlas Lithographic Services,
bounds when they refused to acknowledge Inc. (ALSI) affiliated with private respondent
that GTZ is so immune by dismissing the Kaisahan ng Manggagawang Pilipino, a
complaint against it. Our finding has national labor organization. The local union
additional ramifications on the failure of GTZ adopted the name Atlas Lithographic
to properly appeal the Labor Arbiters Services, Inc. Supervisory, Administrative,
decision to the NLRC. As pointed out by the Personnel, Production, Accounting and
OSG, the direct recourse to the Court of Confidential Employees Association or ALSI-
Appeals while bypassing the NLRC could SAPPACEA-KAMPIL in short and which we
have been sanctioned had the Labor Arbiters shall hereafter refer to as the "supervisors"
decision been a patent nullity. Since the union.
Labor Arbiter acted properly in deciding the
complaint, notwithstanding GTZs claim of Shortly thereafter, private respondent
immunity, we cannot see how the decision Kampil-Katipunan filed on behalf of the
could have translated into a patent nullity. "supervisors" union a petition for
certification election so that it could be the
118. Atlas Lithographic vs, Usec Laguesma. sole and exclusive bargaining agent of the
205 SCRA 12 (Tado) supervisory employees.
ATLAS LITHOGRAPHIC SERVICES, INC.,
petitioner, vs. UNDERSECRETARY The petitioners opposed the private
BIENVENIDO E. LAGUESMA (Department of respondent's petition claiming that under
Labor and Employment) and ATLAS Article 245 of the Labor bode the private
LITHOGRAPHIC SERVICES, INC. respondent cannot represent the
SUPERVISORY, ADMINISTRATIVE, supervisory employees for collective
PERSONNEL, PRODUCTION, ACCOUNTING bargaining purposeless because the private
AND CONFIDENTIAL EMPLOYEES
respondent also represents the rank-and-file
employees' union.
On September 18, 1990, the Med-Arbiter
issued an order in favor of the private
respondent
ISSUE: whether or not, under Article 245 of
the Labor Code, a local union of supervisory
employees may be allowed to affiliate with a
national federation of labor organizations of
rank-and-file employees
Petitioner:
KAMPIL-KATIPUNAN already represents its
rank-and-file employees and, therefore, to
allow the supervisors of those employees to
affiliate with the private respondent is
tantamount to allowing the circumvention
of the principle of the separation of unions
under Article 245 of the Labor Code.
Respondent:
despite affiliation with a national federation,
the local union does not lose its personality
which is separate, and distinct from the
national federation. It maintains that Rep.
Act No. 6715 contemplates the principle laid
down by this Court in the Adamson case
interpreting Section 3 of Rep. Act No. 875
(the Industrial Peace Act) on the right of a
supervisor's union to affiliate. The private
respondent asserts that the legislature must
have noted the Adamson ruling then
prevailing when it conceived the
reinstatement in the present Labor Code of
a similar provision on the right of supervisors
to organize.ll
Ruling: NO
With the enactment in 1974 of the Labor
Code (Pres Decree No. 442), employees
were classified into managerial and rank-
and-file employees. Neither the category of
supervisors nor their right to organize under
the old statute were recognized.
A revision of the Labor Code undertaken by
the bicameral Congress brought about the
enactment of Rep. Act No. 6715 in March
1989 in which employees were reclassified
into three groups, namely: (1) the
managerial employees; (2) supervisors; and
(3) the rank and file employees. Under the
present law, the category of supervisory
employees is once again recognized under
Art. 212 (m)
The rationale for the amendment is the
government's recognition of the right of
supervisors to organize with the
qualification that they shall not join or assist
in the organization of rank-and-file
employees. The reason behind the Industrial
Peace Act provision on the same subject
matter has been adopted in the present
statute. The interests of supervisors on the
one hand, and the rank-and-file employees
on the other, are separate and distinct. The
functions of supervisors, being
recommendatory in nature, are more
identified with the interests of the employer.
The performance of those functions may,
thus, run counter to the interests of the
rank-and-file.
The definition of managerial employees was
limited to those having authority to hire and
fire while those who only recommend
effectively the hiring or firing or transfers of
personnel would be considered as closer to
rank-and-file employees. The exclusion,
therefore, of middle level executives from
the category of managers brought about a
third classification, the supervisory
employees. These supervisory employees
are allowed to form their own union but they
are not allowed to join the rank-and-file
union because of conflict of interest .
In terms of classification, however, while
they are more closely identified with the
rank-and-file they are still not allowed to join
the union of rank-and-file employees.
The peculiar role of supervisors is such that
while they are not managers, when they
recommend action implementing
management policy or ask for the discipline
or dismissal of subordinates, they identify
with the interests of the employer and may
act contrary to the interests of the rank-and-
file.
We agree with the petitioner's contention
that a conflict of interest may arise in the
areas of discipline, collective bargaining and
strikes. Members of the supervisory union
might refuse to carry out disciplinary
measures against their co-member rank-
and-file employees.
In the area of bargaining, their interests
cannot be considered identical. The needs of
one are different from those of the other.
Moreover, in the event of a strike, the
national federation might influence the
supervisors' union to conduct a sympathy
strike on the sole basis of affiliation.
The Court construes Article 245 to mean
that, as in Section 3 of the Industrial Peace
Act, supervisors shall not be given an
occasion to bargain together with the rank-
and-file against the interests of the
employer regarding terms and conditions of
work
The prohibition against a supervisors' union
joining a local union of rank-and-file is
replete with jurisprudence. The Court
emphasizes that the limitation is not
confined to a case of supervisors wanting to
join a rank-and-file local union. The
prohibition extends to a supervisors' local
union applying for membership in a national
federation the members of which include
local unions of rank-and-file employees. The
intent of the law is clear especially where, as
in the case at bar, the supervisors will be co-
mingling with those employees whom they
directly supervise in their own bargaining
unit.

Supervisors are not prohibited from forming
their own union. What the law prohibits is
their membership in a labor organization of
rank-and-file employees (Art. 245, Labor
Code) or their joining a national federation
of rank-and-file employees that includes the
very local union which they are not allowed
to directly join.
119. Philips Industrial Development vs.
NLRC 210 scra 339 (Tingson)
Topic: Who can unionize for the purpose of
CBA (Security Guards)
PHILIPS INDUSTRIAL DEVELOPMENT vs.
NLRCG.R. No. 88957 June 25, 1992
FACTS:
PIDI is a domestic corporation engaged in
the manufacturing and marketing of
electronic products Since 1971, it had a total
of six (6) collective bargaining agreements
(CBAs) with private respondent Philips
Employees Organization-FFW (PEO-FFW), a
registered labor union and the certified
bargaining agent of all the rank and file
employees of PIDI.
In the sixth CBA, it was agreed upon, among
others, that the subject of inclusion or
exclusion of service engineers, sales
personnel and confidential employees in the
coverage of the bargaining unit would be
submitted for arbitration.
NLRC rendered the questioned decision
declaring respondent company's Service
Engineers, Sales Force, division secretaries,
all Staff of General Management, Personnel
and Industrial Relations Department,
Secretaries of Audit, EDP and Financial
Systems are included within the rank and file
bargaining unit.
Petitioner maintains that it did, and in
support of its stand that said employees
should not be absorbed by the existing
bargaining unit because: (1) run counter to
the history of this parties CBA (2) these
employees hold positions which are highly
sensitive, confidential and of a highly
fiduciary nature (3) to include them in the
bargaining unit may subject the company to
breaches in security and the possible
revelation of highly sensitive and
confidential matters. It would cripple the
company's bargaining position and would
give undue advantage to the union.
ISSUE:
Whether security personnel are disqualified
to form unions?
Whether the NLRC committed grave abuse
of discretion in holding that the mentioned
employees are qualified to be included in the
existing bargaining unit?
RULING:
1. NO
At the outset, respondent NLRC did not quite Art. 245. Right of employees in the public
accurately comprehend the issue raised service. — 10
before it. Indeed, the issue is not whether xxx xxx x
the subject employees may join or form a xx
union, but rather, whether or not they may By virtue of such repeal and substitution,
be part of the existing bargaining unit for the security guards became eligible for
rank and file employees of PIDI. membership in any labor organization.

Even if the issue was, indeed, as perceived by 2. YES

the NLRC, still, a palpable error was
committed by it in ruling that under the law,
all workers, except managerial employees
and security personnel, are qualified to join
a union, or form part of a bargaining unit. At
the time Case No. NLRC-NCR-00-11-03936-
87 was filed in 1987, security personnel were
no longer disqualified from joining or
forming a union.
Section 6 of E.O. No. 111, enacted on 24
December 1986, repealed the original
provisions of Article 245 of the Labor Code,
reading as follows:
Art. 245. Ineligibility of security personnel to
join any labor organization. — Security
guards and other personnel employed for
the protection and security of the person,
properties and premises of the employer
shall not be eligible for membership, in any
labor organization.
and substituted it with the following
provision:
All these employees, with the exception of
the service engineers and the sales force
personnel, are confidential employees. By
the very nature of their functions, they assist
and act in a confidential capacity to, or have
access to confidential matters of, persons
who exercise managerial functions in the
field of labor relations. Said employee(s)
may act as a spy or, spies of either party to a
collective bargaining agreement.
As regards the service engineers and the
sales representatives, in holding that they
are included in the bargaining unit for the
rank and file employees of PIDI, the NLRC
practically forced them to become members
of PEO-FFW or to be subject to its sphere of
influence, it being the certified bargaining
agent for the subject bargaining unit. This
violates, obstructs, impairs and impedes the
service engineers' and the sales
representatives' constitutional right to form
unions or associations and to self-
organization.
It is clear, therefore, that the right to join a
union includes the right to abstain from
joining any
union. Inasmuch as what both the
Constitution and the Industrial Peace Act
have recognized, and guaranteed to the
employee, is the "right" to join associations
of his choice, it would be absurd to say that
the law also imposes, in the same breath,
upon the employee the duty to join
associations. The law does not enjoin an
employee to sign up with any association.
120. San Miguel Corp [Mandaue PPP] vs.
Mandaue Packing Products Plants - San
Miguel Corporation
Monthlies and Rank-and-File Union - FFW,
467 SCRA 107 [2005] (Vosotros)
San Miguel Corp [Mandaue PPP]
vs.
Mandaue Packing Products Plants - San
Miguel Corporation Monthlies and Rank-
and-File Union - FFW,
467 SCRA 107 [2005]
FACTS:
Federation of Free Workers (FFW/
respondent) filed a petition for certification
election with the DOLE Regional Office No.
VII. It sought to be certified and to represent
the permanent rank-and-file monthly paid
employees of the petitioner.
The following documents were attached to
the petition:
(1) a Charter Certificate certifying that
respondent as of that date was duly certified
as a local or chapter of FFW;
(2) a copy of the constitution of respondent
prepared by its Secretary, Noel T. Bathan
and attested by its President, Wilfred V.
Sagun;
(3) a list of respondent’s officers and their
respective addresses, again prepared by
Bathan and attested by Sagun;
(4) a certification signifying that respondent
had just been organized and no amount had
yet been collected from its members,
signed by respondent’s treasurer Chita D.
Rodriguez and attested by Sagun;
and
(5) a list of all the rank-and-file monthly paid
employees of the Mandaue Packaging
Products Plants and Mandaue Glass
Plant prepared by Bathan and attested by
Sagun.
SMC (Petitioner) filed a motion to dismiss
the petition for certification election on the
sole ground that herein respondent union is
not listed or included in the roster of
legitimate labor organizations based on the
certification issued by the Officer-In
representative, then right to be represented
by a bargaining agent should not be denied
to other members of the bargaining unit.”
Respondent Union submitted to the Bureau
of Labor Relations the same documents
earlier attached to its petition for
certification. The accompanying letter,
signed by respondents president Sagun,
stated that such documents were submitted
in compliance with the requirements for the
creation of a local/chapter pursuant to the
Labor Code and its Implementing Rules; and
it was hoped that the submissions would
facilitate the listing of respondent under the
roster of legitimate labor organizations.
On 3 August 1998, the Chief of Labor
Relations Division of DOLE Regional Office
No. VII issued a Certificate of Creation of
Local/Chapter No. ITD. I-ARFBT-058/98,
certifying that from 30 July 1998,
respondent has acquired legal personality as
a labor organization/workers association, it
having submitted all the required
documents.
In turn, petitioner SMC filed a Comment,
stating that respondent was not a legitimate
labor organization at the time of the filing of
the petition. SMC also propounded that
contrary to respondents objectives of
establishing an organization representing
rank-and-file employees, two of
respondents officers, namely Vice-President
Emannuel L. Rosell and Secretary Bathan,
were actually supervisory employees.
In support of this allegation, SMC attached
various documents evidencing the
designation of these two officers in
supervisory roles, as well as their exercise of
various supervisory functions. Petitioner
cited Article 245 of the Labor Code, which
provides that supervisory employees shall
not be eligible for membership in a labor
organization of the rank-and-file employees.
ISSUE:
Whether or not respondent union has
acquired legal personality. (YES)
HELD:
Yes. Respondent Union has acquired legal
personality
In this case, Petitioner SMC erroneously cites
the case of Toyota Motor Philippines v.
Toyota Motor Philippines Corporation Labor
Union, and the purported holding therein
that [if] it is true that at the time of the filing
of the petition, the said registration
certificate has not been approved yet, then,
petitioner lacks the legal personality to file
the petition.
However, an examination of the case In regular order, it is the federation or
actually reveals that the cited portion was national union, already in possession of legal
lifted from one of the antecedent rulings of personality, which initiates the creation of
the Med-Arbiter in that case which had not the local/chapter. It issues a charter
even been affirmed or reinstated by the certificate indicating the creation or
Court on review. Moreover, such establishment of the local/chapter. It then
pronouncement made prior to the submits this charter certificate, along with
enactment of Department Order No. 9 the names of the local/chapters officers,
squarely contradicts Section 3, Rule VI constitution and by-laws to the Regional
thereof, which provides that legal Office or Bureau. It is the submission of
personality of the local/chapter is vested these documents, certified under oath by
upon the submission of the complete the Secretary or Treasurer of the
documentary requirements. local/chapter and attested by the President,
which vests legal personality in the
It is also worth noting that petitioner union local/chapter, which is then free to file on its
in Toyota was an independent labor union, own a petition for certification election.
and not a local/chapter, and under
Department Order No. 9, independent labor In this case, the federation in question, the
unions, unlike local/chapters, acquire legal FFW, did not submit any of these
personality only upon issuance of the documentary requirements to the Regional
certificate of registration by the Bureau or Office or Bureau. It did however issue a
Regional Office. charter certificate to the putative
local/chapter (herein respondent).
Still, petitioner cites in its favor Section 5, Respondent then submitted the charter
Rule V of Dept. Order No. 9, which states certificate along with the other
that the labor organization or workers documentary requirements to the Regional
association shall be deemed registered and Office, but not for the specific purpose of
vested with legal personality on the date of creating the local/chapter, but for filing the
issuance of its certificate of registration. petition for certification election.

Again, the citation is obviously misplaced, as
respondent herein is a local/chapter, the
acquisition of its legal personality being
governed instead by Section 3, Rule VI.
The Court likewise sees no impediment in
deeming respondent as having acquired
legal personality as of 15 June 1998, the fact
that it was the local/chapter itself, and not
the FFW, which submitted the documents
required under Section 1, Rule VI of This being the case, we consider it
Department Order No. 9. permissible for respondent to have
submitted the required documents itself to
The evident rationale why the rule states the Regional Office, and proper that
that it is the federation or national union respondents legal personality be deemed
that submits said documents to the Bureau existent as of 15 June 1998, the date the
or Regional Office is that the creation of the complete documents were submitted.
local/chapter is the sole prerogative of the
federation or national union, and not of any
other entity. Certainly, a putative 121. Sarnahang Manggagawa Sa Charter
local/chapter cannot, without the Chemical Soidariiy of Union in the
imprimatur of the federation or national Philippines for Empowerment and Reforms
union, claim affiliation with the larger unit or {SMCC-SUPER} vs. Charter Chemical and
source its legal personality therefrom. Coating Corp., GR 169717, 16 March 2011.
(Banuelos)
In the ordinary course, it should have been TOPIC: Union Registration and Procedure
FFW, and not respondent, which should (Attestation Requirements)
have submitted the subject documents to
the Regional Office. Nonetheless, there is no G.R. No. 169717 March 16, 2011
good reason to deny legal personality or
defer its conferral to the local/chapter if it is SAMAHANG MANGGAGAWA SA CHARTER
evident at the onset that the federation or CHEMICAL SOLIDARITY OF UNIONS IN THE
national union itself has already through its PHILIPPINES FOR EMPOWERMENT AND
own means established the local/chapter. REFORMS (SMCC-SUPER), ZACARRIAS JERRY
VICTORIO-Union President, vs. CHARTER
In this case, such is evidenced by the Charter CHEMICAL and COATING CORPORATION.
Certificate dated 9 June 1998, issued by
FFW, and attached to the petition for Ponente: DEL CASTILLO, J.
certification election. The Charter Certificate
expressly states that respondent has been FACTS:
issued the said certificate to operate as a
local or chapter of the [FFW]. The Charter On February 19, 1999, Samahang
Certificate expressly acknowledges FFWs Manggagawa sa Charter Chemical Solidarity
intent to establish respondent as of 9 June of Unions in the Philippines for
1998. Empowerment and Reforms (petitioner
union) filed a petition for certification
election among the regular rank-and-file
employees of Charter Chemical and Coating
Corporation (respondent company) with the
Mediation Arbitration Unit of the DOLE,
National Capital Region.
On April 14, 1999, respondent company filed
an Answer with Motion to Dismiss4 on the
ground that petitioner union is not a
legitimate labor organization because of (1)
failure to comply with the documentation
requirements set by law.
SMCC-SUPER CONTENTION: It argues that
the lack of verification of its charter
certificate and the alleged illegal
composition of its membership are not
grounds for the dismissal of a petition for
certification election under Section 11, Rule
XI of D.O. No. 9, series of 1997, as amended,
nor are they grounds for the cancellation of
a union’s registration under Section 3, Rule
VIII of said issuance. It contends that what is
required to be certified under oath by the
local union’s secretary or treasurer and
attested to by the local union’s president are
limited to the union’s constitution and by-
laws, statement of the set of officers, and
the books of accounts.
CHARTER CHEMICAL CONTENTION: On the
issue of lack of verification of the charter
certificate, respondent company notes that
Article 235 of the Labor Code and Section 1,
Rule VI of the Implementing Rules of Book V,
as amended by D.O. No. 9, series of 1997,
expressly requires that the charter
certificate be certified under oath.
In the main, the CA ruled that petitioner
union failed to comply with the requisite
documents for registration under Article 235
of the Labor Code and its implementing
rules. It agreed with the Med-Arbiter that
the Charter Certificate, Sama-samang
Pahayag ng Pagsapi at Authorization, and
Listahan ng mga Dumalo sa Pangkalahatang
Pulong at mga Sumang-ayon at Nagratipika
sa Saligang Batas were not executed under
oath. Thus, petitioner union cannot be
accorded the status of a legitimate labor
organization.
Legal ISSUE: W/N the failure to attest the
said document requirements will be fatal for
its registration.
HELD:
NO. It is not necessary for national union to
attest the labor certificate. And Listahan ng
mga dumalo sa pangkalahatang pulong at
mga sumang-ayon at nagratipika sa saligang
bata is not included among those needed to
be executed under oath.
Preliminarily, we must note that Congress
enacted Republic Act (R.A.) No. 9481 which
took effect on June 14, 2007. This law
introduced substantial amendments to the
Labor Code. However, since the operative
FACTS in this case occurred in 1999, we shall
decide the issues under the pertinent legal
provisions then in force (i.e., R.A. No.
6715,18 amending Book V of the Labor Code,
and the rules and regulations19
implementing R.A. No. 6715, as amended by
D.O. No. 9, series of 1997) pursuant to our
ruling in Republic v. Kawashima Textile Mfg.,
Philippines, Inc.
The then prevailing Section 1, Rule VI of the
Implementing Rules of Book V, as amended
by D.O. No. 9, series of 1997, provides:
Section 1. Chartering and creation of a local
chapter — A duly registered federation or
national union may directly create a
local/chapter by submitting to the Regional
Office or to the Bureau two (2) copies of the
following:
(a) A charter certificate issued by the
federation or national union indicating the
creation or establishment of the
local/chapter;
(b) The names of the local/chapter’s officers,
their addresses, and the principal office of
the local/chapter; and
(c) The local/chapter’s constitution and by-
laws provided that where the local/chapter’s
constitution and by-laws [are] the same as
[those] of the federation or national union,
this fact shall be indicated accordingly.
All the foregoing supporting requirements
shall be certified under oath by the Secretary
or the Treasurer of the local/chapter and
attested to by its President.
As readily seen, the Sama-samang Pahayag
ng Pagsapi at Authorization and Listahan ng
mga Dumalo sa Pangkalahatang Pulong at
mga Sumang-ayon at Nagratipika sa Saligang
Batas are not among the documents that
need to be submitted to the Regional Office
or Bureau of Labor Relations in order to
register a labor organization.
As to the charter certificate, the above-
quoted rule indicates that it should be
executed under oath. Petitioner union
concedes and the records confirm that its
charter certificate was not executed under
oath. However, in San Miguel Corporation
(Mandaue Packaging Products Plants) v.
Mandaue Packing Products Plants-San
Miguel Corporation Monthlies Rank-and-File
Union-FFW (MPPP-SMPP-SMAMRFU-
FFW),22 which was decided under the
auspices of D.O. No. 9, Series of 1997, we
ruled –
In San Miguel Foods-Cebu B-Meg Feed Plant
v. Hon. Laguesma, 331 Phil. 356 (1996), the
Court ruled that it was not necessary for the
charter certificate to be certified and
attested by the local/chapter officers. Id.
While this ruling was based on the
interpretation of the previous Implementing
Rules provisions which were supplanted by
the 1997 amendments, we believe that the
same doctrine obtains in this case.
Considering that the charter certificate is
prepared and issued by the national union
and not the local/chapter, it does not make
sense to have the local/chapter’s officers x x Manggagawa ng Takata (SALAMAT) on the
x certify or attest to a document which they ground that the latter is guilty of
had no hand in the preparation of. misrepresentation, false statement and
fraud with respect to the number of those
In accordance with this ruling, petitioner who participated in the organizational
union’s charter certificate need not be meeting, the adoption and ratification of its
executed under oath. Consequently, it Constitution and By-Laws, and in the
validly acquired the status of a legitimate election of its officers.
labor organization upon submission of (1) its Salamat denied the charge and claimed that
charter certificate, (2) the names of its there were enough union members which
officers, their addresses, and its principal was more than the 20% requirement for
office, and (3) its constitution and by-laws— union registration.
the last two requirements having been
executed under oath by the proper union Salamat also contended that Takata was
officials as borne out by the records. estopped from assailing its legal personality
as it agreed to a certification election and
122. Takata (Philippines) Corporation vs actively participated in the pre-election
Bureau of Labor Relations and Samahang conference of the certification election
Lakas proceedings. Salamat argued that the union
Manggagawa Ng Takata (Salamat), members were informed of the contents of
Respondents. G.R. No. 196276, June 04, the documents they signed and that the
2014 (Caubang) attendees to the organizational meeting
constituted more than 50% of the total
TAKATA (PHILIPPINES) CORPORATION, union membership, hence, a quorum existed
Petitioner, for the conduct of the said meeting.
vs.
BUREAU OF LABOR RELATIONS and DOLE Regional Director granted the petition
SAMAHANG LAKAS MANGGAGAWA NG to cancel Salamat’s certificate of
TAKATA (SALAMAT), registration. It found that the 68 who
G.R. No. 196276 June 4, 2014 attended the organizational meeting was
obviously less than 20% of the total number
FACTS: of 396 regular rank-and-file employees
Takata filed with the Department of Labor which Salamat sought to represent, hence,
and Employment (DOLE) a Petition for short of the union registration requirement.
Cancellation of the Certificate of Union The Regional Director also found that the
Registration of Samahang Lakas proceedings in the cancellation of
registration and certification elections are entitled to the rights and privileges granted
two different and entirely separate and by law to legitimate labor organizations
independent proceedings which were not upon issuance of the certificate of
dependent on each other. registration based on the following
requirements:
Salamat appealed with the Bureau of Legal (a) Fifty pesos (₱50.00)registration fee;
Relations (BLR) (Office of the DOLE (b) The names of its officers, their addresses,
Secretary). The BLR granted Salamat’s the principal address of the labor
appeal and reversed the decision of the organization, the minutes of the
DOLE Regional Director. It found that Takata organizational meetings and the list of the
failed to prove that Salamat deliberately and workers who participated in such meetings;
maliciously misrepresented the number of (c) In case the applicant is an independent
rank-and-file employees. The BLR found that union, the names of all its members
the list of employees who participated in the comprising at least twenty percent (20%) of
organizational meeting was a separate and all the employees in the bargaining unit
distinct requirement from the list of the where it seeks to operate;
names of members comprising at least 20% (d) If the applicant union has been in
of the employees in the bargaining unit; and existence for one or more years, copies of its
that there was no requirement for annual financial reports; and
signatures opposite the names of the union (e) Four copies of the constitution and by-
members; and there was no evidence laws of the applicant union, minutes of its
showing that the employees assailed their adoption or ratification, and the list of the
inclusion in the list of union members. members who participated in it."

And after the issuance of the certificate of

ISSUE: registration, the labor organization's
Should Salamat’s certificate of Union registration could be assailed directly
Registration be cancelled? NO through cancellation of registration
proceedings in accordance with Articles 238
and 239 of the Labor Code. And the
RULING: cancellation of union certificate of
registration and the grounds thereof are as
ART. 234. Requirements of Registration. - A follows:
federation, national union or industry or ART. 238. Cancellation of Registration. - The
trade union center or an independent union certificate of registration of any legitimate
shall acquire legal personality and shall be labor organization, whether national or
local, may be cancelled by the Bureau, after
due hearing, only on the grounds specified in
Article 239 hereof.
ART. 239. Grounds for Cancellation of Union
Registration. - The following may constitute
grounds for cancellation of union
registration:
(a) Misrepresentation, false statement or
fraud in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto, the minutes of
ratification, and the list of members who
took part in the ratification;
(b) Misrepresentation, false statements or
fraud in connection with the election of
officers, minutes of the election of officers,
and the list of voters;
(c) Voluntary dissolution by the members.
Takata’s allegations were not supported
with evidence to prove such
misrepresentation by Salamat.
It does not appear in Article 234 (b) of the
Labor Code that the attendees in the
organizational meeting must comprise 20%
of the employees in the bargaining unit. In
fact, even the Implementing Rules and
Regulations of the Labor Code does not so
provide.
It is only under Article 234 (c) that requires
the names of all its members comprising at
least twenty percent (20%) of all the
employees in the bargaining unit where it
seeks to operate. Clearly, the 20% minimum
requirement pertains to the employees’
membership in the union and not to the list
of workers who participated in the
organizational meeting.
Indeed, Article 234 (b) and (c) provide for
separate requirements, which must be
submitted for the union's registration, and
which Salamat did submit. Here, the total
number of employees in the bargaining unit
was 396, and 20% of which was about 79.
Salamat submitted a document entitled
"Pangalan ng Mga Kasapi ng Unyon"
showing the names of 119 employees as
union members, thus they sufficiently
complied even beyond the 20% minimum
membership requirement. Salamat also
submitted the attendance sheet of the
organizational meeting which contained the
names and signatures of the 68 union
members who attended the meeting.
Considering that there are 119 union
members which are more than 20% of all the
employees of the bargaining unit, and since
the law does not provide for the required
number of members to attend the
organizational meeting, the 68 attendees
which comprised at least the majority of the
119 union members would already
constitute a quorum for the meeting to
proceed and to validly ratify the Constitution
and By-laws of the union.
There is no basis for Takata to contend that
grounds exist for the cancellation of
Salamat's union registration. For fraud and
misrepresentation to be grounds for
cancellation of union registration under
Article 239 of the Labor Code, the nature of
the fraud and misrepresentation must be
grave and compelling enough to vitiate the
consent of a majority of union members.
In this case, we agree with the BLR and the
CA that respondent could not have possibly
committed misrepresentation, fraud, or
false statements. The alleged failure of
respondent to indicate with mathematical
precision the total number of employees in
the bargaining unit is of no moment,
especially as it was able to comply with the
20% minimum membership requirement.
Even if the total number of rank-and-file
employees of petitioner is 528, while
respondent declared that it should only be
455, it still cannot be denied that the latter
would have more than complied with the
registration requirement.
123. MARIWASA SIAM CERAMICS, INC. vs.
THE SECRETARY OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT, CHIEF OF THE
BUREAU OF LABOR RELATIONS,
DEPARTMENT OF LABOR AND
EMPLOYMENT, REGIONAL DIRECTOR OF
DOLE REGIONAL OFFICE NUMBER IV-A &
SAMAHAN NG MGA MANGGAGAWA SA
MARIWASA SIAM CERAMICS, INC. (SMMSC-
INDEPENDENT)
Respondent SMMSC is a legitimate labor
organization. Mariwasa Siam Ceramics, Inc.
filed a Petition for Cancellation of Union
Registration against respondent, claiming
that respondent did not comply with the
20% requirement (Art. 234 Labor Code), and
that it committed fraud and
misrepresentation (Art. 239).
All other allegations made by the petitioner
were not given credit since there was no
evidence presented by the petitioner or such
evidence were self-serving.
W/N respondent union’s registration should
be cancelled due to the alleged violations
committed by it.
No. The legitimacy of respondent as a labor
organization must be affirmed. While it is
true that the withdrawal of support may be
considered as a resignation from the union,
the fact remains that at the time of the
union’s application for registration, the
affiants were members of respondent and
they comprised more than the required 20%
membership for purposes of registration as
a labor union. Article 234 of the Labor Code
merely requires a 20% minimum
membership during the application for union
registration. It does not mandate that a
union must maintain the 20% minimum
membership requirement all throughout its
existence.
i1
Respondent asserts that it had a total of 173
union members at the time it applied for
registration. Two names were repeated in
respondent’s list and had to be deducted,
but the total would still be 171 union
members.
Further, out of the four names alleged to be
no longer connected with petitioner, only
two names should be deleted from the list
since the other two have only resigned after
respondent’s registration had already been
granted. Thus, the total union membership
at the time of registration was 169. Since the
total number of rank-and-file employees at
that time was 528, 169 employees would be
equivalent to 32% of the total rank-and-file
workers complement, still very much above
the minimum required by law.
Furthermore, respondent could not have
possibly committed misrepresentation,
fraud, or false statements. The alleged
failure of respondent to indicate with
mathematical precision the total number of
employees in the bargaining unit is of no
moment, especially as it was able to comply
with the 20% minimum membership
requirement. Even if the total number of
rank-and-file employees of petitioner is 528,
while respondent declared that it should
only be 455, it still cannot be denied that the
latter would have more than complied with
the registration requirement.
124. Eagle Ridge Golf and Country Club vs.
Court of ,Appeals and Eagle Ridge Employees
Union
G.R, no. 178989, 18 March 2010 (Dosdos)
EAGLE RIDGE GOLF & COUNTRY CLUB,
Petitioner, - versus - COURT OF APPEALS and
EAGLE RIDGE EMPLOYEES UNION (EREU),
Respondents.
FACTS:
On December 6, 2005, at least 20% of Eagle
Ridges rank-and-file employees the
percentage threshold required under Article
234(c) of the Labor Code for union
registration had a meeting where they
organized themselves into an independent
labor union, named Eagle Ridge Employees
Union (EREU or Union),[5] elected a set of
officers,[6] and ratified[7] their constitution
and by-laws.[8]
Department of Labor and Employment
(DOLE) Regional Office IV granted the
application and issued EREU Registration
Certificate.
The EREU then filed a petition for
certification election in Eagle Ridge Golf &
Country Club. In opposition, Eagle Ridges
petition ascribed misrepresentation, false
statement, or fraud to EREU in connection
with the adoption of its constitution and by-
laws, the numerical composition of the
Union, and the election of its officers.
EAGLE RIDGE: EREU declared in its
application for registration having 30
members, when the minutes of its
December 6, 2005 organizational meeting
showed it only had 26 members. The
misrepresentation was exacerbated by the
discrepancy between the certification issued
by the Union secretary and president that 25
members actually ratified the constitution
and by-laws on December 6, 2005 and the
fact that 26 members affixed their
signatures on the documents, making one
signature a forgery.
Eagle Ridge contended that five employees
who attended the organizational meeting
had manifested the desire to withdraw from
the union. The five executed individual
affidavits.
The withdrawal of the five, effectively
reduced the union membership to 20 or 21,
either of which is below the mandatory
minimum 20% membership requirement
under Art. 234(c) of the Labor Code.
Reckoned from 112 rank-and-file employees
of Eagle Ridge, the required number would
be 22 or 23 employees.
EREU: the alleged discrepancies are not real
for before filing of its application on
December 19, 2005, four additional
employees joined the union on December 8,
2005, thus raising the union membership to
30 members as of December 19, 2005; the
retraction of 5 union members should not be
given any credence for the reasons that:
(a) the affidavits of the five retracting union
members sans other affirmative evidence
presented hardly qualify as clear and
credible evidence considering the joint
affidavits of the other members attesting to
the orderly conduct of the organizational
meeting;
(b) the retracting members did not deny
signing the union documents;
(c) following, Belyca Corporation v. Ferrer-
Calleja[15]and Oriental Tin Can Labor Union
v. Secretary of Labor and Employment,[16] it
can be presumed that duress, coercion or
valuable consideration was brought to bear
on the retracting members; and
(d) citing La Suerte Cigar and Cigarette
Factory v. Director of Bureau of Labor
Relations,[17]Belyca Corporation and
Oriental Tin Can Labor Union, where the
Court ruled that once the required
percentage requirement has been reached,
the employees withdrawal from union
membership taking place after the filing of
the petition for certification election will not
affect the petition, it asserted the
applicability of said ruling as the petition for
certification election was filed on January 10,
2006 or long before February 15, 2006 when
the affidavits of retraction were executed by
the five union members, thus contending
that the retractions do not affect nor be
deemed compelling enough to cancel its
certificate of registration.
DOLE Regional Director: favored Eagle Ridge
and delisted EREU rom the roster of
legitimate labor organizations.
BLR: reversed Dole RD decisions. EREU shall
remain in the roster of legitimate labor
organizations.
CA: dismissed Eagle Ridges appeal for being
deficient
Issues: 1. whether or not THERE WAS
FRAUD, MISREPRESENTATION AND/OR
FALSE STATEMENT WHICH WARRANT THE
CANCELLATION OF CERTIFICATE OF
REGISTRATION OF EREU.
2. whether such separation from the Union
can detrimentally affect the registration of
the Union.
RULING: 1. NO
No Fraud in the Application
A scrutiny of the records fails to show any
misrepresentation, false statement, or fraud
committed by EREU to merit cancellation of
its registration.
First. The Union submitted the required
documents attesting to the FACTS of the
organizational meeting on December 6,
2005, the election of its officers, and the
adoption of the Unions constitution and by-
laws. It submitted before the DOLE Regional
Office with its Application for Registration
and the duly filled out BLR Reg. Form No. I-
LO, s. 1998
Second. The members of the EREU totaled
30 employees when it applied on December
19, 2005 for registration. The Union thereby
complied with the mandatory minimum 20%
membership requirement under Art. 234(c).
Of note is the undisputed number of 112
rank-and-file employees in Eagle Ridge.
Third. The Union has sufficiently explained
the discrepancy between the number of
those who attended the organizational
meeting and the list of union members.
Consequently, the total number of union
members, as of December 8, 2005, was 30,
which was truthfully indicated in its
application for registration on December 19,
2005.
As aptly found by the BLR Director, the Union
already had 30 members when it applied for
registration, for the admission of new
members is neither prohibited by law nor
was it concealed in its application for
registration. Eagle Ridges contention is
flawed when it equated the requirements
under Art. 234(b) and (c) of the Labor Code.
Par. (b) clearly required the submission of
the minutes of the organizational meetings
and the list of workers who participated in
the meetings, while par. (c) merely required
the list of names of all the union members
comprising at least 20% of the bargaining
unit. The fact that EREU had 30 members
when it applied for registration on
December 19, 2005 while only 26 actually
participated in the organizational meeting is
borne by the records.
Fourth. Any seeming infirmity in the
application and admission of union
membership, most especially in cases of
independent labor unions, must be viewed
in favor of valid membership.
The right of employees to self-organization
and membership in a union must not be
trammeled by undue difficulties. In this case,
when the Union said that the four employee-
applicants had been admitted as union
members, it is enough to establish the fact of
admission of the four that they had duly
signified such desire by accomplishing the
membership form. The fact, as pointed out
by Eagle Ridge, that the Union, owing to its
scant membership, had not yet fully
organized its different committees evidently
shows the direct and valid acceptance of the
four employee applicants rather than deter
their admissionas erroneously asserted by
Eagle Ridge.
Fifth. The difference between the number of
26 members, who ratified the Unions
constitution and by-laws, and the 25
members shown in the certification of the
Union secretary as having ratified it, is a
typographical error.
Sixth. In the more meaty issue of the
affidavits of retraction executed by six union
members, we hold that the probative value
of these affidavits cannot overcome those of
the supporting affidavits of 12 union
members and their counsel as to the
proceedings and the conduct of the
organizational meeting on December 6,
2005.
The six affiants of the affidavits of retraction
were not presented in a hearing before the
Hearing Officer (DOLE Regional Director), as
required under the Rules Implementing
Book V of the Labor Code covering Labor
Relations. Said Rules is embodied in
Department Order No. (DO) 40-03 which
was issued on February 17, 2003 and took
effect on March 15, 2003 to replace DO 9 of
1997. Sec. 11, Rule XI of DO 40-03
Seventh. The fact that six union members,
indeed, expressed the desire to withdraw
their membership through their affidavits of
retraction will not cause the cancellation of
registration on the ground of violation of Art.
234(c) of the Labor Code requiring the
mandatory minimum 20% membership of
rank-and-file employees in the employees
union.
2. We answer in the negative.
Twenty percent (20%) of 112 rank-and-file
employees in Eagle Ridge would require a
union membership of at least 22 employees
(112 x 205 = 22.4). When the EREU filed its
application for registration on December 19,
2005, there were clearly 30 union members.
Thus, when the certificate of registration
was granted, there is no dispute that the
Union complied with the mandatory 20%
membership requirement.
With the withdrawal of six union members,
there is still compliance with the mandatory
membership requirement under Art. 234(c),
for the remaining 24 union members
constitute more than the 20% membership
requirement of 22 employees.
Indeed, where the company seeks the
cancellation of a unions registration during
the pendency of a petition for certification
election, the same grounds invoked to
cancel should not be used to bar the
certification election. A certification election
is the most expeditious and fairest mode of
ascertaining the will of a collective
bargaining unit as to its choice of its
exclusive representative.[57] It is the fairest
and most effective way of determining
which labor organization can truly represent
the working force. It is a fundamental
postulate that the will of the majority, if
given expression in an honest election with
freedom on the part of the voters to make
their choice, is controlling.[58]
In S.S. Ventures International, Inc. v. S.S.
Ventures Labor Union (SSVLU) on the effect
of the withdrawal from union membership
right before or after the filing of a petition
for certification election:
We have in precedent cases said that the
employees withdrawal from a labor union
made before the filing of the petition for
certification election is presumed voluntary,
while withdrawal after the filing of such
petition is considered to be involuntary and
does not affect the same. Now then, if a
withdrawal from union membership done
after a petition for certification election has
been filed does not vitiate such petition, is it
not but logical to assume that such
withdrawal cannot work to nullify the
registration of the union?
125. The Heritage Hotel Manila vs. National
Union of Workers in Allied lndustries-
Heritage Hotel Manila Supervisors Chapter
GR 178296 (Dulay)
THE HERITAGE HOTEL MANILA, acting
through its owner, GRAND PLAZA HOTEL
CORPORATION, Vs. NATIONAL UNION OF
WORKERS IN THE HOTEL, RESTAURANT AND
ALLIED INDUSTRIES-HERITAGE HOTEL
MANILA SUPERVISORS CHAPTER
(NUWHRAIN-HHMSC) G.R. No. 178296
January 12, 2011
FACTS:
The respondent UNION’s petition for
certification election was granted.
The petitioner HOTEL then discovered that
respondent had failed to submit to the
Bureau of Labor Relations (BLR) its annual
financial report for several years and the list
of its members since it filed its registration
papers in 1995.
Consequently, the HOTEL filed a Petition for
Cancellation of Registration of respondent,
on the ground of the non-submission of the
said documents; and prayed that
respondent’s Certificate of Creation of
Local/Chapter be cancelled and its name be
deleted from the list of legitimate labor
organizations. It further requested the
suspension of the certification election
proceedings.
Nevertheless, the certification election
pushed through and the respondent UNION
won.
The Regional Director of DOLE-NCR and
DOLE Secretary both HELD: that
constitutionally guaranteed freedom of
association and right of workers to self-
organization outweighed respondent’s
noncompliance with the statutory
requirements to maintain its status as a
legitimate labor organization.
ISSUE:
Whether or not the failure to comply with
the statutory requirement(filing financial
reports and the list of its members) sufficient
ground for the cancellation of registration of
the respondent as a labor union.
HELD: NO.
No, the non-compliance should not be a
ground for the cancellation. Articles 238 and
239 of the Labor Code provide that failure to
file financial reports and the list of its
members are grounds for the cancellation of
Union Organization. However, consideration
must be taken of the fundamental rights
guaranteed by Article XIII, Section 3 of the
Constitution, i.e., the rights of all workers to
self-organization, collective bargaining and
negotiations, and peaceful concerted
activities. Labor authorities should bear in
mind that registration confers upon a union
the status of legitimacy and the concomitant
right and privileges granted by law to a
legitimate labor organization, particularly
the right to participate in or ask for
certification election in a bargaining unit.
Thus, the cancellation of a certificate of
registration is the equivalent of snuffing out
the life of a labor organization. For without
such registration, it loses – as a rule – its
rights under the Labor Code.
Furthermore, that the Labor Code’s
provisions on cancellation of union
registration and on reportorial requirements
have been recently amended by Republic Act
(R.A.) No. 9481, An Act Strengthening the
Workers’ Constitutional Right to Self-
Organization, Amending for the Purpose
Presidential Decree No. 442, As Amended,
Otherwise Known as the Labor Code of the
Philippines, which says that failure to file
financial reports and list of union members
shall not be a ground for cancellation of
union registration but shall subject the
erring officers or members to suspension,
expulsion from membership, or any
appropriate penalty.
126. Rural Bank of Alaminos Employees
Union vs. NLRC, 317 SCRA 669 (1999)
[Macatol]
RURAL BANK OF ALAMINOS EMPLOYEES
UNION (RBAEU) and ISMAEL TAMAYO, SR.,
petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, Third Division, Exec. Labor
Arbiter JOSE B. BOLISAY and RURAL BANK OF
ALAMINOS, Inc., respondents. [G.R. No.
100342-44. October 29, 1999] PURISIMA, J.:
FACTS:
The Petition stems from three cases
originally instituted before Sub-Regional
Arbitration of the National Labor Relations
Commission in Dagupan City. The first case,
NLRC Case No. 01-03-7-0049-89, was
commenced by the herein petitioner, Ismael
Tamayo, Sr., against Rural Bank of Alaminos,
Inc. (RBAI) for illegal dismissal and damages.
The second case, docketed as NLRC Case
No.01-04-7-0059-89, was filed by the herein
private respondent, Rural Bank of Alaminos,
Inc., against the Rural Bank of Alaminos
Employees Union for unfair labor practice,
declaration of illegality of strike and
damages. While the third case, docketed as
NLRC Case No. 01-06-0097-89, was filed by
the Employees Union against the Bank,
charging the latter with unfair labor practice
and damages.
With the appointment of one Benefredo
Quinto to the position of internal auditor,
which position he had HELD: since January 1,
1976, Ismael P. Tamayo, Sr., who had been
with Rural Bank of Alaminos, Inc. (RBAI for
brevity) since it started operations in
September of 1956, feeling shortchanged,
filed on June 3, 1988 a complaint against
RBAI for illegal dismissal.
RBAI agreed on a compromise agreement
dated July 13, 1988 to reinstate Ismael P.
Tamayo, Sr. to the position of internal
auditor.
Claiming that his services were not actually
needed, RBAI terminated effective January
1, 1989 Ismael P. Tamayo, Sr.’s services. This
led to the filing on March 27, 1989 of a
complaint for illegal dismissal by Ismael P.
Tamayo, Sr. against Rural Bank of Alaminos,
Inc.
Subsequent to its certification on December
12, 1989 as the sole bargaining agent of the
employees of RBAI, the Rural Bank of
Alaminos Employees Union (hereinafter
called the Union) submitted sometime in
February 1989 proposals with respect to
salary/wage increases.
RBAIs counter-proposals not acceptable to
it, the Union, which had earlier filed a notice
of strike on March 3, 1989, went on strike on
April 3, 1989.

Its position being that the strike staged by
the Union is illegal and in violation of Article
248 (e) of the Labor Code, RBAI instituted a
petition for the declaration of the strike as
illegal and for actual damages it incurred by
way of loss of earnings to the tune of
P30,000.00 per day.
The Union, assailing the alleged constructive
dismissal of its members brought about or
resulting from the strike, lodged against
RBAI a complaint for unfair labor practice
with prayer for moral and exemplary
damages.
LA: Rural Bank of Alaminos, Inc. guilty of
unfair labor practice, whose act is
tantamount to an illegal lockout amounting
to a constructive dismissal of the Union
members, and we hereby order the bank to
pay them their full backwages and other
benefits for the nine (9) months period from
April to December 1989 with the
computations to include the wage increase
under R.A. 6727 effective July 1, 1989.
The Bank is hereby ordered to re-open and
accept/reinstate the striking union members
without loss of seniority rights and the union
members are likewise ordered to return to
work and may now claim their respective
13th month pay for 1989. In case they are
not immediately reinstated, their full
backwages shall not exceed a maximum of
three (3) years.
National Labor Relations Commission:
Remand all the cases to Regional Arbitration
Branch of origin for further proceedings.
Hence, this petition.
ISSUE:
Whether petition for cancellation of the
union’s registration is an Unfair Labor
Practice? No, it is not per se an act of unfair
labor practice.
HELD:
NLRC Case No. 0097-89 charged RBAI with
unfair labor practice and the Labor Arbiter
concluded that the Bank employed all
available means to further delay the
resolution of the dispute, thus creating a
scenario of an illegal lock-out.
A lock-out means the temporary refusal of
an employer to furnish work as a result of an
industrial or labor dispute. As correctly
found by the NLRC, in the case under
consideration evidence of illegal lock-out is
wanting such that there can be no conclusive
determination by the NLRC as to the charge.
Petitioners failed to present sufficient proof
to support the allegation of illegal lock-out.
No evidence was adduced by the Union to
show that the Bank really refused them
employment during the pendency of the
strike. As to the allegation that the Bank was
interfering with and restraining the
employees in the exercise of their right to
self-organization, suffice it to state that filing
a petition for cancellation of the Unions
registration is not per se an act of unfair
labor practice. It must be shown by
substantial evidence that the filing of the
petition for cancellation of
registration by the employer was aimed to
oppress the Union.
Anent the observation of NLRC that it was at
a loss as to the exact number of employees
who were constructively dismissed by the
Bank, such claim is belied by the records
clearly indicating that in its Complaint in
NLRC Case. 0059-89, petitioner Union did
attach a letter addressed to the respondent
Bank containing a list of the banks
employees together with their length of
service and monthly basic
Respondent avers that since the said list was
presented in evidence in Case No. 0059-89,
the same could not be considered as
evidence in Case No. 0097-89 because these
two cases are separate and distinct from
each other.
The contention is untenable. It must be
recalled that Case No. 0097-89 was filed in
the nature of a countercharge to Case No.
0059-89 by the petitioner Union against
respondent Bank. Besides, all the three cases
were consolidated before the Labor Arbiter
because of the identity of the parties. Thus,
the list, although introduced in Case No.
0059-89, could likewise be
considered as evidence in Case No. 0097-89.
As HELD: by this Court, proceedings before a
labor arbiter are non-litigious in nature in
which, subject to the requirements of due
process, the technicalities of law and
procedure and the rules obtaining in courts
union of law do not strictly apply.
Petitioners stance that the finding of unfair
labor practice already became final as the
issue was not raised on appeal, is untenable.
The first, fourth and fifth issues raised by the
Bank in its Appeal Memorandum filed with
the NLRC on December 24, 1989 theorized
that the Labor Arbiter gravely abused his
discretion in holding that appellant:
1. violated its duty to bargain collectively.
4. is guilty of illegal lock-out.
5. illegally dismissed its employees.
salary.
Although the issue was not collectively
appealed as unfair labor practice, the first,
fourth and fifth issues relate to acts which by
themselves constitute unfair labor practice.
127. San Miguel Employees Union vs. San
Miguel packaging products employee 533
SCR 125 2007 (Pacquiao L)
SAN MIGUEL CORPORATION EMPLOYEES
UNION–PHILIPPINE TRANSPORT AND
GENERAL WORKERS ORGANIZATION
(SMCEU–PTGWO), petitioner, vs. SAN
MIGUEL PACKAGING PRODUCTS
EMPLOYEES UNION–PAMBANSANG DIWA
NG MANGGAGAWANG PILIPINO (SMPPEU–
properly PDMP), respondent G.R. No. 171153
(September 12, 2007)
FACTS
Petitioner SMCEU–PTGWO is the incumbent
bargaining agent for the bargaining unit
comprised of the regular monthly-paid rank
and file employees of the three divisions of
San Miguel Corporation (SMC), namely, the
San Miguel Corporate Staff Unit (SMCSU),
San Miguel Brewing Philippines (SMBP), and
the San Miguel Packaging Products (SMPP),
in all offices and plants of SMC, including the
Metal Closure and Lithography Plant in
Laguna.
Respondent SMPPEU–PDMP is registered as
a chapter of Pambansang Diwa
Manggagawang Pilipino (PDMP).
compliance with registration requirements,
respondent submitted the requisite
documents to the Bureau of Labor Relations
(BLR) for the purpose of acquiring legal
personality. Upon submission of its charter
certificate and other documents,
respondent was issued Certificate
Creation of Local or Chapter PDMP-01 by the
BLR. Thereafter, respondent filed with the
Med-Arbiter of the DOLE Regional Officer in
the National Capital Region (DOLE-NCR),
three separate petitions for certification
election to represent SMPP, SMCSU, and
SMBP. All three petitions were dismissed, on
the ground that the separate petitions
fragmented a single bargaining unit.
Subsequently, petitioner filed with the
DOLE-NCR a petition seeking
cancellation of respondent’s registration and
its dropping from the rolls of legitimate labor
organizations. In its petition, petitioner
accused respondent of committing fraud
and falsification, and non-compliance with
registration requirements in obtaining its
certificate of registration. It raised
allegations that respondent violated Articles
239(a), (b) and (c) and 234(c) of the Labor
Code.
Moreover, petitioner claimed that PDMP is
not a legitimate labor organization, but a
trade union center, hence, it cannot directly
create a local or chapter.
ng
In Subsequently, DOLE-NCR Regional Director
Maximo Lim issued an Order dismissing the
allegations of fraud and misrepresentation,
and irregularity in the submission of
documents by respondent.
Regional Director Lim further ruled that
of respondent is allowed to directly create a
local or chapter. However, he found that
respondent did not comply with the 20%
membership requirement and, thus,
ordered the cancellation of its certificate of
registration and removal from the rolls of
legitimate labor organizations. Respondent
appealed to the BLR.
ISSUE
Whether or not the registration of a union
can be subjected to a collateral attack (NO)
the
HELD:
No. The legal personality of a legitimate
labor organization, such as PDMP, cannot be
subject to a collateral attack. The law is very
clear on this matter. Article 212 (h) of the
Labor Code, as amended, defines a
legitimate labor organization as any labor
organization duly registered with the DOLE,
and includes any branch or local thereof. On
the other hand, a trade union center is any
group of registered national unions or
federations organized for the mutual aid and
protection of its members; for assisting such
members in collective bargaining; or for
participating in the formulation of social and
employment policies, standards,
programs, and is duly registered with the
DOLE in accordance with Rule III, Section 2 of
the Implementing Rules.
The Implementing Rules stipulate that a
labor organization shall be deemed
registered and vested with legal personality
on the date of issuance of its certificate of
registration. Once a certificate
registration is issued to a union, its legal
personality cannot be subject to collateral
attack. It may be questioned only in an
independent petition for cancellation in
accordance with Section 5 of Rule V, Book V
of the Implementing Rules.
aforementioned provision is enunciated in
the following:
Sec. 5. Effect of registration. The labor
organization or workers association shall be
deemed registered and vested with legal
personality on the date of issuance of its
certificate of registration.Such legal
personality cannot thereafter be subject to
collateral attack, but may be questioned
only in an independent petition for
cancellation in accordance with these Rules.
PDMP was registered as a trade union center
and issued Registration Certificate No. FED-
11558-LC by the BLR on 14 February 1991.
Until the certificate of registration of PDMP
is cancelled, its legal personality as a
legitimate labor organization subsists. Once
a union acquires legitimate status as a labor
and organization, it continues to be recognized
as such until its certificate of registration is
cancelled or revoked in an independent
action for cancellation. It bears to emphasize
that what is being directly challenged is the
personality of respondent as a legitimate
labor organization and not that of PDMP.
This being a collateral attack, this Court is
without jurisdiction to entertain questions
of indirectly impugning the legitimacy of
PDMP.
Corollarily, PDMP is granted all the rights
and privileges appurtenant to a legitimate
labor organization, and continues to be
The recognized as such until its certificate of
registration is successfully impugned and
thereafter cancelled or revoked in an
independent action for cancellation.
128. SAMMA-LIKHA vs. SAMA Corp., G.R.
No. 167141, 13 Mar 2009
FACTS: SAMMA-LIKHA filed a petition for
certification election on July 24, 2001 in the
Department of Labor and Employment
(DOLE), Regional Office IV. It claimed that:
(1) it was a local chapter of the LIKHA
Federation, a legitimate labor organization
registered with the DOLE; (2) it sought to
represent all the rank-and-file employees of
respondent Samma Corporation;(3) there
was no other legitimate labor organization
representing these rank-and file employees;
(4) respondent was not a party to any
collective bargaining agreement and (5) no
certification or consent election had been
conducted within the employer unit for the
last 12 months prior to the filing of the
petition.
SAMMA CORPORATION moved for the
dismissal of the petition arguing that (1)
LIKHA Federation failed to establish its legal
personality; (2) petitioner failed to prove its
existence as a local chapter; (3) it failed to
attach the certificate of non-forum shopping
and (4) it had a prohibited mixture of
supervisory and rank-and-file employees. In
an order dated November 12, 2002, med-
arbiter ordered the dismissal of the petition
on the following grounds: (1) lack of legal
personality for failure to attach the
certificate of registration purporting to show
its legal personality; (2) prohibited mixture
of rank-and-file and supervisory employees
and (3) failure to submit a certificate of non-
forum shopping.
ISSUE: Whether petitioner had the legal
personality (as labor organization) to file the
petition for certification election.
HELD: YES. Petitioner argues that the
erroneous inclusion of one supervisory
employee in the union of rank-and-file
employees was not a ground to impugn its
legitimacy as a legitimate labor organization
which had the right to file a petition for
certification election.
We agree. LIKHA was granted legal
personality as a federation under certificate
of registration no. 92-1015-032-11638-FED-
LC. Subsequently, petitioner as its local
chapter was issued its charter certificate no.
2-01. With certificates of registration issued
in their favor, they are clothed with legal
personality as legitimate labor
organizations:
Section 5. Effect of registration. The labor
organization or workers association shall be
deemed registered and vested with legal
personality on the date of issuance of its
certificate of registration. Such legal
personality cannot thereafter be subject to
collateral attack but may be questioned only
in an independent petition for cancellation
in accordance with these Rules.
-0-
Section 3. Acquisition of legal personality by
local chapter. - A local/chapter constituted in
accordance with Section 1 of this Rule shall
acquire legal personality from the date of
filing of the complete documents
enumerated therein. Upon compliance with
all the documentary requirements, the
Regional Office or Bureau of Labor Relations
shall issue in favor of the local/chapter a
certificate indicating that it is included in the
roster of legitimate labor organizations.
Such legal personality cannot thereafter be
subject to collateral attack but may be
questioned only in an independent petition
for cancellation of certificate of registration.
Unless petitioner’s union registration is
cancelled in independent proceedings, it
shall continue to have all the rights of a
legitimate labor organization, including the
right to petition for certification election.
Furthermore, the grounds for dismissal of a
petition for certification election based on
the lack of legal personality of a labor
organization are the following: (a) petitioner
is not listed by the Regional Office or the
Bureau of Labor Relations in its registry of
legitimate labor organizations or (b) its legal
personality has been revoked or cancelled
with finality in accordance with the rules.
As mentioned, respondent filed a petition
for cancellation of the registration of
petitioner on December 14, 2002. In a
resolution dated April 14, 2003, petitioners
charter certificate was revoked by the DOLE.
But on May 6, 2003, petitioner moved for
the reconsideration of this resolution.
Neither of the parties alleged that this
resolution revoking petitioners charter
certificate had attained finality. However, in
this petition, petitioner prayed that its
charter certificate be reinstated in the roster
of active legitimate labor [organizations].
This cannot be granted here. To repeat, the
proceedings on a petition for cancellation of
registration are independent of those of a
petition for certification election. This case
originated from the latter. If it is shown that
petitioners legal personality had already
been revoked or cancelled with finality in
accordance with the rules, then it is no
longer a legitimate labor organization with
the right to petition for a certification
election.
Respondent, as employer, had been the one
opposing the holding of a certification
election among its rank-and-file employees.
This should not be the case. We have already
declared that, in certification elections, the
employer is a bystander; it has no right or
material interest to assail the certification
election.
This Court notes that it is petitioner, the
employer, which has offered the most
tenacious resistance to the holding of a
certification election among its monthly-
paid rank-and-file employees. This must not
be so, for the choice of a collective
bargaining agent is the sole concern of the
employees. The only exception to this rule is
where the employer has to file the petition
for certification election pursuant to Article
258 of the Labor Code because it was
requested to bargain collectively, which
exception finds no application in the case
before us. Its role in a certification election
has aptly been described in Trade Unions of
the Philippines and Allied Services (TUPAS) v.
Trajano, as that of a mere bystander. It has
no legal standing in a certification election as
it cannot oppose the petition or appeal the
Med-Arbiter's orders related thereto.
129. Legend lnternational Resorts vs
Kilusang Manggagawa ng Legenda, GR
169754 23 February 2011. (Roxas)
Topic: Pendency of a petition for
cancellation of union registration will not
preclude collective bargaining.
FACTS:
KML filed with the Med-Arbitration Unit of
the DOLE a Petition for Certification Election.
KML alleged that it is a legitimate labor
organization of the rank and file employees
of Legend International Resorts Limited
(LEGEND). KML claimed that it was issued its
Certificate of Registration by the DOLE on
May 18, 2001.
LEGEND moved to dismiss the petition
alleging that KML is not a legitimate labor
organization because its membership is a
mixture of rank and file and supervisory
employees in violation of Article 245 of the
Labor Code.
KML argued that even if 41 of its members
are indeed supervisory employees and
therefore excluded from its membership,
the certification election could still proceed
because the required number of the total
rank and file employees necessary for
certification purposes is still sustained. KML
also claimed that its legitimacy as a labor
union could not be collaterally attacked in
the certification election proceedings but
only through a separate and independent
action for cancellation of union registration.
Finally, as to the alleged acts of
misrepresentation, KML asserted that
LEGEND failed to substantiate its claim.
Med-Arbiter ruled (Sep 20, 2001): dismissing
for lack of merit the petition for certification
election. The Med-Arbiter found that indeed
there were several supervisory employees in
KML’s membership. Since Article 245 of the
Labor Code expressly prohibits supervisory
employees from joining the union of rank
and file employees, the Med-Arbiter
concluded that KML is not a legitimate labor
organization.
Office of the Secretary of DOLE decision
(May 22, 2002): The Office of the Secretary
of DOLE HELD: that KML’s legitimacy as a
union could not be collaterally attacked
The Office of the Secretary of DOLE also
opined that Article 245 of the Labor Code
merely provides for the prohibition on
managerial employees to form or join a
union and the ineligibility of supervisors to
join the union of the rank and file employees
and vice versa. It declared that any violation
of the provision of Article 245 does not ipso
facto render the existence of the labor
organization illegal. Moreover, it HELD: that
Section 11, paragraph II of Rule XI which
provides for the grounds for dismissal of a
petition for certification election does not
include mixed membership in one union.
Legend filed a Motion for Reconsideration. It
also alleged that it filed a petition for
cancellation of union registration of KML
which was granted by the DOLE on
November 7, 2001. MFR was denied in a
resolution dated August 20, 2002: a final
order of cancellation is required before a
petition for certification of election may be
dismissed on the ground of lack of legal
personality.
ISSUE: Whether the cancellation of KML’s
certificate of registration should retroact to
the time of its issuance.
RULING: The cancellation of KML’s
certificate of registration should not retroact
to the time of its issuance.
LEGEND claims that KML’s petition for
certification election filed during the
pendency of the petition for cancellation and
its demand to enter into collective
bargaining agreement with LEGEND should
be dismissed due to KML’s lack of legal
personality.
At any rate, the Court applies the established
rule correctly followed by the public
respondent that an order to hold a
certification election is proper despite the
pendency of the petition for cancellation of
the registration certificate of the respondent
union. The rationale for this is that at the
time the respondent union filed its petition,
it still had the legal personality to perform
such act absent an order directing the
cancellation.
In Capitol Medical Center, Inc. v. Hon.
Trajano, we also HELD: that "the pendency
of a petition for cancellation of union
registration does not preclude collective
bargaining." Citing the Secretary of Labor,
we HELD: viz:
That there is a pending cancellation
proceedings against the respondent Union is
not a bar to set in motion the mechanics of
collective bargaining. If a certification
election may still be ordered despite the
pendency of a petition to cancel the union’s
registration certificate x x x more so should
the collective bargaining process continue
despite its pendency. (Emphasis supplied.)
130. Cruz vs. Calleja, 188 SCRA 520 (Soriano)
FACTS:
The Allied Bank Employees Union (ABEU),
which was then a mere chapter of the
National Union of Bank Employees (NUBE),
elected its officers, whose term of office
would expire on February 10, 1987.
Before the expiration of the old CBA
between the ABEU and Allied Bank on June
30, 1984, the ABEU negotiated for a new
CBA. However, because the Union and the
Bank could not agree on major economic
proposals, a bargaining deadlock ensued.
Minister Ople issued an Order resolving the
deadlock issues in the collective bargaining
and in effect drew up a new CBA for the
parties. The 3-year term of the new CBA
would expire on January 31, 1988.
The NUBE issued a special resolution
creating an ABEU Interim Board tasked to
sign the new CBA with the Bank in lieu of the
union officers who had been dismissed by
the Bank.
In January, 1987, the Interim Board
commenced negotiations with the Bank for
a one-year extension of the CBA which was
expiring on January 31, 1988. A drive for the
extension of the CBA began in March 1987
for the referendum would take place on June
23, 1987. However, the Interim Board also
submitted to the referendum the matter of
extending for one year the term of office of
the Interim Board, in effect, postponing for
one year the election of the regular officers
of the Union. The overwhelming majority of
the union members voted yes in the
referendum. The postponement of the
election did not sit well with the ousted
officers led by private respondent Rolando
Ocampo. On June 23, 1987, they filed in the
Office of Labor Secretary Franklin Drilon a
letter-petition against the postponement of
the election of the officers of the Union and
to nullify the one year extension of the CBA.
The Office of the Secretary of Labor
forwarded the letter-petition of respondent
Rolando Ocampo to the National Capital
Region, DOLE, Manila, which subsequently
treated it as a formal petition.
After the hearing of the petition and the
submission of the parties' position papers,
the Med-Arbiter, on January 4, 1988, issued
an order directing the Union to call a general
membership meeting where the manner of
conducting the election could be discussed
before fixing the date of the election. The
order declared null and void the one-year
extension of the CBA from February 1, 1988
to January 31, 1989.
In a resolution dated January 6, 1988, the
Interim Board appointed a Comelec which,
on January 8, 1988, issued a resolution
setting the election of officers on February
10, 1988.
On motion of Ocampo, et al, the Bureau of
Labor Relations issued on February 9, 1988,
a temporary restraining order enjoining
petitioners, including the Union's Comelec,
from proceeding with the election on
February 10, 1988. However, despite the
restraining order, the Union HELD: the
election on February 10, 1988 as scheduled.
Petitioners were declared the winners in the
election.
On March 2, 1989, the public respondent,
Director Pura Calleja of the BLR, issued a
resolution whose dispositive portion reads
as follows:
WHEREFORE, premises considered, the
election conducted in Allied Bank Employees
Union on February 10, 1988 is hereby
declared null and void.
Another election is hereby ordered
conducted in accordance with the express
tenor of the Med-Arbiter's Order dated 4
January 1988, that a general membership
meeting shall first be HELD: where the
mechanics of the election shall be fully
threshed out.
ISSUE:
Whether or not the public respondent erred
in declaring null and void the election HELD:
on February 10, 1988. (NO)
Ruling:
There is no merit in the petitioners'
contention that the public respondent
gravely abused her discretion in annulling
the February 10, 1988 election of officers.
The public respondent correctly noted that
in ordering the postponement of the
election for one year (in effect extending
their term of office for one year), the ABEU
Interim Board "overstepped its bounds" for
it was constituted and authorized only "to
sign for and in behalf of the union the
Collective Bargaining Agreement with the
Bank and administer the CBA and the
operation of the union."
Instead of calling a regular election of
officers of ABEU on 11 February 1987, as
mandated by the Union's Constitution and
by-laws, respondents submitted in a
"referendum" the extension of their term of
office for yet another year, from 11 February
1987 to 10 February 1988.
From the very inception the referendum
process initiated by the Interim Board was
improper. The results therefrom are
therefore, invalid. It may be true, that the
task of administering the operation of the
union was given to the ABEU-Interim Board
at the time it was constituted, to fill in the
vacuum in the local union's leadership
during that time. Nonetheless said task
could not be exercised beyond the regular
term of the regular officers. Stated simply,
the exercise of said task is only coterminous
with the term of the regular officers, in
whose shoes, the members of the ABEU-
Interim Board merely stepped into.
When the term of the union's regular
officers expired on February 11, 1987 the
election of officers should have been HELD:,
in accordance with the provision of the
union constitution and by laws. With the
expiration of the term of the regular officers,
the term of the ABEU-Interim Board, expired
too. In calling the referendum therefore, the
ABEU-Interim Board clearly overstepped its
bounds.
131. Palacol vs. Calleja, 182 SCRA 710 (Tado)
CARMELITO L. PALACOL, ET AL., petitioners,
vs. PURA FERRER-CALLEJA, Director of the
Bureau of Labor Relations, MANILA CCBPI
SALES FORCE UNION, and COCA-COLA
BOTTLERS (PHILIPPINES), INC., respondents
G.R. No. 85333 February 26, 1990
FACTS:
On October 12, 1987, the respondent
Manila CCBPI Sales Force Union (the Union),
as the collective bargaining agent of all
regular salesmen, regular helpers, and relief
helpers of the Manila Plant and Metro
Manila Sales Office of the respondent Coca-
Cola Bottlers (Philippines), Inc. (the
Company) concluded a new collective
bargaining agreement with the latter. 1
Among the compensation benefits granted
to the employees was a general salary
increase to be given in lump sum including
recomputation of actual commissions
earned based on the new rates of increase.
On the same day, the president of the Union
submitted to the Company the ratification
by the union members of the new CBA and
authorization for the Company to deduct
union dues equivalent to P10.00 every
payday or P20.00 every month and, in
addition, 10% by way of special assessment,
from the CBA lump-sum pay granted to the
union members
The purpose of the special assessment
sought to be levied is "to put up a
cooperative and credit union; purchase
vehicles and other items needed for the
benefit of the officers and the general
membership; and for the payment for
services rendered by union officers,
consultants and others." 2 There was also an
additional proviso stating that the "matter of
allocation ... shall be at the discretion of our
incumbent Union President."
Subsequently however, a total of members
of the Union submitted documents to the
Company stating that although they have
ratified the new CBA, they are withdrawing
or disauthorizing the deduction of any
amount from their CBA lump sum. These
members, numbering 355 in all (170 + 185),
added to the original oppositors of 173,
turned the tide in favor of disauthorization
for the special assessment, with a total of
528 objectors and a remainder of 272
supporters. 5
 and consent" 8 is in accord with the
Petitioners assailed the 10% special constitutional principle of the State
assessment as a violation of Article 241(o) in affording full protection to labor. 9
relation to Article 222(b) of the Labor Code.
The respondent-Union brushed aside the
Med-Arbiter Manases T. Cruz ruled in favor defects pointed out by petitioners in the
of petitioners manner of compliance with the legal
Bureau of Labor Relations, however, the requirements as "insignificant
order of the Med-Arbiter was reversed and technicalities." On the contrary, the failure
set aside of the Union to comply strictly with the
requirements set out by the law invalidates
the questioned special assessment.
ISSUE: Substantial compliance is not enough in view
Can a special assessment be validly deducted of the fact that the special assessment will
by a labor union from the lump-sum pay of diminish the compensation of the union
its members, granted under a collective members. Their express consent is required,
bargaining agreement (CBA), and this consent must be obtained in
notwithstanding a subsequent accordance with the steps outlined by law,
disauthorization of the same by a majority of which must be followed to the letter. No
the union members? shortcuts are allowed.

The applicable provisions are clear. The

Ruling:
NO
We are convinced that the deduction of the
10% special assessment by the Union was
not made in accordance with the
requirements provided by law.
Petitioners are correct in citing the ruling of
this Court in Galvadores which is applicable
to the instant case. The principle "that
employees are protected by law from
unwarranted practices that diminish their
compensation without their known edge
Union itself admits that both paragraphs (n)
and (o) of Article 241 apply. Paragraph (n)
refers to "levy" while paragraph (o) refers to
"check-off" of a special assessment. Both
provisions must be complied with. Under
paragraph (n), the Union must submit to the
Company a written resolution of a majority
of all the members at a general membership
meeting duly called for the purpose. In
addition, the secretary of the organization
must record the minutes of the meeting
which, in turn, must include, among others,
the list of all the members present as well as
the votes cast.

As earlier outlined by petitioners, the Union
obviously failed to comply with the
requirements of paragraph (n). It HELD: local
membership meetings on separate
occasions, on different dates and at various
venues, contrary to the express requirement
that there must be a general membership
meeting. The contention of the Union that
"the local membership meetings are
precisely the very general meetings required
by law" 10 is untenable because the law
would not have specified a general
membership meeting had the legislative
intent been to allow local meetings in lieu of
the latter.
It submitted only minutes of the local
membership meetings when what is
required is a written resolution adopted at
the general meeting. Worse still, the
minutes of three of those local meetings
HELD: were recorded by a union director and
not by the union secretary.
Since it is quite evident that the Union did
not comply with the law at every turn, the
only conclusion that may be made therefrom
is that there was no valid levy of the special
assessment pursuant to paragraph (n) of
Article 241 of the Labor Code.
Paragraph (o) on the other hand requires an
individual written authorization duly signed
by every employee in order that a special
assessment may be validly checked-off. Even
assuming that the special assessment was
validly levied pursuant to paragraph (n), and
granting that individual written
authorizations were obtained by the Union,
nevertheless there can be no valid check-off
considering that the majority of the union
members had already withdrawn their
individual authorizations.
The collection of the special assessment
partly for the payment for services rendered
by union officers, consultants and others
may not be in the category of "attorney's
fees or negotiations fees." But there is no
question that it is an exaction which falls
within the category of a "similar charge,"
and, therefore, within the coverage of the
prohibition in the aforementioned article.
There is an additional proviso giving the
Union President unlimited discretion to
allocate the proceeds of the special
assessment. Such a proviso may open the
door to abuse by the officers of the Union
considering that the total amount of the
special assessment is quite considerable —
P1,027,694.33 collected from those union
members who originally authorized the
deduction, and P1,267,863.39 from those
who did not authorize the same, or
subsequently retracted their authorizations.
132. Gabrlel vs. Secretary of Labor, 328
SCRA 247 [2000] (Tingson)
Topic: Rights and Conditions of Membership
(Attorney’s Fees)
G.R. No. 115949. March 16, 2000
GABRIEL, ET AL. VS. SECRETARY OF LABOR
FACTS:
Petitioners comprise the Executive Board of
the SolidBank Union, the duly recognized
collective bargaining agent for the rank and
file employees of Solid Bank Corporation.
Private respondents are members of said
union.
The unions Executive Board decided to
retain anew the service of Atty. Ignacio P.
Lacsina (now deceased) as union counsel in
connection with the negotiations for a new
Collective Bargaining Agreement (CBA).
Majority of all union members approved and
signed a resolution confirming the decision
of the executive board.
As approved, the resolution provided that
ten percent (10%) of the total economic
benefits that may be secured through the
negotiations be given to Atty. Lacsina as
attorneys fees and to check-off said
attorneys fees from the first lump sum
payment of benefits to the employees under
the new CBA and to turn over said amount
to Atty. Lacsina.
The bank then, on request of the union,
made payroll deductions for attorneys fees
from the CBA benefits paid.
Private respondents instituted a complaint
against the petitioners and the union
counsel before the DOLE for illegal
deduction of attorneys fees as well as for
quantification of the benefits in the 1992
CBA.
The DOLE- NCR directed to immediately
return or refund to the Complainants the
illegally deducted amount of attorneys fees.
The Secretary of Labor, on appeal, ordered
that the refund shall be limited to those
union members who have not signified their
conformity to the check-off of attorneys
fees.
Petitioners argue that the General
Membership Resolution authorizing the
bank to check-off attorneys fee from the first
lump sum payment of the benefits to the
employees under the new CBA satisfies the
legal requirements for such assessment.
Private respondents, on the other hand,
claim that the check-off provision in
question is illegal because it was never
submitted for approval at a general
membership meeting called for the purpose
and that it failed to meet the formalities
mandated by the Labor Code
ISSUE:
Whether the order of the Secretary of Labor
correct?
RULING:
YES own pockets. So categorical is this intent
Attorneys fees may not be deducted or that the law makes it clear that any
checked off from any amount due to an agreement to the contrary shall be null and
employee without his written consent. void ab initio.

Article 241 of the labor code has three (3) 133. Volkschel Labor Union vs. BLR, 137
requisites for the validity of the special SCRA 42 (Vosotros)
assessment for union’s incidental expenses,
attorney’s fees and representation Volkschel Labor Union
expenses. These are: 1) authorization by a
written resolution of the majority of all the vs.
members at the general membership
meeting called for the purpose; (2) Bureau of Labor Relations;
secretarys record of the minutes of the
meeting; and (3) individual written G.R. No. L-45824; 19 Jan 1985; 137 SCRA 42
authorization for check off duly signed by the
employees concerned.
FACTS:
After a thorough review of the records, we
find that the General Membership Petitioner was once affiliated with the
Resolution did not satisfy the requirements Associated Labor Union for Metal Workers
laid down by law and jurisprudence for the (ALUMETAL for short).
validity of the ten percent (10%) special
assessment for unions incidental expenses, On August 1, 1975, both unions, using the
attorneys fees and representation expenses. name Volkschel Labor Union Associated
There were no individual written check off Labor Union for Metal Workers, jointly
authorizations by the employees concerned entered into a collective bargaining
and so the assessment cannot be legally agreement with respondent companies.
deducted by their employer.
One of the subjects dealt with is the
The obligation to pay the attorneys fees payment of union dues which is provided for
belongs to the union and cannot be shunted in Section 3, Article 1, of the CBA, which
to the workers as their direct responsibility. reads:
Neither the lawyer nor the union itself may
require the individual worker to assume the Section 3. CHECK-OFF. — The
obligation to pay attorneys fees from their COMPANY agrees to make payroll
deductions not softener than twice a month
of UNION membership dues and such special
assessments fees or fines as may be duly
authorized by the UNION, provided that the
same is covered by the individual check-off
authorization of the UNION members. All
said deductions shall be promptly
transmitted within five (5) days by the
COMPANY to the UNION Treasurer. The
COMPANY shall prepare two (2) checks. One
(1) check will be under the name of the local
union as their local fund including local
special assessment funds and the other
check will be for the ALU Regional Office
regarding the remittance of the UNION dues
deduction.
After some time, a majority of petitioner’s
members decided to disaffiliate from
respondent federation in order to operate
on its own as an independent labor group
pursuant to Article 241 (formerly Article 240)
of the Labor Code of the Philippines, the
pertinent portion of which reads:
Incumbent affiliates of existing federations
or national unions may disaffiliate only for
the purpose of joining a federation or
national union in the industry or region in
which it properly belongs or for the purpose
of operating as an independent labor group.
ISSUE(S):
Whether or not petitioner union’s
disaffiliation from respondent federation
valid.
RULING:
YES. A local union, being a separate and
voluntary association, is free to serve the
interest of all its members including the
freedom to disaffiliate when circumstances
warrant.
The right of a local union to disaffiliate from
its mother union is well-settled. In previous
cases, it has been repeatedly HELD: that a
local union, being a separate and voluntary
association, is free to serve the interest of all
its members including the freedom to
disaffiliate when circumstances warrant. 4
This right is consistent with the
Constitutional guarantee of freedom of
association (Article IV, Section 7, Philippine
Constitution).
In the case at bar, it would go against the
spirit of the labor law to restrict petitioner's
right to self-organization due to the
existence of the CBA. We agree with the
Med-Arbiter's opinion that "A disaffiliation
does not disturb the enforceability and
administration of a collective agreement; it
does not occasion a change of
administrators of the contract nor even an
amendment of the provisions thereof."
Side Ruling: (EFFECT OF DISAFFLIATION)
Under Section 3, Article I, of the CBA, the
obligation of the respondent companies to
deduct and remit dues to ALUMETAL is
conditioned on the individual check-off
authorization of petitioner's members, In
other words, ALUMETAL is entitled to
receive the dues from respondent
companies as long as petitioner union is
affiliated with it and respondent companies
are authorized by their employees
(members of petitioner union) to deduct
union dues. Without said affiliation, the
employer has no link to the mother union.
The obligation of an employee to pay union
dues is coterminous with his affiliation or
membership. "The employees' check-off
authorization, even if declared irrevocable,
is good only as long as they remain members
of the union concerned."
A contract between an employer and the
parent organization as bargaining agent for
the employees is terminated by the
disaffiliation of the local of which the
employees are members. Respondent
companies therefore were wrong
continuing the check-off in favor of
respondent federation since they were duly
notified of the disaffiliation and
petitioner's members having already
rescinded their check-off authorization.
Suffice it to state that respondent federation
is not entitled to union dues payments from
petitioner's members. "A local union which
has validly withdrawn from its affiliation
with the parent association and which
continues to represent the employees of an
employer is entitled to the check-off dues
under a collective bargaining contract."
134. Philippine Skylanders lnc. vs. NLRC, G.R.
177374,31Jan. 2002 (Banuelos)
TOPIC: Right to Disaffiliate from Mother
Union
G.R. No. 127374 January 31, 2002
PHILIPPINE SKYLANDERS, INC., MARILES C.
ROMULO and FRANCISCO DAKILA, vs.
NATIONAL LABOR RELATIONS COMMISSION,
LABOR ARBITER EMERSON TUMANON,
PHILIPPINE ASSOCIATION OF FREE LABOR
UNIONS (PAFLU) SEPTEMBER (now UNIFIED
PAFLU) and SERAFIN AYROSO.
Ponente: BELLOSILLO, J.
FACTS:
in In November 1993 the Philippine Skylanders
Employees Association (PSEA), a local labor
union affiliated with the Philippine
of Association of Free Labor Unions (PAFLU)
September (PAFLU), won in the certification
election conducted among the rank and file
employees of Philippine Skylanders, Inc.
(PSI). Its rival union, Philippine Skylanders
Employees Association-WATU (PSEA-WATU)
immediately protested the result of the
election before the Secretary of Labor.
Several months later, pending settlement of
the controversy, PSEA sent PAFLU a notice of
disaffiliation citing as reason PAFLU's
supposed deliberate and habitual dereliction
of duty toward its members. Attached to the
notice was a copy of the resolution adopted
and signed by the officers and members of
PSEA authorizing their local union to
disaffiliate from its mother federation.
PSEA subsequently affiliated itself with the
National Congress of Workers (NCW),
changed its name to Philippine Skylanders
Employees Association - National Congress
of Workers (PSEA-NCW), and to maintain
continuity within the organization, allowed
the former officers of PSEA-PAFLU to
continue occupying their positions as
elected officers in the newly-forged PSEA-
NCW.
On 17 March 1994 PSEA-NCW entered into a
collective bargaining agreement with PSI
which was immediately registered with the
Department of Labor and Employment.
Meanwhile, apparently oblivious to PSEA's
shift of allegiance, PAFLU Secretary General
Serafin Ayroso wrote Mariles C. Romulo
requesting a copy of PSI's audited financial
statement. Ayroso explained that with the
dismissal of PSEA-WATU's election protest
the time was ripe for the parties to enter into
a collective bargaining agreement.
On 30 July 1994 PSI through its personnel
manager Francisco Dakila denied the
request citing as reason PSEA's disaffiliation
from PAFLU and its subsequent affiliation
with NCW.
Agitated by PSI's recognition of PSEA-NCW,
PAFLU through Serafin Ayroso filed a
complaint for unfair labor practice against
PSI, its president Mariles Romulo and
personnel manager Francisco Dakila. PAFLU
alleged that aside from PSI's refusal to
bargain collectively with its workers, the
company through its president and
personnel manager, was also liable for
interfering with its employees' union
activities.
On 1 February 1995 PAFLU amended its
complaint by including the elected officers of
PSEA-PAFLU as additional parties to the
case. PAFLU averred that the local officers of
PSEA-PAFLU, namely Macario Cabanias,
Pepito Rodillas, Sharon Castillo, Danilo
Carbonel, Manuel Eda, Rolando Felix,
Jocelyn Fronda, Ricardo Lumba, Joseph
Mirasol, Nerisa Mortel, Teofilo Quirong,
Leonardo Reyes, Manuel Cadiente, and
Herminia Riosa, were equally guilty of unfair
labor practice since they brazenly allowed
themselves to be manipulated and
influenced by FRANCISCO DAKILA.
PSI, its president Mariles C. Romulo, and its
personnel manager Dakila moved for the
dismissal of the complaint on the ground
that the issue of disaffiliation was an inter-
union conflict which lay beyond the
jurisdiction of the Labor Arbiter. On the
other hand, PSEA-NCW took the cudgels for
its officers who were being sued in their
capacities as former officers of PSEA-PAFLU
and asserted that since PSEA was no longer
affiliated with PAFLU, Ayroso or PAFLU for
that matter had no personality to file the
instant complaint. In support of this
assertion, PSEA-NCW submitted in evidence
a Katunayan signed by 111 out of 120 rank
and file employees of PSI disauthorizing
Ayroso or PAFLU from instituting any action
in their behalf.
Legal ISSUE: W/N the act of PSEA
disaffiliating with PAFLU is an act of unfair
labor practice.
HELD:
NO. PSEA, being separate and distinct local
union has every right to disaffiliate from the
mother federation.
The right of a local union to disaffiliate from
its mother federation is not a novel thesis
unillumined by case law. In the landmark
case of Liberty Cotton Mills Workers Union
vs. Liberty Cotton Mills, Inc. we upHELD: the
right of local unions to separate from their
mother federation on the ground that as
separate and voluntary associations, local
unions do not owe their creation and
existence to the national federation to which
they are affiliated but, instead, to the will of
their members. The sole essence of
affiliation is to increase, by collective action,
the common bargaining power of local
unions for the effective enhancement and
protection of their interests. Admittedly,
there are times when without succor and
support local unions may find it hard,
unaided by other support groups, to secure
justice for themselves.
Yet the local unions remain the basic units of
association, free to serve their own interests
subject to the restraints imposed by the
constitution and by-laws of the national
federation, and free also to renounce the
affiliation upon the terms laid down in the
agreement which brought such affiliation
into existence.
Such dictum has been punctiliously followed
since then.
Upon an application of the aforecited
principle to the issue at hand, the
impropriety of the questioned Decisions
becomes clearly apparent. There is nothing
shown in the records nor is it claimed by
PAFLU that the local union was expressly
forbidden to disaffiliate from the federation
nor were there any conditions imposed for a
valid breakaway. As such, the pendency of
an election protest involving both the
mother federation and the local union did
not constitute a bar to a valid disaffiliation.
Neither was it disputed by PAFLU that 111
signatories out of the 120 members of the
local union, or an equivalent of 92.5% of the
total union membership supported the claim
of disaffiliation and had in fact disauthorized
PAFLU from instituting any complaint in their
behalf. Surely, this is not a case where one
(1) or two (2) members of the local union
decided to disaffiliate from the mother
federation, but it is a case where almost all
local union members decided to disaffiliate.
It was entirely reasonable then for PSI to
enter into a collective bargaining agreement
with PSEA-NCW. As PSEA had validly severed
itself from PAFLU, there would be no
restrictions which could validly hinder it
from subsequently affiliating with NCW and
entering into a collective bargaining
agreement in behalf of its members.
There is a further consideration that likewise
argues for the granting of the petitions. It
stands unchallenged that PAFLU instituted
the complaint for unfair labor practice
against the wishes of workers whose
interests it was supposedly protecting. The
mere act of disaffiliation did not divest PSEA
of its own personality; neither did it give
PAFLU the license to act independently of
the local union.
Recreant to its mission, PAFLU cannot simply
ignore the demands of the local chapter and
decide for its welfare. PAFLU might have
forgotten that as an agent it could only act in
representation of and in accordance with
the interests of the local union. The
complaint then for unfair labor practice
lodged by PAFLU against PSI, PSEA and their
respective officers, having been filed by a
party which has no legal personality to
institute the complaint, should have been
dismissed at the first instance for failure to
state a cause of action.
Policy considerations dictate that in
weighing the claims of a local union as
against those of a national federation, those
of the former must be preferred.
Parenthetically though, the desires of the
mother federation to protect its locals are
not altogether to be shunned. It will
however be to err greatly against the
Constitution if the desires of the federation
would be favored over those of its members.
That, at any rate, is the policy of the law. For
if it were otherwise, instead of protection,
there would be disregard and neglect of the
lowly workingmen.
AS TO JURISDICTION: At the outset, let it be
noted that the issue of disaffiliation is an
inter-union conflict the jurisdiction of which
properly lies with the Bureau of Labor
Relations (BLR) and not with the Labor
Arbiter. Nonetheless, with due recognition
of this fact, we deem it proper to settle the
controversy at this instance since to remand
the case to the BLR would only mean
intolerable delay for the parties.
135. Cirtek Employees Labor Union - FFW vs.
Cirtek Electronics. GR 190516, 06 June 2011
(Caubang)
CIRTEK EMPLOYEES LABOR UNION-
FEDERATION OF FREE WORKERS, Petitioner,
vs.
CIRTEK ELECTRONICS, INC
G.R. No. 190515 November 15, 2010
TOPIC: Right to disaffiliate with Mother
Union
(Note: but the case did not clearly illustrate
it :/)
FACTS:
Cirtek Electronics, Inc. an electronics and
semi-conductor firm, had an existing
Collective Bargaining Agreement (CBA) with
Cirtek Employees Labor Union-Federation of
Free Workers. Prior to the 3rd year of the
CBA, the parties renegotiated its economic
provisions but failed to reach a settlement,
particularly on the issue of wage increases.
The Labor Union thereupon declared a
bargaining deadlock and filed a Notice of
Strike with the National Conciliation and
Mediation Board. Cirtek filed a Notice of
Lockout.
While the conciliation proceedings were
ongoing, Cirtek placed seven union officers
including the President, a Vice President, the
Secretary and the Chairman of the Board of
Directors under preventive suspension for
allegedly spearheading a boycott of
overtime work. The officers were eventually
dismissed from employment, prompting the
labor union to file another Notice of Strike
which was, after conciliation meetings,
converted to a voluntary arbitration case.
The dismissal of the officers was later found
to be legal, hence, the union appealed.
In the meantime, as amicable settlement of
the CBA was deadlocked, the union went on
strike.
Cirtek created a Labor Management Council
(LMC) through which it concluded with the
remaining officers of petitioner a
Memorandum of Agreement (MOA)
providing for daily wage increases. Cirtek
alleged that the remaining officers signed
the MOA under Cirtek's assurance that
should the Secretary order a higher award of
wage increase, Cirtek would comply.
The Secretary of Labor resolved the CBA
deadlock by awarding a wage increase and
adopting all other benefits as embodied in
the MOA.
Cirtek moved for a reconsideration stating
that the union members were waiving their
rights and benefits under the Secretary’s
Decision. Reconsideration of the Decision
was denied.
On appeal, the appellate court ruled in favor
of Cirtek.
ISSUE:
Could the remaining officers in the Union act
and ratify the MOA with Cirtek? YES
RULING:
It is well-settled that the Secretary of Labor,
in the exercise of his power to assume
jurisdiction under Art. 263 (g) of the Labor
Code, may resolve all issues involved in the
controversy including the award of wage
increases and benefits. While an arbitral
award cannot per se be categorized as an
agreement voluntarily entered into by the
parties because it requires the intervention
and imposing power of the State thru the
Secretary of Labor when he assumes
jurisdiction, the arbitral award can be
considered an approximation of a collective
bargaining agreement which would
otherwise have been entered into by the
parties, hence, it has the force and effect of
a valid contract obligation.
That the arbitral award was higher than that
which was purportedly agreed upon in the
MOA is of no moment. For the Secretary, in
resolving the CBA deadlock, is not limited to
considering the MOA as basis in computing
the wage increases. He could, as he did,
consider the financial documents submitted
by respondent as well as the parties’
bargaining history and respondent’s
financial outlook and improvements as
stated in its website.
While a contract constitutes the law
between the parties, this is so in the present
case with respect to the CBA, not to the MOA
in which even the union’s signatories had
expressed reservations thereto.
While the terms and conditions of a CBA
constitute the law between the parties, it is
not, however, an ordinary contract to which
is applied the principles of law governing
ordinary contracts. A CBA, as a labor
contract within the contemplation of Article
1700 of the Civil Code of the Philippines
which governs the relations between labor
and capital, is not merely contractual in
nature but impressed with public interest,
thus, it must yield to the common good. As
such, it must be construed liberally rather
than narrowly and technically, and the
courts must place a practical and realistic
construction upon it, giving due
consideration to the context in which it is
negotiated and purpose which it is intended
to serve.
136. NATIONAL UNION OF WORKERS IN
HOTELS, RESTAURANTS AND ALLIED
INDUSTRIES- MANILA PAVILION HOTEL
CHAPTER,
Petitioner,
- versus -
SECRETARY OF LABOR AND EMPLOYMENT,
BUREAU OF LABOR RELATIONS, HOLIDAY
INN MANILA PAVILION HOTEL LABOR UNION
AND ACESITE PHILIPPINES
CORPORATION,
Respondents
FACTS:
A certification election was conducted on
June 16, 2006 among the rank-and-file
employees of respondent Holiday Inn Manila
Pavilion Hotel (the Hotel).
In view of the significant number of
segregated votes, contending unions,
petitioner, NUHWHRAIN-MPHC,
respondent Holiday Inn Manila Pavillion
Hotel Labor Union (HIMPHLU), referred the
case back to Med-Arbiter Ma. Simonette
Calabocal to decide which among those
votes would be opened and tallied. Eleven
(11) votes were initially segregated because
they were cast by dismissed employees,
albeit the legality of their dismissal was still
pending before the Court of Appeals. Six
other votes were segregated because the
employees who cast them were already
occupying supervisory positions at the time
of the election. Still five other votes were
segregated on the ground that they were
cast by probationary employees and,
pursuant to the existing Collective
Bargaining Agreement (CBA),
employees cannot vote. It bears noting early
on, however, that the vote of one Jose
Gatbonton (Gatbonton), a probationary
employee, was counted.
HOTEL
Med-Arbiter: ruled for the opening of 17 out
of the 22 segregated votes, specially those
cast by the 11 dismissed employees and
those cast by the six supposedly supervisory
employees of the Hotel.
Secretary of Labor and Employment (SOLE):
affirmed. In fine, the SOLE concluded that
the certification of HIMPHLU as the exclusive
bargaining agent was proper.
CA: affirmed the ruling of the SOLE
and ISSUE: 1. whether employees on
probationary status at the time of the
certification elections should be allowed to
vote, and
2. whether HIMPHLU was able to obtain the
required majority for it to be certified as the
exclusive bargaining agent.
RULING:
1. YES
The inclusion of Gatbontons vote was proper
not because it was not questioned but
because probationary employees have the
right to vote in a certification election.
Airtime Specialists, Inc. v. Ferrer-Calleja
such holds:
In a certification election, all rank and file
employees in the appropriate bargaining
unit, whether probationary or permanent
are entitled to vote. This principle is clearly
stated in Art. 255 of the Labor Code which
states that the labor organization designated
or selected by the majority of the employees
in an appropriate bargaining unit shall be the
exclusive representative of the employees in
such unit for purposes of collective
bargaining. Collective bargaining covers all
aspects of the employment relation and the
resultant CBA negotiated by the certified
union binds all employees in the bargaining
unit. Hence, all rank and file employees,
probationary or permanent, have a shall not be eligible to form, join or assist any
substantial interest in the selection of the
bargaining representative. The Code makes
no distinction as to their employment status
as basis for eligibility in supporting the
petition for certification election. The law
refers to all the employees in the bargaining
unit. All they need to be eligible to support
the petition is to belong to the bargaining
unit. (Emphasis supplied)
Rule II, Sec. 2 of Department Order No. 40-
03, series of 2003, which amended Rule XI of
the Omnibus Rules Implementing the Labor
Code, provides:
Rule II
Section 2. Who may join labor unions and
workers' associations. - All persons
employed in commercial, industrial and
agricultural enterprises, including
employees of government owned or
controlled corporations without original
charters established under the Corporation
Code, as well as employees of religious,
charitable, medical or educational
institutions whether operating for profit or
not, shall have the right to self-organization
and to form, join or assist labor unions for
purposes of collective bargaining: provided,
however, that supervisory employees shall
not be eligible for membership in a labor
union of the rank-and-file employees but
may form, join or assist separate labor
unions of their own. Managerial employees
labor unions for purposes of collective
bargaining. Alien employees with valid
working permits issued by the Department
may exercise the right to self-organization
and join or assist labor unions for purposes
of collective bargaining if they are nationals
of a country which grants the same or similar
rights to Filipino workers, as certified by the
Department of Foreign Affairs.
For purposes of this section, any employee,
whether employed for a definite period or
not, shall beginning on the first day of
his/her service, be eligible for membership
in any labor organization.
All other workers, including ambulant,
intermittent and other workers, the self-
employed, rural workers and those without
any definite employers may form labor
organizations for their mutual aid and
protection and other legitimate purposes
except collective bargaining. (Emphasis
supplied)
The provision in the CBA disqualifying
probationary employees from voting cannot
override the Constitutionally-protected right
of workers to self-organization, as well as the
provisions of the Labor Code and its
Implementing Rules on certification
elections and jurisprudence thereon.
A law is read into, and forms part of, a
contract. Provisions in a contract are valid
only if they are not contrary to law, morals,
good customs, public order or public policy.
Rule XI, Sec. 5 of D.O. 40-03, on which the
SOLE and the appellate court rely to support
their position that probationary employees
hired after the issuance of the Order
granting the petition for the conduct of
certification election must be excluded,
should not be read in isolation and must be
harmonized with the other provisions of
D.O. Rule XI, Sec. 5 of D.O. 40-03.
In light of the immediately-quoted
provisions, and prescinding from the
principle that all employees are, from the
first day of their employment, eligible for
membership in a labor organization, it is
evident that the period of reckoning in
determining who shall be included in the list
of eligible voters is, in cases where a timely
appeal has been filed fromthe Order of the
Med-Arbiter, the date when the Order of the
Secretary of Labor and
Employment,whether affirming or denying
the appeal, becomes final and executory
In the present case, records show that the
probationary employees, including
Gatbonton, were included in the list of
employees in the bargaining unit submitted
by the Hotel on May 25, 2006 in compliance
with the directive of the Med-Arbiter after
the appeal and subsequent motion for
reconsideration have been denied by the
SOLE, rendering the Med-Arbiters August 22,
2005 Order final and executory 10 days after
the March 22, 2007 Resolution (denying the
motion for reconsideration of the January 22
Order denying the appeal), and rightly so.
Because, for purposes of self-organization,
those employees are, in light of the
discussion above, deemed eligible to vote.
A certification election is the process of
determining the sole and exclusive
bargaining agent of the employees in an
appropriate bargaining unit for purposes of
collective bargaining. Collective bargaining,
refers to the negotiated contract between a
legitimate labor organization and the
employer concerning wages, hours of work
and all other terms and conditions of
employment in a bargaining unit.
But while the Court rules that the votes of all
the probationary employees should be
included, under the particular circumstances
of this case and the period of time which it
took for the appeal to be decided, the votes
of the six supervisory employees must be
excluded because at the time the
certification elections was conducted, they
had ceased to be part of the rank and file,
their promotion having taken effect two
months before the election.
2. NO.
It is well-settled that under the so-called
double majority rule, for there to be a valid
certification election, majority of the
bargaining unit must have voted AND the
winning union must have garnered majority
of the valid votes cast.
Under Art. 256 of the Labor Code, the union
obtaining the majority of the valid votes cast
by the eligible voters shall be certified as the
sole and exclusive bargaining agent of all the
workers in the appropriate bargaining unit.
This majority is 50% + 1. Hence, 50% of 337
is 168.5 + 1 or at least 170.
HIMPHLU obtained 169 while petitioner
received 151 votes. Clearly, HIMPHLU was
not able to obtain a majority vote.
It bears reiteration that the true importance
of ascertaining the number of valid votes
cast is for it to serve as basis for computing
the required majority, and not just to
determine which union won the elections.
The opening of the segregated but valid
votes has thus become material. To be sure,
the conduct of a certification election has a
two-fold objective: to determine the
appropriate bargaining unit and to ascertain
the majority representation of the
bargaining representative, if the employees
desire to be represented at all by anyone.
Having declared that no choice in the
certification election conducted obtained
the required majority, it follows that a run-
off election must be HELD: to determine
which between HIMPHLU and petitioner
should represent the rank-and-file
employees.
A run-off election refers to an election
between the labor unions receiving the two
(2) highest number of votes in a certification
or consent election with three (3) or more
choices, where such a certified or consent
election results in none of the three (3) or
more choices receiving the majority of the
valid votes cast; provided that the total
number of votes for all contending unions is
at least fifty percent (50%) of the number of
votes cast.[8] With 346 votes cast, 337 of
which are now deemed valid and HIMPHLU
having only garnered 169 and petitioner
having obtained 151 and the choice NO
UNION receiving 1 vote, then the holding of
a run-off election between HIMPHLU and
petitioner is in order.
137. MARIWASA SIAM CERAMICS, INC. vs.
THE SECRETARY OF THE DEPARTMENT OF
LABOR
G.R. No. 183317, December 21, 2009
FACTS:
Respondent Samahan Ng Mga Manggagawa
Sa Mariwasa Siam Ceramics, Inc. (SMMSC-
Independent) was issued a Certificate of
Registration as a legitimate labor
organization by the Department of Labor
and Employment (DOLE), Region IV-A.
Petitioner Mariwasa Siam Ceramics, Inc.
filed a Petition for Cancellation of Union
Registration against respondent, claiming
that the latter violated Article 234 of the
Labor Code for not complying with the 20%
requirement, and that it committed massive
fraud and misrepresentation in violation of
Article 239 of the same code.
The petitioner insists that respondent failed
to comply with the 20% union membership
requirement for its registration as a
legitimate labor organization because of the
disaffiliation from the total number of union
members of 102 employees who executed
affidavits recanting their union membership.
The second allegation ostensibly bares the
affiants regret for joining respondent union
and expresses the desire to abandon or
renege from whatever agreement he may
have signed regarding his membership with
respondent. Simply put, through these
affidavits, it is made to appear that the
affiants recanted their support of
respondent’s application for registration.
ISSUE:
Whether the Union registration be
cancelled?
RULING:
NO.
For the purpose of de-certifying a union such
as respondent, it must be shown that there
was misrepresentation, false statement or
fraud in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto; the minutes of
ratification; or, in connection with the
election of officers, the minutes of the
election of officers, the list of voters, or
failure to submit these documents together
with the list of the newly elected-appointed
officers and their postal addresses to the
BLR.
In the instant case, the affidavits of
recantation were executed after the
identities of the union members became
public, i.e., after the union filed a petition for
certification election on May 23, 2005, since
the names of the members were attached to
the petition.
The purported withdrawal of support for the
registration of the union was made after the
documents were submitted to the DOLE,
Region IV-A. The logical conclusion,
therefore, following jurisprudence, is that
the employees were not totally free from the
employers pressure, and so
voluntariness of the employees execution of
the affidavits becomes suspect.
Accordingly, we cannot give full credence to
these affidavits, which were executed under
suspicious circumstances, and which contain
allegations unsupported by evidence. At
best, these affidavits are self-serving. They
possess no probative value.
a resignation from the union, the fact
remains that at the time of the unions
application for registration, the affiants were
members of respondent and they comprised
more than the required 20% membership for
purposes of registration as a labor union.
the
The bare fact that two signatures appeared
twice on the list of those who participated in
the organizational meeting would not, to our
mind, provide a valid reason to cancel
respondent’s certificate of registration.
138. TOYOTA MOTOR PHILIPPINES
CORPORATION
vs.

A retraction does not necessarily negate an TOYOTA MOTOR PHILIPPINES

earlier declaration. For this reason, CORPORATION LABOR UNION AND THE
retractions are looked upon with disfavor SECRETARY OF LABOR AND EMPLOYMENT
and do not automatically exclude the
original statement or declaration based
solely on the recantation. It is imperative G.R. No. 121084. February 19, 1997
that a determination be first made as to
which between the original and the new
statements should be given weight or FACTS:
accorded belief, applying the general rules
on evidence. In this case, inasmuch as they On November 26, 1992, the Toyota Motor
remain bare allegations, the purported Philippines Corporation Labor Union
recantations should not be upHELD:. (TMPCLU) filed a petition for certification
election with the Department of Labor,
Nevertheless, even assuming the veracity of National Capital Region, for all rank-and-file
the affidavits of recantation, the legitimacy employees of the Toyota Motor
of respondent as a labor organization must Corporation.
be affirmed. While it is true that the
withdrawal of support may be considered as
In response, petitioner Toyota Corp filed a
Position Paper seeking the denial of the
issuance of an Order directing the holding of
a certification election on two grounds:
1) The respondent union, being "in the
process of registration" had no legal
personality to file the same as it was not a
legitimate labor organization as of the date
of the filing of the petition;
2) The union was composed of both rank-
and-file and supervisory employees in
violation of law.
Attached to the position paper was a list of
union members and their respective job
classifications, indicating that many of the
signatories to the petition for certification
election occupied supervisory positions and
were not in fact rank-and-file employees.
On appeal, the Office of the Secretary of
Labor, in a Resolution set aside the Med-
Arbiter's Order and directed the holding of a
certification election among the regular
rank-and-file employees of Toyota Motor
Corporation. In setting aside the questioned
Order, the Office of the Secretary contended
that:
Contrary to the allegation of herein
respondent-appellee, petitioner-appellant
was already a legitimate labor organization
at the time of the filing of the petition on 26
November 1992. Records show that on 24
November 1992 or two (2) days before the
filing of the said petition, it was issued a
certificate of registration.
ISSUE:
Whether or not the grant of a certification
election to TMPCLU was proper (NO)
HELD:
No. Respondent union's membership list
contains the names of at least twenty-seven
(27) supervisory employees in Level Five
positions, the union could not, prior to
purging itself of its supervisory employee
members, attain the status of a legitimate
labor organization. Not being one, it cannot
possess the requisite personality to file a
petition for certification election.
The purpose of every certification election is
to determine the exclusive representative of
employees in an appropriate bargaining unit
for the purpose of collective bargaining. A
certification election for the collective
bargaining process is one of the fairest and
most effective ways of determining which
labor organization can truly represent the
working force.
In determining the labor organization which
represents the interests of the workforce,
those interests must be, as far as reasonably
possible, homogeneous, so as to genuinely
reach the concerns of the individual
members of a labor organization.
According to Rothenberg, an appropriate
bargaining unit is a group of employees of a
given employer, composed of all or less than
the entire body of employees, which the
collective interests of all the employees,
consistent with equity to the employer
indicate to be best suited to serve reciprocal
rights and duties of the parties under the
collective bargaining provisions of law.
In Belyca Corporation v. Ferrer Calleja, we
defined the bargaining unit as "the legal
collectivity for collective bargaining
purposes whose members
substantially mutual bargaining interests in
terms and conditions of employment as will
assure to all employees their collective
bargaining rights."
This in mind, the Labor Code has made it a
clear statutory policy to prevent supervisory
employees from joining labor organizations
consisting of rank-and-file employees as the
concerns which involve members of either
group are normally disparate
contradictory.
Article 245 provides:
ART. 245 Ineligibility of managerial
employees to join any labor organization;
right of supervisory employees.
Managerial Employees are not eligible to
join, assist or form any labor organization.
Supervisory employees shall not be eligible
for membership in a labor organization of
the rank-and-file employees but may join,
assist or form separate labor organizations
of their own.
Clearly, based on this provision, a labor
organization composed of both rank-and-file
and supervisory employees is no labor
organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization.
Not being one, an organization which carries
a mixture of rank-and-file and supervisory
employees cannot possess any of the rights
of a legitimate labor organization, including
have the right to file a petition for certification
election for the purpose of collective
bargaining.
It becomes necessary, therefore, anterior to
the granting of an order allowing a
certification election, to inquire into the
composition of any labor organization
whenever the status of the labor
organization is challenged on the basis of
Article 245 of the Labor Code.
and
Why are managerial and supervisory
positions not allowed in Labor Unions?
--
It is fairly obvious, from a reading of the
Labor Code's definition of the term that
those occupying Level 5 positions are
unquestionably supervisory employees.
Supervisory employees, as defined above,
are those who, in the interest of the
employer, effectively recommend
managerial actions if the exercise of such
authority is not merely routinary or clerical
in nature but require the use of independent
judgment.
Under the job description for level five
employees, such personnel all engineers
having a number of personnel under them,
not only oversee production of new models
but also determine manpower
requirements, thereby influencing
important hiring decisions at the highest
levels. This determination is neither routine
nor clerical but involves the independent
assessment of factors affecting production,
which in turn affect decisions to hire or
transfer workers. The use of independent
judgment in making the decision to hire, fire
or transfer in the identification of manpower
requirements would be greatly impaired if
the employee's loyalties are torn between
the interests of the union and the interests
of management. A supervisory employee
occupying a level five position would
therefore find it difficult to objectively
identify the exact manpower requirements
dictated by production demands.
This is precisely what the Labor Code, in
requiring separate unions among rank-and-
file employees on one hand, and supervisory
employees on the other, seeks to avoid.
The rationale behind the Code's exclusion of
supervisors from unions of rank-and-file
employees is that such employees, while in
the performance of supervisory functions,
become the alter ego of management in the
making and the implementing of key
decisions at the sub-managerial level.
Certainly, it would be difficult to find unity or
mutuality of interests in a bargaining unit
consisting of a mixture of rank-and-file and
supervisory employees. And this is so
because the fundamental test of a
bargaining unit's acceptability is whether or
not such a unit will best advance to all
employees within the unit the proper
exercise of their collective bargaining rights.
The Code itself has recognized this, in
preventing supervisory employees from
joining unions of rank-and-file employees.
139. Tagaytay HIghlands Intl Golf Club vs
Tagaytay HIghlands Employees Union
TOPIC: Certification of Election
G.R. No. 142000 January 22, 2003
TAGAYTAY HIGHLANDS INTERNATIONAL
GOLF CLUB INCORPORATED, vs. TAGAYTAY
HIGHLANDS EMPLOYEES UNION-PGTWO.
Ponente: CARPIO-MORALES, J. which it was duly granted a Certification of
Affiliation by DOLE on October 10, 1997; and
FACTS: that Section 5, Rule V of said Department
Order provides that the legitimacy of its
On October 16, 1997, the Tagaytay registration cannot be subject to collateral
Highlands Employees Union attack, and for as long as there is no final
(THEU)Philippine Transport and General order of cancellation, it continues to enjoy
Workers Organization (PTGWO), Local the rights accorded to a legitimate
Chapter No. 776, a legitimate labor organization.
organization said to represent majority of
the rank-and-file employees of THIGCI, filed Legal ISSUE: W/N the union issued with the
a petition for certification election before certification of election, can its legal
the DOLE Mediation-Arbitration Unit, personality be subject to collateral attack.
Regional Branch No. IV.
HELD:
THIGCI, in its Comment[1] filed on
November 27, 1997, opposed THEUs NO. After a certificate of registration is
petition for certification election on the issued to a union, its legal personality cannot
ground that the list of union members be subject to collateral attack.
submitted by it was defective and fatally
flawed as it included the names and It may be questioned only in an independent
signatures of supervisors, resigned, petition for cancellation in accordance with
terminated and absent without leave Section 5 of Rule V, Book IV of the Rules to
(AWOL) employees, as well as employees of Implement the Labor Code (Implementing
The Country Club, Inc., a corporation distinct Rules) which section reads:
and separate from THIGCI; and that out of
the 192 signatories to the petition, only 71 Sec. 5. Effect of registration. The labor
were actual rank-and-file employees of organization or workers association shall be
THIGCI. deemed registered and vested with legal
personality on the date of issuance of its
Replying to THIGCIs Comment, THEU certificate of registration. Such legal
asserted that it had complied with all the personality cannot thereafter be subject to
requirements for valid affiliation and collateral attack, but may be questioned
inclusion in the roster of legitimate labor only in an independent petition for
organizations pursuant to DOLE Department cancellation in accordance with these Rules.
Order No. 9, series of 1997, on account of
The grounds for cancellation of union
registration are provided for under Article
239 of the Labor Code, as follows:
Art. 239. Grounds for cancellation of union
registration. The following shall constitute
grounds for cancellation of union
registration:
(a) Misrepresentation, false statement or
fraud in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto, the minutes of
ratification, and the list of members who
took part in the ratification;
(b) Failure to submit the documents
mentioned in the preceding paragraph
within thirty (30) days from adoption or
ratification of the constitution and by-laws
or amendments thereto;
(c) Misrepresentation, false statements or
fraud in connection with the election of
officers, minutes of the election of officers,
the list of voters, or failure to subject these
documents together with the list of the
newly elected/appointed officers and their
postal addresses within thirty (30) days from
election;
(d) Failure to submit the annual financial
report to the Bureau within thirty (30) days
after the losing of every fiscal year and
misrepresentation, false entries or fraud in
the preparation of the financial report itself;
(e) Acting as a labor contractor or engaging
in the cabo system, or otherwise engaging in
any activity prohibited by law;
(f) Entering into collective bargaining
agreements which provide terms and
conditions of employment below minimum
standards established by law;
(g) Asking for or accepting attorneys fees or
negotiation fees from employers;
(h) Other than for mandatory activities
under this Code, checking off special
assessments or any other fees without duly
signed individual written authorizations of
the members;
(i) Failure to submit list of individual
members to the Bureau once a year or
whenever required by the Bureau; and
(j) Failure to comply with the requirements
under Articles 237 and 238, (Emphasis
supplied), while the procedure for
cancellation of registration is provided for in
Rule VIII, Book V of the Implementing Rules.
The inclusion in a union of disqualified
employees is not among the grounds for
cancellation, unless such inclusion is due to
misrepresentation, false statement or fraud
under the circumstances enumerated in
Sections (a) and (c) of Article 239 of above-
quoted Article 239 of the Labor Code.

THEU, having been validly issued a certificate
of registration, should be considered to have
already acquired juridical personality which
may not be assailed collaterally.
As for TAGAYTAY HIGHLANDS
INTERNATIONAL GOLF CLUB
INCORPORATEDs allegation that some of the
signatures in the petition for certification
election were obtained through fraud, false
statement and misrepresentation, the
proper procedure is, as reflected above, for
it to file a petition for cancellation of the
certificate of registration, and not to
intervene in a petition for certification
election.
140. FVC Labor Union vs. Sama Samang
Nagkakaisang Manggagawa
FVC LABOR UNION-PHILIPPINE TRANSPORT
AND GENERAL WORKERS ORGANIZATION
(FVCLU-PTGWO), Petitioner, vs. SAMA-
SAMANG NAGKAKAISANG MANGGAGAWA
SA FVC-SOLIDARITY OF INDEPENDENT AND
GENERAL LABOR ORGANIZATIONS
(SANAMA-FVC-SIGLO), Respondent G.R. No.
176249 November 27, 2009
FACTS:
FVC Labor Union recognized bargaining
agent of the rank-and-file employees of the
FVC Philippines, Incorporated (company) –
signed a five-year collective bargaining
agreement (CBA) with the company. At the
end of the 3rd year of the five-year term and
pursuant to the CBA, FVC Labor Union and
the company entered into the renegotiation
of the CBA and modified, among other
provisions, the CBA’s duration.
Sama-Samang Nagkakaisang Manggagawa
sa FVC-Solidarity of Independent and
General Labor Organizations (SANAMA-
SIGLO) filed before the Department of Labor
and Employment (DOLE) a petition for
certification election for the same rank-and-
file unit covered by the FVC Labor Union
CBA. FVC Labor Union moved to dismiss the
petition on the ground that the certification
election petition was filed outside the
freedom period or outside of the sixty (60)
days before the expiration of the CBA on
May 31, 2003.
The Labor Arbiter dismissed the petition on
the ground that it was filed outside the 60-
day period counted from the May 31, 2003
expiry date of the amended CBA. SANAMA-
SIGLO appealed the decision to the DOLE
Secretary, contending that the filing of the
petition on January 21, 2003 was within 60-
days from the January 30, 2003 expiration of
the original CBA term.
Apparently, the "peculiar circumstances" the
FVC Labor Union referred to relate to the
economic and other provisions CBA that it
renegotiated with the company. The
renegotiated CBA changed the CBA’s
remaining term. To FVCLU-PTGWO, this
extension of the CBA term also changed the
union’s exclusive bargaining representation
status and effectively moved the reckoning
point of the 60-day freedom period.
ISSUE:
Can there be a filing of a certification
election petition only within 60 days from
the expiration of the five-year CBA? NO
RULING:
Article 253-A of the Labor Code covers this
situation and it provides:
Terms of a collective bargaining agreement.
– Any Collective Bargaining Agreement that
the parties may enter into, shall, insofar as
the representation aspect is concerned, be
for a term of five (5) years. No petition
questioning the majority status of the
incumbent bargaining agent shall be
entertained and no certification election
shall be conducted by the Department of
Labor and Employment outside of the sixty
day period immediately before the date of
expiry of such five-year term of the
Collective Bargaining Agreement.
All other provisions of the Collective
Bargaining Agreement shall be renegotiated
not later than three (3) years after its
execution.
Any agreement on such other provisions of
the Collective Bargaining Agreement
entered into within six (6) months from the
date of expiry of the term of such other
provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the
day immediately following such date. If any
such agreement is entered into beyond six
months, the parties shall agree on the
duration of retroactivity thereof. In case of a
deadlock in the renegotiation of the
collective bargaining agreement, the parties
may exercise their rights under this Code.
This Labor Code provision is implemented
through Book V, Rule VIII of the Rules
Implementing the Labor Code which states:
Sec. 14. Denial of the petition; grounds. –
The Med-Arbiter may dismiss the petition on
any of the following grounds:
xxxx
(b) the petition was filed before or after the
freedom period of a duly registered
collective bargaining agreement; provided
that the sixty-day period based on the
original collective bargaining agreement
shall not be affected by any amendment,
extension or renewal of the collective
bargaining agreement (underscoring
supplied).
xxxx
The root of the controversy can be traced to
a misunderstanding of the interaction
between a union’s exclusive bargaining
representation status in a CBA and the term
or effective period of the CBA.
FVC Labor Union has taken the view that its
exclusive representation status should fully
be in step with the term of the CBA and that
this status can be challenged only within 60
days before the expiration of this term. Thus,
when the term of the CBA was extended, its
exclusive bargaining status was similarly
extended so that the freedom period for the
filing of a petition for certification election
should be counted back from the expiration
of the amended CBA term.
We hold this FVC Labor Union position to be
correct, but only with respect to the original
five-year term of the CBA which, by law, is
also the effective period of the union’s
exclusive bargaining representative status.
While the parties may agree to extend the
CBA’s original five-year term together with
all other CBA provisions, any such
amendment or term in excess of five years
will not carry with it a change in the union’s
exclusive collective bargaining status. By
express provision of the above-quoted
Article 253-A, the exclusive bargaining status
cannot go beyond five years and the
representation status is a legal matter not
for the workplace parties to agree upon.
In other words, despite an agreement for a
CBA with a life of more than five years, either
as an original provision or by amendment,
the bargaining union’s exclusive bargaining
status is effective only for five years and can
be challenged within sixty (60) days prior to
the expiration of the CBA’s first five years.
In the present case, the CBA was originally
signed for a period of five years, i.e., from
February 1, 1998 to January 30, 2003, with a
provision for the renegotiation of the CBA’s
other provisions at the end of the 3rd year of
the five-year CBA term. Thus, prior to
January 30, 2001 the workplace parties sat
down for renegotiation but instead of
confining themselves to the economic and
non-economic CBA provisions, also
extended the life of the CBA for another four
months, i.e., from the original expiry date on
January 30, 2003 to May 30, 2003.
As discussed above, this negotiated
extension of the CBA term has no legal effect
on the FVC Labor Union’s exclusive
bargaining representation status which
remained effective only for five years ending
on the original expiry date of January 30,
2003.
We thus find no error in the appellate court’s
ruling reinstating the DOLE order for the
conduct of a certification election. If this
ruling cannot now be given effect, the only
reason is SANAMA-SIGLO’s own desistance;
we cannot disregard its manifestation that
the members of SANAMA themselves are no
longer interested in contesting the exclusive
collective bargaining agent status of FVCLU-
PTGWO. This recognition is fully in accord
with the Labor Code’s intent to foster
industrial peace and harmony in the
workplace.
141. NATIONAL UNION OF WORKERS IN
HOTELS, RESTAURANTS AND ALLIED
INDUSTRIES- MANILA PAVILION HOTEL
CHAPTER vs.SECRETARY OF LABOR AND
EMPLOYMENT, BUREAU OF LABOR
RELATIONS, HOLIDAY INN MANILA PAVILION
HOTEL LABOR UNION AND ACESITE
PHILIPPINES HOTEL CORPORATION
A certification of election was conducted
among the rank-and file employees of
respondent wherein HIMPHLU was ahead by
18 votes from petitioner herein. Petitioner
alleges that 11 of those votes were from
dismissed employees, 6 other votes were
segregated because the employees who cast
them were already occupying supervisory
positions at the time of the election. 5 other
votes were segregated on the ground that
they were cast by probationary employees
and, pursuant to the existing Collective
Bargaining Agreement (CBA), such
employees cannot vote. It bears noting early
on, however, that the vote of one
Gatbonton, a probationary employee, was
counted.
The CA ruled that only 17 votes can be
disregarded and the probationary
employees should be counted since the vote
cast by Gatbonton was not questioned.
ISSUE: W/N employees on probationary
status at the time of the certification
elections should be allowed to vote.
Yes. The inclusion of Gatbonton’s vote was
proper not because it was not questioned
but because probationary employees have
the right to vote in a certification election.
The votes of the six other probationary
employees should thus also have been
counted.
Provisions mentioned in the ruling:
Rule II, Sec. 2 of D.O. 40-03, series of 2003.
Rule XI, Sec. 5 of D.O. 40-03
Rule XI, Sec. 13 of D.O. 40-03
Rule XI, Sec. 21 of D.O. 40-03
In light of the immediately-quoted
provisions, and prescinding from the
principle that all employees are, from the
first day of their employment, eligible for
membership in a labor organization, it is
evident that the period of reckoning
indetermining who shall be included in the
list of eligible voters is, in cases where a
timely appeal has been filed fromthe Order
of the Med – Arbiter, the date when the
Order of the Secretary of Labor and
Employment, whether affirming or denying
the appeal, becomes final and executory.
The filing of an appeal to the SOLE from the
Med-Arbiter’s Order stays its execution, in
accordance with Sec. 21, and rationally, the
Med-Arbiter cannot direct the employer to
furnish him/her with the list of eligible voters
pending the resolution of the appeal.
During the pendency of the appeal, the
employer may hire additional employees. To
exclude the employees hired after the
issuance of the Med-Arbiter’s Order but
before the appeal has been resolved would
violate the guarantee that every employee
has the right to be part of a labor
organization from the first day of their
service.
In the present case, records show that the
probationary employees, including
Gatbonton, were included in the list of
employees in the bargaining unit submitted
by the Hotel on May 25, 2006 in compliance
with the directive of the Med-Arbiter after
the appeal and subsequent motion for
reconsideration have been denied by the
SOLE, rendering the Med-Arbiter’s August
22, 2005 Order final and executory 10 days
after the March 22, 2007 Resolution
(denying the motion for reconsideration of
the January 22 Order denying the appeal),
and rightly so. Because, for purposes of self-
organization, those employees are, in light of
the discussion above, deemed eligible to
vote.
Even if the Implementing Rules gives the
SOLE 20 days to decide the appeal from the
Order of the Med-Arbiter, experience shows
that it sometimes takes months to be
resolved. To rule then that only those
employees hired as of the date of the
issuance of the Med-Arbiter’s Order are
qualified to vote would effectively
disenfranchise employees hired during the
pendency of the appeal. More importantly,
reckoning the date of the issuance of the
Med-Arbiter’s Order as the cut-off date
would render inutile the remedy of appeal to
the SOLE.1avvph!1
But while the Court rules that the votes of all
the probationary employees should be
included, under the particular circumstances
of this case and the period of time which it
took for the appeal to be decided, the votes
of the six supervisory employees must be
excluded because at the time the
certification elections was conducted, they
had ceased to be part of the rank and file,
their promotion having taken effect two
months before the election.
It bears reiteration that the true importance
of ascertaining the number of valid votes
cast is for it to serve as basis for computing
the required majority, and not just to
determine which union won the elections.
The opening of the segregated but valid
votes has thus become material. To be sure,
the conduct of a certification election has a
two-fold objective: to determine the
appropriate bargaining unit and to ascertain
the majority representation of the
bargaining representative, if the employees
desire to be represented at all by anyone. It
is not simply the determination of who
between two or more contending unions
won, but whether it effectively ascertains
the will of the members of the bargaining
unit as to whether they want to be
represented and which union they want to
represent them.
Having declared that no choice in the
certification election conducted obtained
the required majority, it follows that a run-
off election must be HELD: to determine
which between HIMPHLU and petitioner
should represent the rank-and-file
employees.
142. G.R. No. 169254 August 23, 2012
DE LA SALLE UNIVERSITY vs. DE LA SALLE
UNIVERSITY EMPLOYEES ASSOCIATION
(DLSUEA-NAFTEU)
FACTS:
Respondent DLFSUEA-NAFTEU has two
opposing factions. The Aliazas faction filed a
petition for election of union officers in the
Bureau of Labor Relations. They alleged that
there has been no election for respondent’s
officers since 1992 in supposed violation of
the respondent union’s constitution and by-
laws which provided for an election of
officers every three years. It would appear
that the respondent’s members repeatedly
voted to approve the hold-over of the
previously elected officers led by Baylon R.
Banez (Banez faction) and to defer the
elections to expedite the negotiations of the
economic terms covering the last two years
of the 1995-2000 collective bargaining
agreement.
Due to the brewing conflict between the two
factions, petitioner thru a letter to the
respondent informed the latter that the
intra-union dispute between the incumbent
set of officers of the Union on one hand and
a sizeable number of its members on the
other hand has reached serious levels. By
virtue of the 19 March 2001 Decision and the
06 July 2001 Order of the Department of
Labor and Employment (DOLE), the hold-
over authority of Union’s incumbent set of
officers has been considered extinguished
and an election of new union officers, to be
conducted and supervised by the DOLE, has
been directed to be held. Until the result of
this election [come] out and a declaration by
the DOLE of the validly elected officers is
made, a void in the Union leadership exists.
In light of these circumstances, the
University has no other alternative but to
temporarily do the following:
1. Establish a savings account for the Union
where all the collected union dues and
agency fees will be deposited and HELD: in
trust; and
2. Discontinue normal relations with any
group within the Union including the
incumbent set of officers.
In view of the foregoing decision of
petitioner, respondent filed a complaint for
unfair labor practice in the National Labor
Relations Commission (NLRC) on August 21,
2001. It alleged that petitioner committed a
violation of Article 248(a) and (g) of the
Labor Code which provides:
Article 248. Unfair labor practices of
employers. It shall be unlawful for an
employer to commit any of the following
unfair labor practice:
(a) To interfere with, restrain or coerce
employees in the exercise of their right to
self-organization.
(d) To initiate, dominate, assist or otherwise
interfere with the formation or
administrator of any labor organization,
including the giving of financial or other
support to it or its organizers or supporters.
Respondent union asserted that the creation
of escrow accounts was not an act of
neutrality as it was influenced by the Aliazas
factions’s letter and was an act of
interference with the internal affairs of the
union. Thus, petitioner’s non-remittance of
union dues and discontinuance of normal
relations with it constituted unfair labor
practice.
Petitioner, for its defense, denied the
allegations of respondent and insisted that
its actions were motivated by good faith.
The Labor Arbiter dismissed the complaint
for unfair labor practice against petitioner
for lack of merit affirming the need to
conduct an election of the union’s officers.
The labor arbiter, in effect, upHELD: the
validity of petitioner’s view that there was a
void in the leadership of respondent.
The Secretary of Labor assumed jurisdiction
over the matter pursuant to Article 263 of
the Labor Code as petitioner, an educational
institution, was considered as belonging to
an industry indispensable to national
interest.
The Secretary of Labor issued a Decision,
finding petitioner guilty of violating Article
248(g) in relation to Article 252 of the Labor
Code. The salient portion thereof stated:
The University is guilty of refusal to bargain
amounting to an unfair labor practice under
Article 248(g) of the Labor Code. Indeed
there was a requirement on both parties of
the performance of the mutual obligation to
meet and convene promptly and
expeditiously in good faith for the purpose of
negotiating an agreement. Undoubtedly,
both [petitioner] and [respondent] entered
into a [CBA] on [March 20, 2001. The term of
the said CBA commenced on [June 1, 2000
and with the expiration of the economic
provisions on the third year, [respondent]
initiated negotiation by sending a letter
dated March 15, 2003, together with the
CBA proposal. In reply to the letter of
[respondent], [petitioner] in its letter dated
[March 20, 2003 refused.
Such an act constituted an intentional
avoidance of a duty imposed by law. There
was nothing in the [March 19, 2001 and July
6, 2001 orders] of Director Maraan and
Cacdac which restrained or enjoined
compliance by the parties with their
obligations under the CBA and under the
law. The issue of union leadership is distinct
and separate from the duty to bargain.
ISSUE:
Whether the petitioner’s refusal to bargain
amount to unfair labor practice under the
Labor Code.
RULING:
YES. Petitioner erred in unilaterally
suspending negotiations with respondent
since the pendency of the intra-union
dispute was not a justifiable reason to do so.
The continued refusal by the
University to negotiate amounts to unfair
labor practice. The non-proclamation of the
newly elected union officers cannot be used
as an excuse to fulfill the duty to bargain
collectively.
Petitioner’s reliance on the July 12, 2002
Decision of Labor Arbiter Pati, and the
NLRC’s affirmance thereof, is misplaced. The
unfair labor practice complaint dismissed by
Labor Arbiter Pati questioned petitioner’s
actions immediately after the March 19,
2001 Decision of BLR Regional Director
Maraan, finding that "the reason for the
hold-over of the previously elected union
officers is already extinguished." The present
controversy involves petitioner’s actions
subsequent to (1) the clarification of said
March 19, 2001 Maraan Decision by BLR
Director Cacdac who opined in a May 16,
2003 memorandum that the then
incumbent union officers (i.e., the Bañez
faction) continued to hold office until their
successors have been elected and qualified,
and (2) the July 28, 2003 Decision of the
Secretary of Labor in OS-AJ-0015-2003 ruling
that the very same intra-union dispute
(subject of several notices of strike) is
insufficient ground for the petitioner to
suspend CBA negotiations with respondent
union. We take notice, too, that the
aforesaid Decision of Labor Arbiter Pati has
since been set aside by the Court of Appeals
and such reversal was upheld by this Court’s
Second Division in its Decision dated April 7,
2009 in G.R. No. 177283, wherein petitioner
was found liable for unfair labor practice.
Neither can petitioner seek refuge in its
defense that as early as November 2003 it
had already released the escrowed union
dues to respondent and normalized relations
with the latter. The fact remains that from its
receipt of the July 28, 2003 Decision of the
Secretary of Labor in OS-AJ-0015-2003 until
its receipt of the November 17, 2003
Decision of the Secretary of Labor in OS-AJ-
0033-2003, petitioner failed in its duty to
collectively bargain with respondent union
without valid reason. At most, such
subsequent acts of compliance with the
issuances in OS-AJ-0015-2003 and OS-AJ-
0033-2003 merely rendered moot and
academic the Secretary of Labor’s directives
for petitioner to commence collective
bargaining negotiations within the period
provided.