G.R. No.
173863 September 15, 2010 to market and distribute goods inside the CSEZ as this would amount to tax which
CHEVRON PHILIPPINES, INC. (Formerly CALTEX PHILIPPINES, INC.),Petitioner,
vs.
BASES CONVERSION DEVELOPMENT AUTHORITY and CLARK DEVELOPMENT
CORPORATION, Respondents
Facts:
On June 28, 2002, the Board of Directors of respondent Clark Development
Corporation (CDC) issued and approved Policy Guidelines on the Movement of
Petroleum Fuel to and from the Clark Special Economic Zone. In one of its
provisions, it levied royalty fees to suppliers delivering Coastal fuel from outside
sources for Php0.50 per liter for those delivering fuel to CSEZ locators not
sanctioned by CDC and Php1.00 per litter for those bringing-in petroleum fuel from
outside sources. The policy guidelines were implemented effective July 27, 2002.
The petitioner Chevron Philippines Inc (formerly Caltex Philippines Inc) who is a
fuel supplier to Nanox Philippines, a locator inside the CSEZ, received a Statement
of Account from CDC billing them to pay the royalty fees amounting to Php115,000
for its fuel sales from Coastal depot to Nanox Philippines from August 1 to
September 21, 2002.
Petitioner, contending that nothing in the law authorizes CDC to impose royalty
fees based on a per unit measurement of any commodity sold within the special
economic zone, protested against the CDC and Bases Conversion Development
Authority (BCDA). They alleged that the royalty fees imposed had no reasonable
relation to the probably expenses of regulation and that the imposition on a per
unit measurement of fuel sales was for a revenue generating purpose, thus, akin
to a “tax”.
BCDA denied the protest. The Office of the President dismissed the appeal as well
for lack of merit.
Upon appeal, CA dismissed the case. CA held that in imposing the royalty fees, CDC
was exercising its right to regulate the flow of fuel into CSEZ under the vested
exclusive right to distribute fuel within CSEZ pursuant to its Joint Venture
Agreement (JVA) with Subic Bay Metropolitan Authority (SBMA) and Coastal
Subic Bay Terminal, Inc. (CSBTI) dated April 11, 1996. The appellate court also found
that royalty fees were assessed on fuel delivered, not on the sale, by petitioner
and that the basis of such imposition was petitioner’s delivery receipts to Nanox
Philippines. The fact that revenue is incidentally also obtained does not make the
imposition a tax as long as the primary purpose of such imposition is regulation.
When elevated in SC, petitioner argued that: 1) CDC has no power to impose fees
on sale of fuel inside CSEZ on the basis of income generating functions and its right
they have no power to impose, and that the imposed fee is not regulatory in
nature but rather a revenue generating measure; 2) even if the fees are regulatory
in nature, it is unreasonable and are grossly in excess of regulation costs.
Respondents contended that the purpose of royalty fees is to regulate the flow of
fuel to and from the CSEZ and revenue (if any) is just an incidental product. They
viewed it as a valid exercise of police power since it is aimed at promoting the
general welfare of public; that being the CSEZ administrator, they are responsible
for the safe distribution of fuel products inside the CSEZ.
Issue:
Whether the act of CDC in imposing royalty fees can be considered as valid
exercise of the police power.
Held:
Yes. SC held that CDC was within the limits of the police power of the State when
it imposed royalty fees.
In distinguishing tax and regulation as a form of police power, the determining
factor is the purpose of the implemented measure. If the purpose is primarily to
raise revenue, then it will be deemed a tax even though the measure results in
some form of regulation. On the other hand, if the purpose is primarily to regulate,
then it is deemed a regulation and an exercise of the police power of the state,
even though incidentally, revenue is generated.
In this case, SC held that the subject royalty fee was imposed for regulatory
purposes and not for generation of income or profits. The Policy Guidelines was
issued to ensure the safety, security, and good condition of the petroleum fuel
industry within the CSEZ. The questioned royalty fees form part of the regulatory
framework to ensure “free flow or movement” of petroleum fuel to and from the
CSEZ. The fact that respondents have the exclusive right to distribute and market
petroleum products within CSEZ pursuant to its JVA with SBMA and CSBTI does
not diminish the regulatory purpose of the royalty fee for fuel products supplied
by petitioner to its client at the CSEZ.
However, it was erroneous for petitioner to argue that such exclusive right of
respondent CDC to market and distribute fuel inside CSEZ is the sole basis of the
royalty fees imposed under the Policy Guidelines. Being the administrator of CSEZ,
the responsibility of ensuring the safe, efficient and orderly distribution of fuel
products within the Zone falls on CDC. Addressing specific concerns demanded by
the nature of goods or products involved is encompassed in the range of services
which respondent CDC is expected to provide under Sec. 2 of E.O. No. 80, in
pursuance of its general power of supervision and control over the movement of
all supplies and equipment into the CSEZ.
There can be no doubt that the oil industry is greatly imbued with public interest
as it vitally affects the general welfare. Fuel is a highly combustible product which,
if left unchecked, poses a serious threat to life and property. Also, the reasonable
relation between the royalty fees imposed on a “per liter” basis and the regulation
sought to be attained is that the higher the volume of fuel entering CSEZ, the
greater the extent and frequency of supervision and inspection required to ensure
safety, security, and order within the Zone.
Respondents submit that the increased administrative costs were triggered by
security risks that have recently emerged, such as terrorist strikes. The need for
regulation is more evident in the light of 9/11 tragedy considering that what is
being moved from one location to another are highly combustible fuel products
that could cause loss of lives and damage to properties.
As to the issue of reasonableness of the amount of the fees, SC held that no
evidence was adduced by the petitioner to show that the fees imposed are
unreasonable. Administrative issuances have the force and effect of law. They
benefit from the same presumption of validity and constitutionality enjoyed by
statutes. These two precepts place a heavy burden upon any party assailing
governmental regulations. Petitioner’s plain allegations are simply not enough to
overcome the presumption of validity and reasonableness of the subject
imposition.
WHEREFORE, the petition is DENIED for lack of merit and the Decision of the Court of
Appeals dated November 30, 2005 in CA-G.R. SP No. 87117 is hereby AFFIRMED
MANILA MEMORIAL PARK CEMETERY, INC. v. Lluz et al.
G.R. No. 208451
February 03, 2016
CARPIO, J.:
Facts:
Petitioner Manila Memorial Park Cemetery, Inc. (Manila Memorial) entered into a
Contract of Services with respondent Ward Trading and Services (Ward Trading).
The Contract of Services provided that Ward Trading, as an independent
contractor, will render interment and exhumation services and other related work
to Manila Memorial in order to supplement operations at Manila Memorial Park,
Paranaque City.
Among those assigned by Ward Trading to perform services at the Manila
Memorial Park were respondents Ezard Lluz, Norman Corral, Erwm Fugaban,
Valdimar Balisi, Emilio Fabon, John Mark Aplicador, Michael Curioso, Junlin
Espares, and Gavino Farinas (respondents).
Respondents alleged that soon after the management declined their request for
regularization and to be recognized as legitimate members of the existing labor
union,the latter dismissed them. Hence, this case for illegal dismissal.
By way of defense, Manila Memorial argued that there was no employer-employee
relationship between the company and respondents. Instead, It argued that
respondents were the employees of Ward Trading.
Issue:
Whether or not an employer-employee relationship exists between Manila
Memorial and respondents for the latter to be entitled to their claim for wages
and other benefits.
Ruling:
Contracting arrangements for the performance of specific jobs or services under
the law and its implementing rules are allowed. However, contracting must be
made to a legitimate and independent job contractor since labor rules expressly
prohibit labor-only contracting.
Labor-only contracting exists when 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:
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 the performance of the
work of the contractual employee.
In the present case, The Contract of Services proved the existence of labor-only
conrtacting between Manila Memorial and Ward Trading. The Contract of Services
provided that Ward Trading, as an independent contractor, will render interment
and exhumation services and other related work to Manila Memoria.However,a
closer reading of the Contract of Services reveals that Ward Trading does not have
substantial capital or investment in the form of tools, equipment, machinery, work
premises and other materials since it is Manila Memorial which owns the
equipment used in the performance of work needed for interment and
exhumation services. Furthermore, although Ward shall be in charge of the
supervision over individual respondents, the exercise of its supervisory function is
heavily dependent upon the needs of petitioner Memorial Park. The contract
further provides that petitioner has the option to take over the functions of
Ward's personnel if it finds any part or aspect of the work or service provided to
be unsatisfactory
Manila Memorial failed to adduce evidence to prove that Ward Trading had any
substantial capital, investment or assets to perform the work contracted for. Thus,
the presumption that Ward Trading is a labor-only contractor stands.
Consequently, Manila Memorial is deemed the employer of respondents.
Diamond Farms, Inc. v. SPFL et al.
G.R. Nos. 173254-55 & 173263 January 13, 2016
JARDELEZA, J.:
Facts:
DFI owns an 800-hectare banana plantation ("original plantation") in Alejal,
Carmen, Davao. Pursuant to Republic Act No. 6657 or the Comprehensive Agrarian
Reform Law of 1988 ("CARL"), commercial farms shall be subject to compulsory
acquisition and distribution, thus the original plantation was covered by the
law. DFI offered to give up its rights and interest over the original plantation in
favor of the government by way of a Voluntary Offer to Sell. The DAR accepted
DFI's offer to sell the original plantation. Out of the total 800 hectares, the DAR
only approved the disposition of 689.88 hectares.
The awarded plantation was turned over to qualified agrarian reform beneficiaries
("ARBs") under the CARL. These ARBs are the same farmers who were working in
the original plantation. They subsequently organized themselves into a multi-
purpose cooperative named "DARBMUPCO," which is one of the respondents in
this case.
DARBMUPCO entered into a Banana Production and Purchase Agreement
("BPPA") with DFI. Under the BPPA, DARBMUPCO and its members as owners of
the awarded plantation, agreed to grow and cultivate only high grade quality
exportable bananas to be sold exclusively to DPI. The BPPA is effective for 10
years.18
Hampered by lack of manpower to undertake the agricultural operation under the
BPPA, DFI engaged the services of the respondent-contractors, who in turn
recruited the respondent-workers to assist DARBMUPCO in meeting its
production obligations under the BPPA,
Southern Philippines Federation of Labor ("SPFL")—a legitimate labor
organization with a local chapter in the awarded plantation filed a petition for
certification election in the Office of the Med-Arbiter on behalf of some 400
workers (the respondent-workers in this petition) "jointly employed by DFI and
DARBMUPCO" working in the awarded plantation.
In another case, SPFL, together with more than 300 workers, filed a case for
underpayment of wages, nonpayment of 13th month pay and service incentive
leave pay and attorney's fees against DFI, DARBMUPCO and the respondent-
contractors before the National Labor Relations Commission ("NLRC").
DARBMUPCO and DFI denied that they are the employers of the respondent-
workers. They claimed, instead, that the respondent-workers are the employees
of the respondent-contractors.
Issue:
Who among DFI,DARBMUPCO and the respondent-contractors is the employer of
the respondent-workers?
Ruling:
Petition is denied. Furthermore, the decision of the Court of Appeals declaring DFI
to be the employer of respondent-workers is affirmed.
This case involves job contracting, a labor arrangement expressly allowed by law.
Contracting or subcontracting is an arrangement whereby a principal (or
employer) agrees to put out or farm out with a contractor or subcontractor the
performance or completion 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.
The Omnibus Rules Implementing the Labor Code distinguishes between
permissible job contracting (or independent contractorship) and labor-only
contracting. Job contracting is permissible under the Code if the following
conditions are met:
(1) The contractor carries on an independent business and undertakes the
contract work on his own account under his own responsibility according to his
own manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except as to
the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary
in the conduct of his business.
In contrast, job contracting shall be deemed as labor-only contracting, an
arrangement prohibited by law, if a person who undertakes to supply workers to
an employer:
(1) Does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises and other materials; and
(2) The workers recruited and placed by such person are performing activities
which are directly related to the principal business or operations of the employer
in which workers are habitually employed.
Based on the conditions for permissible job contracting, we rule that respondent-
contractors are labor only contractors.
There is no evidence showing that respondent-contractors are independent
contractors. The respondent-contractors, DFI, and DARBMUPCO did not offer any
proof that respondent-contractors were not engaged in labor-only contracting.
Herein respondents, Voltaire Lopez, Jr., et al., were commissioned and contracted
by petitioner, Diamond Farms, Inc. (DFI) to recruit farm workers, who are the
complaining [respondent-workers] (as represented by Southern Philippines
Federation of Labor (SPFL) in this appeal by certiorari).
Farm tools, implements and equipment necessary to performance of such farm
activities were supplied by petitioner DFI. Herein respondents Voltaire Lopez, Jr.
et. al. had no adequate capital to acquire or purchase such tools, implements,
equipment, etc.
Herein respondents Voltaire Lopez, Jr., et. al. as well as rcspondents-SPFL, et. al.
were being directly supervised, controlled and managed by petitioner DFI farm
managers and supervisors, specifically on work assignments and performance
targets.
A finding that a contractor is a labor-only contractor is equivalent to a declaration
that there is an employer-employee relationship between the principal, and the
workers of the labor-only contractor; the labor-only contractor is deemed only as
the agent of the principal. Thus, in this case, respondent-contractors are the labor-
only contractors and either DFI or DARBMUPCO is their principal.
We hold that DFI is the principal. The records show that it is DFI which hired the
individual [respondent-contractors] who in turn hired their own men to work in
the 689.88 hectares land of DARBMUPCO as well as in the managed area of the
plantation.
DFI cannot argue that DARBMUPCO is the principal of the respondent-contractors
because it (DARBMUPCO) owns the awarded plantation where respondent-
contractors and respondent-workers were working. That DARBMUPCO owns the
awarded plantation where the respondent-contractors and respondent-workers
were working is immaterial.DFI, as the principal, hired the respondent-contractors
and the latter, in turn, engaged the services of the respondent-workers.
Clearly, DFI is the true employer of the respondent-workers; respondent-
contractors are only agents of DFI. Under Article 106 of the Labor Code, DFI shall
be solidarily liable with the respondent-contractors for the rightful claims of the
respondent-workers, to the same manner and extent, as if the latter are directly
employed by DFI.
G.R. No. 202091
SUMIFRU (PHILIPPINES) CORP. (surviving entity of a merger with Fresh Banana
Agricultural Corporation and other corporations), Petitioner
vs.
NAGKAHIUSANG MAMUMUO SA SUYAPA FARM1 (NAMASUFA-NAFLU-KMU),
Respondent
Facts
On March 14, 2008, the private respondent NAMASUF A-NAFLU-KMU, , filed a
Petition for Certification Election before the Department of Labor and
Employment, Regional Office No. XI in Davao City. NAMASUFA sought to
represent all rank-and-file employees, numbering around one hundred forty, of
packing plant 90 (PP 90) of Fresh Banana Agricultural Corporation (FBAC).
NAMASUF A claimed that there was no existing union in the aforementioned
establishment.
FBAC filed an Opposition to the Petition stating that there is no employer-
employee relationship between it and the workers involved. It alleged that
members are actually employees of A2Y Contracting Services (A2Y), an
independent contractor, as evidenced by the payroll records.
NAMASUFA contended that they were former workers of Stanfilco before FBAC
took over and were then required to join the Compostela Banana Packing Plant
Workers' Cooperative (CBPPWC) before they were hired and allowed to work at
the Packing Plant of FBAC. It further alleged that the members of NAMASUF A
were working at PP 90 long before A2Y came.
DOLE Med-Arbiter – Granted petition for certification election
The "four-fold test" will show that respondent FBAC is the employer of
petitioner's members. The elements to determine the existence of an
employment relationship are:
(a) the selection and engagement of the employee; (staff of respondent FBAC
advised those who are interested to be hired in the Packing Plant to become
members first of CBPPWC)
(b) the payment of wages (payment by a2y merely an administrative
arrangement);
(c) the power of dismissal (FBAC is the authority that imposes disciplinary
measures against erring workers) ; and
(d) the employer's power to control the employee's conduct (FBAC gives
instructions to the workers on how to go about their work is sufficient indication
that it exercises control over their movements)
Labor Sec Appeal - DISMISSED
In this case, Sumifru's control over the subject employees is evident. The fact that
the subject workers are required by Sumifru to fill up monitoring sheets as they go
about their jobs and the imposition of disciplinary actions for non-compliance with
the "No Helmet - No Entry and No ID - No Entry" policies prove that it is indeed
Sumifru, and not A2Y Contracting Services, that exercises control over the conduct
of the subject workers.
CA Pet Cert - DISMISSED
DOLE Secretary did not commit grave abuse of discretion. The records are replete
with evidence which would show that SUMIFRU has control over the concerned
workers, to wit: "Standardized Packing Plant Breaktime"; Material Requisition for
PP 90; "no helmet, no entry", "no ID, no entry policy", attendance Sheets for Gas
and seminarrs
Issue
WON ER-EE RELATION EXISTS
Ruling
YES. The Med-Arbiter found, based on documents submitted by the parties, that
Sumifru gave instructions to the workers on how to go about their work, what
time they were supposed to report for work, required monitoring sheets as they
went about their jobs, and provided the materials used in the packing plant.
In affirming the Med-Arbiter, the DOLE Secretary found that the element of
control was present because Sumifru required monitoring sheets and imposed
disciplinary actions for non-compliance with "No Helmet - No Entry" "No ID - No
Entry" policies.
In turn, the CA, even went further and itself reviewed the records - to arrive, as it
did arrive, at the same conclusion. The Court cannot re-calibrate the factual bases
of the Med-Arbiter, DOLE Secretary, and the CA, contrary to the provisions of Rule
45, especially where, as here, the Petition fails to show any whimsicality or
capriciousness in the exercise of judgment of the Med-Arbiter or the DOLE
Secretary in finding the existence of an employer-employee relationship.
WESLEYAN UNIVERSITY-PHILIPPINES vs. GUILLERMO T. MAGLAYA, SR.
G.R. No. 212774 January 23, 2017
“For this Court's resolution is a petition for review on certiorari filed by petitioner
Wesleyan University-Philippines (WUP) assailing the Resolution1 dated January 20,
2014 of the Court of Appeals (CA) which denied its petition for certiorari.”
FACTS:
WUP is a non-stock, non-profit, non-sectarian educational corporation duly
organized and existing under the Philippine laws. Respondent Atty. Guillermo T.
Maglaya, Sr. was appointed as a corporate member and was elected as a member
of the Board of Trustees, both for a period of five (5) years. He was elected as
President of the University for a five-year term. He was re-elected as a trustee.
In a Memorandum, the incumbent Bishops of the United Methodist Church
apprised all the corporate members of the expiration of their tenns on December
31, 2008, unless renewed by the former. The said members, including Maglaya,
sought the renewal of their membership in the WUP's Board, and signified their
willingness to serve the corporation.
Dr. Dominador Cabasal, Chairman of the Board, informed the Bishops of the
cessation of corporate terms of some of the members and/or trustees since the
by-laws provided that the vacancy shall only be filled by the Bishops upon the
recommendation of the Board. Maglaya learned that the Bishops created an Ad
Hoc Committee to plan the efficient and orderly turnover of the administration of
the WUP in view of the alleged "gentleman's agreement", and that the Bishops
have appointed the incoming corporate members and trustees. He clarified that
there was no agreement and any discussion of the turnover because the corporate
members still have valid and existing corporate terms.
In this case, the Bishops, through a formal notice to all the officers, deans, staff,
and employees of WUP, introduced the new corporate members, trustees, and
officers. In the said notice, it was indicated that the new Board met, organized,
and elected the new set of officers. Manuel Palomo, the new Chairman of the
Board, informed Maglaya of the termination of his services and authority as the
President of the University.
Thereafter, Maglaya and other fonner members of the Board filed a Complaint for
Injunction and Damages before the Regional Trial Court of Cabanatuan City.The
RTC dismissed the case declaring the same as a nuisance or harassment suit
prohibited under Section l(b), Rule 1 of the Interim Rules for Intra-Corporate
Controversies. The RTC observed that it is clear from the by-laws of WUP that
insofar as membership in the corporation is concerned, which can only be given
by the College of Bishops of the United Methodist Church, it is a precondition to a
seat in the WUP Board. Consequently, the expiration of the terms of the plaintiffs,
including Maglaya, as corporate members carried with it their termination as
members of the Board. Moreover, their continued stay in their office beyond their
terms was only in hold-over capacities, which ceased when the Bishops appointed
new members of the corporation and the Board.
The CA affirmed the decision of the RTC, and dismissed the petition for certiorari
filed by the plaintiffs for being the improper remedy.
Thereafter, Maglaya filed the present illegal dismissal case against WUP, Palomo,
Bishop Lito C. Tangonan and Bishop Leo A. Soriano. He claimed that he was
unceremoniously dismissed in a wanton, reckless, oppressive and malevolent
manner.
The Labor Arbiter ruled in favor of WUP. The LA held that the action between
employers and employees where the employer-employee relationship is merely
incidental is within the exclusive and original jurisdiction of the regular courts.
The National Labor Relations Commission reversed and set aside the Decision of
the LA ruling that the illegal dismissal case falls within the jurisdiction of the labor
tribunals. Since the reasons for his termination cited by WUP were not among the
just causes provided under Article 282 (now Article 297) of the Labor Code,
Maglaya was illegally dismissed.
Thereafter, the NLRC denied the motion for reconsideration filed by WUP and the
CA dismissed the petition for certiorari filed by WUP. The CA noted that the
decision and resolution of the NLRC became final and executor.
ISSUE:
The Court of Appeals committed an error of law when it summarily dismissed the
special civil action for certiorari raising lack of jurisdiction of the NLRC filed by
[WUP] where it was very clear that the NLRC had no jurisdiction over the case
involving a corporate officer and where the nature of the controversy is an intra-
corporate dispute.
RULING:
The Court find the instant petition impressed with merit.
WUP alleges that while the NLRC decision became final and executory, it did not
mean that the said decision had become immutable and unalterable as the CA
ruled. WUP maintains that the remedy of the aggrieved party against a final and
executory decision of the NLRC is the filing of the petition for certiorari under Rule
65 of the Rules of Court. As such, it was able to meet the conditions set forth in
filing the said remedy before the CA.
"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.
Since this Court is now reversing the challenged decision of the CA and affirming
the decision of the LA in dismissing the case for want of jurisdiction, Maglaya is
not entitled to collect the amount of ₱2,505,208.75 awarded from the time the
NLRC decision became final and executory up to the time the CA dismissed WUP's
petition for certiorari.
In sum, this Court finds that the NLRC erred in assuming jurisdiction over, and
thereafter in failing to dismiss, Maglaya's complaint for illegal dismissal against
WUP, since the subject matter of the instant case is an intra-corporate controversy
which the NLRC has no jurisdiction.
NESTLE PHILIPPINES INC., Petitioner VS. BENNY A. PUEDAN, et. al., Respondent
G.R. No. 220617 January 30, 2017
FACTS:
On July 6, 2012, the respondents filed a complaint against the petitioner for
illegal dismissal and demanding for separation pay, nominal damages and
attorney’s fees. The respondents alleged that Ocho de Setiembre Inc. (ODSI) and
Nestle Philippines Inc. (NPI) hired them to sell various products of NPI in the
assigned covered area. After sometime, the respondents demanded that they be
considered regular employees of NPI but they were directed to sign contracts of
employment with ODSI instead. However, the respondents refused to comply
with such directives resulting from their dismissal from their position. The
contention of the respondents is that ODSI is a labor-only contractor and, thus,
they should be deemed regular employees of NPI and there was no just or
authorized cause for their dismissal. The ODSI averred that it is a company
engaged in the business of buying, selling, distributing, and marketing of goods
and commodities of every kind and it enters into all kinds of contracts for the
acquisition thereof. According to ODSI the respondents were
hired as its employees to execute the Distributorship Agreement with the NPI.
Unfortunately, the business relationship between the NPI and ODSI turned sour
and eventually NPI downsized its marketing and promotional support from ODSI
and termination of the Distributorship Agreement. Meanwhile, ODSI argues with
the respondents that they were not dismissed but merely on floating status.
However, the NPI did not file any position paper or appear in the scheduled
conferences.
The Labor Arbiter concluded that all the impleaded respondents therein (i.e.
including NPI) should be held liable for the payment of nominal damages plus
attorney’s fees.
The aggrieved respondents appealed to National Labor Relation Commission
(NLRC) and the NLRC reversed and set aside the Labor Arbiter ruling. The NLRC
ordered ODSI and NPI to pay each of the respondents and entitled to separation
pay and to nominal damages. The respondents moved for a partial reconsideration
arguing since it was ODSI that closed down operations and not the NPI, therefore
NPI should reinstate them. However, the NLRC denied the motion.
Moreover, the NPI was dissatisfied hence filed a petition for certiorari before
the Court of Appeals (CA) which the CA affirmed the NLRC ruling.
ISSUE:
Whether or not Nestle Philippines Inc. (NPI) and Ocho de Setiembre Inc.
(ODSI) are deemed jointly and severely liable for the respondent’s monetary
claims.
HELD:
No. The Distributorship Agreement between the Nestle Philippines inc. (NPI)
and Ocho de Setiembre Inc. (ODSI) is not that of a principal and a contractor, but
that of a seller and a buyer/re-seller. Based on the stipulated in the Distributorship
Agreement NPI agreed to sell its products to ODSI at discounted prices. According
to NPI the goods it manufactures are distributed to the market through various
distributor including ODSI, that in turn, re-sell the same to the designated outlets
through its own employees as the respondents. Therefore, the reselling activities
allegedly performed by the respondents properly pertain to ODSI only.
In effect, ODSI was not a labor-only contractor of NPI hence the NPI cannot
be deemed the true employer of the respondents. Therefore, NPI cannot be held
jointly and severely liable to ODSI’s monetary obligation towards the respondents.
Valenzuela vs. Alexandra Mining and Oil Ventures, Inc.
G.R. No. 222419, October 5, 2016
Facts:
Valenzuela sued for non-payment of backwages, overtime pay, separation pay,
moral and exemplary damages and attorney's fees against Alexandra Mining and
Oil Ventures, Inc. (AMO VI) and its owner and president, Cesar E. Detera (Cesar).
Valenzuela was hired as a company driver of AMOVI. He did not just worked for
the company but also drove for the members of the Detera family. After five years
and five months of service, he was told that he can no longer continue to work as
there were no forthcoming funds to pay for his salary. Respondents however
insisted that Valenzuela was the family driver of Cesar and not employee of
AMOVI.
LA Ruling:
The Labor Arbiter (LA) rendered a Decision9 holding that Valenzuela had been
illegally dismissed. The LA dismissed Cesar's claim that Valenzuela was a family
driver and not an employee of AMOVI, as the evidence on record proved
otherwise. She likewise pointed out that the respondents failed to present any
evidence to support their claim that Valenzuela abandoned his employment.
Unyielding, the respondents interposed an appeal to the National Labor Relations
Commission (NLRC) and reiterated their claim that Valenzuela was the family
driver of the Deteras and not an employee.
NLRC Ruling:
The NLRC rendered a Decision affirming the ruling of the LA. The NLRC held that
respondents failed to present evidence to dispute [Valenzuela's] allegations. Such
allegation is unsupported. On the other hand, the Valenzuela was able to present
identification card and payslips. The respondents filed a Motion for
Reconsideration of the foregoing decision, but the NLRC denied the same.
Undeterred, the respondents filed a petition for certiorari with the CA imputing
grave abuse of discretion on the part of the NLRC for holding that there was an
employer-employee relationship between AMOVI and Valenzuela.
In its decision, the CA ruled that while it was established that Valenzuela was an
employee of AMOVI there was no proof that the company or its president
dismissed him from service. It likewise affirmed that Valenzuela did not abandon
his employment as the respondents failed to establish acts showing his intention
to leave employment. Thus, it applied the ruling in Exodus where it was held that
when there is no evidence of the fact of dismissal on the part of the employer and,
at the same time, no proof of abandonment on the part of the employee, the
proper relief is reinstatement without backwages. This has no application where
there was evidence of dismissal as when Cesar admits having impliedly dismissed
a driver by invoking Art. 150 of the Labor Code in justifying the act. This case was
unanimously held by the LA, NLRC, and the CA that the employer was AMOVI.
There being an admission of dismissal, the SC examined whether there was
observance of the substantive and procedural due process. The SC found
violations in both. Thus, Valenzuela was entitled to backwages under Art. 279 of
the Labor Code. However, in view of the strained relations between the parties,
the Court did not award reinstatement and in lieu thereof, granted payment of
separation pay of one month for every year of service from the time of illegal
termination up to the finality of the decision.

CA Ruling:

The CA partly granted the petition and modified the same by deleting the award
of backwages. The CA held that since there was no clear evidence that Valenzuela
was dismissed by the respondents and, on the other hand, there was an equal lack
of proof of abandonment of work on the part of Valenzuela. It held further that
following the ruling of the Court in Exodus International Construction
Corporation, et al vs. Biscocho, et al., the remedy was to reinstate Valenzuela
without backwages. Valenzuela filed a Motion for Partial Reconsideration, but the
same was denied. Valenzuela filed the petition before the SC questioning the
Decision and Resolution of the CA. He contends that the fact of his dismissal was
clearly established and this entitles him to the payment of both separation pay and
full backwages.

RULING