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Contents
Contents .......................................................................................................................................................................................... 1 Philippine Bank of Communications vs NLRC (1986) G.R. L-66598 ....................................................................................... 3 Neri vs NLRC (1993) 224 SCRA 717 ............................................................................................................................................ 5 Filipinas Synthetic Fiber Corp., vs NLRC (1996) 257 SCRA 336 .............................................................................................. 6 Maraquinot vs NLRC (1998) 284 SCRA 539 ............................................................................................................................... 7 San Miguel vs Maerc Integrated Services (2003) G.R. 144627 .................................................................................................. 9 Manila Water Co., vs Pena (2004) G.R. 158255 ........................................................................................................................... 9 NHA vs Maceda Security Agency (2005) G.R. 163448 ........................................................................................................... 11 Abella vs PLDT (2005) G.R. 159469 ........................................................................................................................................... 11 San Miguel vs Aballa (2005) G.R. 149011 .................................................................................................................................. 13 Manila Electric Co., vs Benamira (2005) G.R. 145271 .............................................................................................................. 14 DOLE Philppines vs Esteva (2006) G.R. 161115 ....................................................................................................................... 15 San Miguel vs NLRC (2006) G.R. 147566 .................................................................................................................................. 19 Eparwa vs Liceo (2006) G.R. 150402 .......................................................................................................................................... 22 Escario vs NLRC (2000) G.R. 124055 ......................................................................................................................................... 24 Aboitiz vs Dimapatoi (2006) G.R. 148619.................................................................................................................................. 28 GSIS vs NLRC (2006) G.R. 157647 ............................................................................................................................................. 32 Republic vs Asiapro Cooperative (2007) G.R. 172101 ............................................................................................................. 33 Jaguar Security and Investigation Agency vs Sales (2008) G.R. 162420 ................................................................................ 38 Almeda et al., vs Asahi Glass (2008) G.R. 177785 .................................................................................................................... 39 Sasan, Sr et al, vs NLRC and EPCIB (2008) G.R. 176240 ......................................................................................................... 41 Purefoods Corp., vs NLRC et al., (2008) G.R. 172241 .............................................................................................................. 45 Maranaw Hotels and Resort vs CA (2009) G.R. 149660 .......................................................................................................... 48 Cola-Cola Bottlers Phils., vs Agito et al., (2009) G.R. 179546 ................................................................................................ 49 South Davao Development Co. vs Gamo (2009) G.R. 171814 ................................................................................................ 53 Jethro Intelligence & Security Corp., vs Secretary of DOLE (2009) G.R. 172537.................................................................. 55 Traveno et al., vs Bobongon Banana Growers Multi-purpose Coop et al., (2009) G.R. 164205 ......................................... 56 Aliviado vs Procter and Gamble Phils. Inc., et al (2010) G.R. 160506 .................................................................................... 56 DBP vs NLRC (1995) G.R. 108031 .............................................................................................................................................. 59 Batong Buhay Gold Mines vs Dela Serna (1999) G.R. 86963 .................................................................................................. 62 Barayoga vs Asset Privatization Trust (2005) G.R. 160073 ..................................................................................................... 65 Ma. Cecelia Timbal LlB 2 Rm 402

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Philippine Airlines vs Zamora (2007) G.R. 166996 .................................................................................................................. 69 Philippine Airlines vs Philippine Airlines Employees Association (2007) G.R. 142399 ..................................................... 70 Castillo vs Uniwide Warehouse Club (2010) G.R. 169725 ...................................................................................................... 71 Bank of the Philippine Islands vs NLRC (1989) G.R. 69746-47 .............................................................................................. 72 Traders Royal Bank Employees Union vs NLRC (1997) G.R. 120592 ................................................................................... 74 Brahm Industries vs NLRC (1997) G.R. 118853 ........................................................................................................................ 78 Heirs of Aniban vs NLRC (1997) G.R. 155034 .......................................................................................................................... 79 Sapio vs Undaloc Construcion et al., (2008) G.R. 155034 ........................................................................................................ 80 Atty. Ortiz vs San Miguel Corp., (2008) G.R. 151983-84 ......................................................................................................... 81 Masmud vs NLRC (2009) G.R. 183385 ...................................................................................................................................... 84 Bernardo vs. NLRC (1999) G.R. 122917 ..................................................................................................................................... 85 Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978 .................................................................................... 89 Del Monte Phils vs Velasco (2007) G.R. 153447........................................................................................................................ 90 Ultra Villa Food Haus vs, Geniston (1999) G.R. 120473 .......................................................................................................... 91 Remington Industrial Sales Corp,. vs Castaneda (2007) G.R. 153477 .................................................................................... 93 Tolosa vs NLRC (2008) G.R. 149578 .......................................................................................................................................... 98 Phil Global Communications Inc vs de Vera (2005) G.R. 157214 ......................................................................................... 100 U-Bix Corp. vs Bandiola (2007) G.R. 157168 ........................................................................................................................... 101 Escasinas et al., vs Shangri-la Mactan Island Resort et al., (2009) G.R. 178827 .................................................................. 107 ISS Indochina Corp., vs Ferrer (2005) G.R. 156381................................................................................................................. 110 People vs Capt. Gasacao (2005) G.R. 168449 .......................................................................................................................... 111 Acua vs CA (2006) G.R. 159832 .............................................................................................................................................. 114 Asian International Manpower Services vs CA (2006) G.R. 169652 .................................................................................... 116 Sim vs. NLRC (2007) G.R. 157376 ............................................................................................................................................ 119 Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195 ................................................................................................... 122 Masangcay vs Trans-Global Maritime Agency Inc., (2008) G.R. 172800............................................................................. 123 Magsaysay Maritime Corp., et al., vs Velasquez, et al., (2008) G.R. 179802 ....................................................................... 124 Serrano vs Gallant Maritime Services et al., (2009) G.R. 167614 .......................................................................................... 125 People vs Domingo (2009) G.R. 181475 ................................................................................................................................... 127 Great Southern Maritime Services Corp vs Surigao (2009) G.R. 183646 .......................................................................... 128

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Philippine Bank of Communications vs NLRC (1986) G.R. L-66598

FACTS: Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to provide "Temporary Services" to petitioner Consisting of the "temporary services" of eleven (11) messengers. The contract period is described as being "from January 1976." The petitioner in truth undertook to pay a "daily service rate of P18, " on a per person basis. Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and alongside other people also rendering services to the bank. There was some question as to when Ricardo Orpiada commenced rendering services to the bank. On or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's services "were no longer needed." Orpiada instituted a complaint in the Department of Labor against the petitioner for illegal dismissal and failure to pay the 13th month pay provided for in Presidential Decree No. 851. The Office of the Regional Director, Regional Office No. IV of the Department of Labor, issued an order dismissing Orpiada's complaint for failure of Mr. Orpiada to show the existence of an employer-employee relationship between the bank and himself. The Labor Arbiter Dogelio rendered a decision ordering the reinstatement of complainant to the same or equivalent position with full back wages and to pay the latter's 13th month pay for the year 1976. On 26 October 1977, the bank appealed the decision of the Labor Arbiter to the respondent NLRC. NLRC promulgated its decision affirming the award of the Labor Arbiter. ISSUES: 1. What is the appropriate characterization of the relationship between the bank and (CESI) 2. Whether or not that relationship is one of employer and job (independent) contractor or one of employer and "labor-only" contractor; HELD: Articles 106 and 107 of the Labor Code of the Philippines (Presidential Decree No. 442, as amended) provides as follows: ART. 106. Contractor or sub-contractor. 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 in this Code. In the event that the contractor or sub-contractor 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 sub-contructor 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 The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make 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, to prevent any violation or circumvention of any provisions 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 such person 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.

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ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, part, nership association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. (Emphasis supplied) Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the performance of work for the employer, does not thereby create an employeremployes relationship between himself and the employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's employees. The law itself, in other words, establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them. A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e "the person or intermediary" is considered "merely as an agent of the employer. " The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. Thus, where "labor only" contracting exists in a given case, the statute itself implies or establishes an employeremployee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. " The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code. Both the petitioner bank and (CESI) have insisted that (CESI) was not a "labor only" contractor. Section 9 of Rule VIII of Book III entitled "Conditions of Employment," of the Omnibus Rules Implementing the Labor Code provides as follows: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shag be deemed to be engaged in labor-only contracting where such person: (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 to the principal business or operations of the c workers are habitually employed, (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary 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 (c) For cases not file under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. (Emphasis supplied) In contrast, job contracting-contracting out a particular job to an independent contractor is defined by the Implementing Rules as follows:

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Sec. 8. Job contracting. There is job contracting 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. (Emphasis supplied) The definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be read in conjunction with the definition of job contracting given in Section 8 of the same Rules. CESI is not a parcel delivery company: as its name indicates, it is a recruitment and placement corporation placing bodies, as it were, in different client companies for longer or shorter periods of time. There is, of course, nothing illegal about hiring persons to carry out "a specific project or undertaking the completion or termination of which was 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" We hold that, in the circumstances 'instances of this case, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect Ricardo Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this it is not necessary to determine here.

Neri vs NLRC (1993) 224 SCRA 717 FACTS: Petitioners instituted complaints against FEBTC and BCC to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service. They contended that BCC in engaged in labor-only contracting because it failed to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of its business. Moreover, petitioners argue that they perform duties which are directly related to the principal business or operation of FEBTC. ISSUE: Whether or not BCC was engaged in labor-only contracting. HELD: It is well-settled that there is labor-only contracting where: (a) 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, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. This fact was both determined by the Labor Arbiter and the NLRC as BCC had a capital stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized venture and cannot be deemed engaged in labor-only contracting. Ma. Cecelia Timbal LlB 2 Rm 402

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While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. The law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or" instead of and. Having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank. On the other hand, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. These services range from janitorial, security and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer.

Filipinas Synthetic Fiber Corp., vs NLRC (1996) 257 SCRA 336 FACTS: Filipinas Synthetic Fiber Corporation (FILSYN), a domestic corporation engaged in the manufacture of polyester fiber, contracted with De Lima Trading and General Services (DE LIMA) for the performance of specific janitorial services at the former's plant in Pursuant to the agreement Felipe Loterte, was deployed at FILSYN to take care of the plants and maintain general cleanliness around the premises. Loterte sued FILSYN and DE LIMA for illegal dismissal, underpayment of wages, non-payment of legal holiday pay, service incentive leave pay and 13th month pay alleging that he was first assigned to perform janitorial work at FILSYN in 1981 by the La Saga General Services; that the La Saga was changed to DE LIMA on August 1991; that when a movement to demand increased wages and 13th month pay arose among the workers, he was accused of having posted in the bulletin board at FILSYN an article attributing to management a secret understanding to block the demand; and, for denying responsibility, his gate pass was unceremoniously cancelled was subsequently dismissed. ISSUE: Whether or not De Lima is an independent job contractor. HELD: Private respondent DE LIMA is an independent job contractor. Under the Labor Code, two (2) elements must exist for a finding of labor-only contracting: (a) 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 (b) the workers recruited and placed by such persons are performing activities directly related to the principal business of such employer. These two (2) elements do not exist in the instant case. As pointed out by petitioner, private respondent DE LIMA is a going concern duly registered with the Securities and Exchange Commission with substantial capitalization of P1,600,000.00, P400,000.00 of which is actually subscribed. 13 Hence, it cannot be considered as engaged in labor-only contracting being a highly capitalized venture. 14 Moreover, while the janitorial services performed by Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA may be considered directly related to the principal business of FILSYN which is the manufacture of polyester fiber, nevertheless, they are not necessary in its operation. On the contrary, they are merely incidental thereto, as opposed to being integral, without which production and

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company sales will not suffer. Judicial notice has already been taken of the general practice in private as well as in government institutions and industries of hiring janitorial services on an independent contractor basis. Consequently, DE LIMA being an independent job contractor, no direct employer-employee relationship exists between petitioner FILSYN and private respondent Felipe Loterte. With respect to its liability, however, petitioner cannot totally exculpate itself from the fact that respondent DE LIMA is an independent job contractor. Notwithstanding the lack of a direct employer-employee relationship between FILSYN and Felipe Loterte, theformer is still jointly and severally liable with respondent DE LIMA for Loterte's monetary claims under Art. 109 of the Labor Code explicitly provides every employer or indirect employer shall be Decision responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.

Maraquinot vs NLRC (1998) 284 SCRA 539 FACTS: Petitioner Alejandro Maraguinot, Jr. maintains that private respondents employed him as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00. He was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P539.00. Petitioner Paulino Enero, on his part, claims that private respondents employed him in as a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 then to P475.00. Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or director may assign. Petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in then refused to take him back when he reported for work. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal. On the other hand, private respondents assert that they contract persons called "producers" also referred to as "associate producers" 8 to "produce" or make movies for private respondents; and contend that petitioners are project employees of the association producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents. ISSUE: WON an employer-employee relationship existed between petitioners and private respondents or any one of private respondents. HELD: Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers Ma. Cecelia Timbal LlB 2 Rm 402

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must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none of these. Private respondents' evidence reveals that the moviemaking equipment are supplied to the producers and owned by VIVA. These include generators, cables and wooden platforms, cameras and "shooting equipment;" in fact, VIVA likewise owns the trucks used to transport the equipment. It is thus clear that the associate producer merely leases the equipment from VIVA. If private respondents insist that the associate producers are labor contractors, then these producers can only be "labor-only" contractors. As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an "available group of free-lance workers which includes the complainants Maraguinot and Enero." 24 And in their Memorandum, private respondents declared that the associate producer "hires the services of . . . 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly showed that the associate producers did not supply the workers required by the movie project. The relationship between VIVA and its producers or associate producers seems to be that of agency, as the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer. The employer-employee relationship between petitioners and VIVA can further be established by the "control test." These four elements are present here. VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the company." The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film. It may not be validly argued then that petitioners are actually subject to the movie director's control, and not VIVA's direction. The director merely instructs petitioners on how to better comply with VIVA's requirements to ensure that a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-file employees with control ultimately resting on the employer. Moreover, appointment slips 28 issued to all crew members state: During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management. The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top Management" of VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVA's control over petitioners. Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew members; moreover, it is VIVA's corporate name which appears on the heading of the appointment

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slip. What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is that petitioners are employees only of VIVA.

San Miguel vs Maerc Integrated Services (2003) G.R. 144627 FACTS: In a decision by the court, it Decision petitioner jointly and severally liable with MAERC for the payment of separation benefits and wage differential of 291 complainants. Petitioner reiterated that no employer- employee relationship exists between it and the complainants. And that MAERC is an independent contractor hence petitioner should not be Decision solidarily liable with it. It disputes this courts finding that MAERC solely engaged the services of complainants and exercised control over the complainants conduct; that no intervention or influence could have been extended by it in the selection or hiring of complainants or the majority of them had worked to the petitioner before it signed a contract with MAERC. ISSUE: WON employer- employee relationship exists between the parties. HELD: Petitioners contention must be rejected. While the continuity of service rendered by the workers to petitioner by itself does not signify an employer- employee relationship, it was Decision to be so considering the other circumstances present. More so, since the workers continued to work for petitioner without break from their former employer and then as employees of MAERC even before the latter was incorporated. The record adequately supports the fact that MAERC admitted recruiting workers for petitioner before its incorporation. Most importantly, petitioner refutes this Courts conclusion that petitioner exercised control over the workplace. It stresses that checkers assigned to the workplace did not stay there continuously to merit the conclusion that they maintained constant presence as Decision by the court. We disagree. While petitioners checkers may not have stayed the full eight hours in the workplace because they had to leave for their office to make their reports, their attendance need not be continuous to be considered constant and therefore an indication of control. We find in fact that they maintained sufficient presence at the workplace to be able to pinpoint the workers whose performance was not at par and to report who they are.

Manila Water Co., vs Pena (2004) G.R. 158255 FACTS: Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila. Under the Concession Agreement, petitioner undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter, while the employment of those not in the list was terminated. Private respondents, being contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless, petitioner engaged their services without written contract for three months. Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by petitioner to collect charges for the Balara Branch. Subsequently, most of the 121 collectors Ma. Cecelia Timbal LlB 2 Rm 402

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were asked by the petitioner to transfer to the First Classic Courier Services, a newly registered corporation. Only private respondents remained with ACGI. Private respondents filed a complaint for illegal dismissal and money claims against petitioner, contending that they were petitioners employees as all the methods and procedures of their collections were controlled by the latter. Petitioner on the other hand asserts that private respondents were employees of ACGI, an independent contractor. It maintained that it had no control and supervision over private respondents manner of performing their work except as to the results. Thus, petitioner did not have an employer-employee relationship with the private respondents, but only a service contractor-client relationship with ACGI. ISSUE: Whether or not ACGI is an independent contractor; HELD: ACGI is an independent contractor but a labor- only contractor. First, ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and other materials, to qualify as an independent contractor. While it has an authorized capital stock of P1,000,000.00, only P62,500.00 is actually paid-in, which cannot be considered substantial capitalization. The 121 collectors subscribed to four shares each and paid only the amount of P625.00 in order to comply with the incorporation requirements. Further, private respondents reported daily to the branch office of the petitioner because ACGI has no office or work premises. In fact, the corporate address of ACGI was the residence of its president, Mr. Herminio D. Pea. Moreover, in dealing with the consumers, private respondents used the receipts and identification cards issued by petitioner. Second, the work of the private respondents was directly related to the principal business or operation of the petitioner. Being in the business of providing water to the consumers in the East Zone, the collection of the charges therefore by private respondents for the petitioner can only be categorized as clearly related to, and in the pursuit of the latters business. Lastly, ACGI did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, petitioner. Prior to private respondents alleged employment with ACGI, they were already working for petitioner, subject to its rules and regulations in regard to the manner and method of performing their tasks. This form of control and supervision never changed although they were already under the seeming employ of ACGI. Petitioner issued memoranda regarding the billing methods and distribution of books to the collectors; it required private respondents to report daily and to remit their collections on the same day to the branch office or to deposit them with Bank of the Philippine Islands; it monitored strictly their attendance as when a collector cannot perform his daily collection, he must notify petitioner or the branch office in the morning of the day that he will be absent; and although it was ACGI which ultimately disciplined private respondents, the penalty to be imposed was dictated by petitioner as shown in the letters it sent to ACGI specifying the penalties to be meted on the erring private respondents. These are indications that ACGI was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that ACGI was not an independent contractor since it did not carry a distinct business free from the control and supervision of petitioner. Under this factual milieu, there is no doubt that ACGI was engaged in labor-only contracting, and as such, is considered merely an agent of the petitioner. In labor-only contracting, the statute creates an employer-employee 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. Since ACGI is only a labor-only contractor, the workers it supplied should be considered as employees of the petitioner.

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NHA vs Maceda Security Agency (2005) G.R. 163448 FACTS: On September 17, 1996, respondent MASADA Security Agency entered into a 1-year contract to provide security services to the various offices and installations of NFA. Upon expiration of said contract, the parties extended the effectivity thereof on a monthly basis under same terms. Subsequently, the RTWPB issued several wage orders increasing the daily wage rate. Accordingly, respondent requested NFA for a corresponding upward adjustment in the monthly contract rate consisting of the increases in the daily minimum wage of the security guards as well as increases in their overtime pay, holiday pay and rest day pay. It also claimed SSS and Pag- ibig Premiums. NFA however granted only with respect to the increase in the daily wage by multiplying the amount of the mandated increase by 30 days and denied the others. Respondent now filed a case with the RTC for recovery of sum of money against NFA, seeking reimbursement for the other wage- related benefits. NFA however denied that respondent paid the security guards their wage related benefits and that respondent cannot demand an adjustment on said- related benefits because it is bound by their contract expressly limiting NFAs obligation to pay onlY the increment in their daily wage. ISSUES: (1) (2) Whether or not respondent is entitled to recover from NFA the wage related benefits of the security guards; Whether or not respondent the liability of the principals in service contracts under Section 6 of RA 6727 and

the wage orders issued by the RTWPB is limited only to the increment in the minimum wage; HELD: Payment of the increases in the wage rate of workers is ordinarily shouldered by the employer. RA 6727 Section 6 however expressly lodged said obligation to the principals or indirect employers in construction projects and estalblishments providing security, janitorial and similar services , the prescribed increases in the wage rates of the workers shall be borne by the principals or clients of the service contractors and the contract shall be deemed amended accordingly. The term wage in RA 6727 pertained to no other than the statutory minimum which is defined as the lowest wage rate fixed by law other than an employer can pay his worker. The presumption is that lawmakers are aware that wage means the statutory minimum wage. If their intention was to extend the obligation of the principals in service contracts to the payment of the increment in the other benefits and remuneration of workers, it would be expressly specified. At any rate, however, the interest of the employees will not be adversely affected if the obligation of the principals under the subject provision will be limited to the increase in the statutory minimum wage. This is so because all remuneration and benefits other than the increased statutory minimum wage should be shouldered and paid by the employer or service contractor to the workers concerned. Having discharged its obligation to the respondent, NFA no longer has the cause of action. The latters complaint for collection of remuneration and b enefits other than the increased minimum wage rate should therefore be dismissed.

Abella vs PLDT (2005) G.R. 159469 Facts:

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Respondent Peoples Security Incorporated entered into an agreement with the PLDT to provide the latter with such number of qualified uniformed and properly armed security guards for the purpose of guarding and protecting PLDTs installations and properties from theft, pilferage, intentional damage, trespass or other unlawful acts. Under the agreement, it was expressly provided that there shall be no employer-employee relationship between the PLDT and the security guards, which may be supplied to it by PSI, and that the latter shall have the entire charge, control and supervision over the work and services of the supplied security guards. It was likewise stipulated therein that PSI shall also have the exclusive authority to select, engage, and discharge its security guards, with full control over their wages, salaries or compensation. Consequently, respondent PSI deployed security guards to the PLDT. The sixty-five (65) security guards supplied by respondent PSI filed a Complaint for regularization against the PLDT alleging that petitioner security guards have been employed by the company through the years and that PSI acted as the middleman in the payment of the minimum pay to the security guards, but no premium for work rendered beyond eight hours was paid to them nor were they paid their 13th month pay. In sum, the Complaint states that inasmuch as the complainants are under the direct control and supervision of PLDT. Hence they should be considered as regular employees by the latter. Issue: WON an employer- employee relationship exists between petitioners and respondent PLDT. Held: We considered the following factors in considering the existence of an employer-employee relationship: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employees conduct. Testimonies during the trial reveal that interviews and evaluation were conducted by PLDT to ensure that the standards it set are met by the security guards. In fact, PLDT rarely failed to accept security guards referred to by PSI but on account of height deficiency. The referral is nothing but for possible assignment in a designated client which has the inherent prerogative to accept and reject the assignee for justifiable grounds or even arbitrarily. We are thus convinced that the employer-employee relationship is deemed perfected even before the posting of the complainants with the PLDT, as assignment only comes after employment. PSI is a legitimate job contractor pursuant to Section 8, Rule VII, Book II of the Omnibus Rules Implementing the Labor Code. It is a registered corporation duly licensed by the Philippine National Police to engage in security business. It has substantial capital and investment in the form of guns, ammunitions, communication equipments, vehicles, office equipments like computer, typewriters, photocopying machines, etc., and above all, it is servicing clients other than PLDT like PCIBank, Crown Triumph, and Philippine Cable, among others. Here, the security guards which PSI had assigned to PLDT are already the formers employees prior to assignment and if the assigned guards to PLDT are rejected by PLDT for reasons germane to the security agreement, then the rejected or terminated guard may still be assigned to other clients of PSI as in the case of Jonathan Daguno who was posted at PLDT on 21 February 1996 but was subsequently relieved therefrom and assigned at PCIBank Makati Square effective 10 May 1996. Therefore, the evidence as it stands is at odds with petitioners assertion that PSI is an in -house agency of PLDT so as to call for a piercing of veil of corporate identity It is PSI that determined and paid the petitioners wages, salaries, and compensation. As elucidated by the Labor Arbiter, petitioners witness testified that his wages were collected and withdrawn at the office of PSI and PLDT pays PSI for the security services on a lump-sum basis and that the wages of complainants are only a portion of the total sum. The signature of the PLDT supervisor in the Daily Time Records does not ipso facto make PLDT the employer of complainants inasmuch as the Labor Arbiter had found that the record is replete with evidence showing that some of the Daily Time Records do not bear the signature of a PLDT supervisor yet no complaint was lodged for nonpayment of the guards wages evidencing that the signature of the PLDTs supe rvisor is not a condition Ma. Cecelia Timbal LlB 2 Rm 402

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precedent for the payment of wages of the guards. Notably, it was not disputed that complainants enjoy the benefits and incentives of employees of PSI and that they are reported as employees of PSI with the SSS. Lastly, petitioners capitalize on the delinquency reports prepared by PLDT personnel against some of the security guards as well as certificates of participation in civil disturbance course, certificates of attendance in first aid training, certificate of completion in fire brigade training seminar and certificate of completion on restricted land mobile radio telephone operation to show that the petitioners are under the direct control and supervision of PLDT and that the latter has, in fact, the power to dismiss them. The Labor Arbiter found from the evidence that the delinquency reports were nothing but reminders of the infractions committed by the petitioners while on duty which serve as basis for PLDT to recommend the termination of the concerned security guard from PLDT. As already adverted to earlier, termination of services from PLDT did not ipso facto mean dismissal from PSI inasmuch as some of those pulled out from PLDT were merely detailed at the other clients of PSI as in the case of Jonathan Daguno, who was merely transferred to PCIBank Makati.

San Miguel vs Aballa (2005) G.R. 149011 Facts: Petitioner San Miguel Corporation entered into a one-year contract with the Sunflower Multi-Purpose Cooperative. Sunflower undertook and agreed to perform and provide the company on a non exclusive basis for a period of one year the following: Messengerial, Janitorial, Shrimp harvesting and Sanitation. Pursuant to the contract, Sunflower engaged private respondents to render services at SMCs Bacolod Shrimp Processing Pla nt. The contract was renewed and private respondentd continued to perform their tasks. Later, private respondents filed a complaint praying to be declared as regular employees of SMC, with claims of recovery of all benefits and privileges. Issue: Whether or not Sunflower is engaged in labor only contracting. Held: The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work. In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal 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 principal employer is not responsible for any claim made by the employees. In labor-only contracting, the statute creates an employer-employee 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. The following would show that sunflower is engaged in labor only contracting: What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. It is gathered that the lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC.

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Sunflower, during the existence of its service contract with respondent SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC. And from the job description provided by SMC itself, the work assigned to private respondents was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that they are considered directly related to the principal business of the employer has been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. Therefore since Sunflower is labor only contracting, there is the existence of an employer- employee relationship between SMC and private respondents.

Manila Electric Co., vs Benamira (2005) G.R. 145271 Facts: The individual respondents are licensed security guards formerly employed by Peoples Security, Inc. and deployed as such at MERALCOs head office. The security service agreement between PSI and MERALCO was terminated. Thereafter, 56 of PSIs security guards, including herein eight individual respondents, filed a complaint for unpaid monetary benefits against PSI and MERALCO. Meanwhile, the security service agreement between respondent Armed Security & Detective Agency, Inc., (ASDAI) and MERALCO took effect. Subsequently, the individual respondents were absorbed by ASDAI and retained at MERALCOs head office. Later, the security service agreement between respondent Advance Forces Security & Investigation Services, Inc. (AFSISI) and MERALCO took effect, terminating the previous security service agreement with ASDAI. The individual respondents amended their complaint to implead AFSISI as party respondent.

Issue: Whether or not the individual respondents are employees of MERALCO. Held: No. In this case, the terms and conditions embodied in the security service agreement between MERALCO and ASDAI expressly recognized ASDAI as the employer of individual respondents. Under the security service agreement, it was ASDAI which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to MERALCO according to the number agreed upon; (c) provided the uniform, firearms and ammunition, nightsticks, flashlights, raincoats and other paraphernalia of the security guards; (d) paid them salaries or wages; and, (e) disciplined and supervised them or principally controlled their conduct. The agreement even explicitly provided that *n+othing herein contained shall be understood to make the security guards under this Agreement, employees of the COMPANY, it being clearly understood that such security guards shall be considered as they are, employees of the AGENCY alone. Clearly, the individual responden ts are the employees of ASDAI. Neither is the stipulation that the agency cannot pull out any security guard from MERALCO without its consent an indication of control. It is simply a security clause designed to prevent the agency from unilaterally removing its security guards from their assigned posts at MERALCOs premises to the latters detriment.

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The clause that MERALCO has the right at all times to inspect the guards of the agency detailed in its premises is likewise not indicative of control as it is not a unilateral right. The agreement provides that the agency is principally mandated to conduct inspections, without prejudice to MERALCOs right to conduct its own inspections. Moreover, ASDAI and AFSISI are not labor-only contractors. There is labor only contract when the person acting as contractor is considered merely as an agent or intermediary of the principal who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. On the other hand, job (independent) contracting is present if the following conditions are met: (a) 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 to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. Given the above distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in job contracting. The individual respondents can not be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCOs principal business, which is the distribution of electricity. Furthermore, the fact that the individual respondents filed their claim for unpaid monetary benefits against ASDAI is a clear indication that the individual respondents acknowledge that ASDAI is their employer. The fact that there is no actual and direct employer-employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents. When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it, MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code.

DOLE Philppines vs Esteva (2006) G.R. 161115 Facts: Petitioner is a corporation duly organized and existing in accordance with Philippine laws, engaged principally in the production and processing of pineapple for the export market. Its plantation is located in Polomolok, South Cotabato. Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines, and dulyregistered with the Cooperative Development Authority (CDA) on 6 January 1993. Members of CAMPCO live in communities surrounding petitioner's plantation and are relatives of petitioner's employees. On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service Contract referred to petitioner as "the Company," while CAMPCO was "the Contractor." Pursuant to the foregoing Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner Ma. Cecelia Timbal LlB 2 Rm 402

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at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner. The Task Force submitted a report on 3 June 1993 identifying six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. The DOLE Regional Office No. XI held a conference on 18 August 1993 wherein the representatives of the cooperatives named by the Task Force were given the opportunity to explain the nature of their activities in relation to petitioner. On 19 October 1993, Director Parel of DOLE Regional Office No. XI issued an Order, directing the cooperatives to cease and desist from engaging in labor-only contracting. On 15 September 1994, DOLE Undersecretary Cresencio B. Trajano, by the authority of the DOLE Secretary, issued an Order dismissing the appeal of the Cooperatives. Respondents started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were still working for petitioner, others were put on "stay home status" on varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. Together, respondents filed a Complaint, on 19 December 1996, with the National Labor Relations Commission (NLRC), for illegal dismissal, regularization, wage differentials, damages and attorney's fees. Respondents thus argued that they should be considered regular employees of petitioner given that: (1) they were performing jobs that were usually necessary and desirable in the usual business of petitioner; (2) petitioner exercised control over respondents, not only as to the results, but also as to the manner by which they performed their assigned tasks; and (3) CAMPCO, a labor-only contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents asserted that they were entitled to security of tenure and those placed on "stay home status" for more than six months had been constructively and illegally dismissed. Respondents further claimed entitlement to wage differential, moral damages, and attorney's fees. Petitioner, in its Position Paper filed before the NLRC, denied that respondents were its employees. Petitioner explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, in which petitioner was accused of preventing the regularization of such workers. The Labor Arbiter who heard the case, rendered his Decision 18 on 24 June 1994 declaring that these workers fell squarely within the concept of seasonal workers as envisaged by Article 280 of the Labor Code, as amended, who were hired by petitioner in good faith and in consonance with sound business practice; and consequently, dismissing the complaint against petitioner. The NLRC, in its Resolution, 19 dated 14 March 1995, affirmed in toto the Labor Arbiter's Decision and further found that the workers were validly and legally engaged by petitioner for "term employment," wherein the parties agreed to a fixed period of employment, knowingly and voluntarily, without any force, duress or improper pressure being brought to bear upon the employees and absent any other circumstance vitiating their consent. The said NLRC Resolution became final and executory on 18 June 1996. Despite the favorable ruling of both the Labor Arbiter and the NLRC, petitioner decided to discontinue such employment arrangement. Yet, the problem of petitioner as to shortage of workforce due to the peaks in operation, work backlogs, absenteeism, and excessive leaves, persisted.

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Petitioner then found a solution in the engagement of cooperatives such as CAMPCO to provide the necessary additional services. Petitioner contended that respondents were owners-members of CAMPCO; that CAMPCO was a duly-organized and registered cooperative which had already grown into a multi-million enterprise; that CAMPCO was engaged in legitimate job-contracting with its own owners-members rendering the contract work; that under the express terms and conditions of the Service Contract executed between petitioner (the principal) and CAMPCO (the contractor), the latter shall undertake the contract work on its own account, under its own responsibility, and according to its own manner and method free from the control and direction of the petitioner in all matters connected with the performance of the work, except as to the result thereof; and since CAMPCO held itself out to petitioner as a legitimate job contractor, respondents, as owners-members of CAMPCO, were estopped from denying or refuting the same. Petitioner further averred that Department Order No. 10, amending the rules implementing Books III and VI of the Labor Code, as amended, promulgated by the DOLE on 30 May 1997, explicitly recognized the arrangement between petitioner and CAMPCO as permissible contracting and subcontracting. The LA and the NLRC decided the case in favor of the Petitioner Company and against the complaint of the private respondents (employees). On appeal by certiorari, the CA reversed the rulings of the LA and NLRC. Thus, the petitioner Company appealed to the SC for Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil Procedure, questioning the decision of the Court of Appeals concerning the herein assailed issues.

Issues: 1. 2. Whether or not department order no. 10, series of 1997 is the applicable regulation in this case. Whether or not there should be a retroactive application to department order no. 3, series of 2001. Whether or not its retroactive application violated the constitutional provision against impairment of contracts and deprived petitioner of the due process of the law. Held: The second assignment of error delves into the significance and application to the case at bar of the two department orders issued by DOLE. Department Order No. 10, series of 1997, amended the implementing rules of Books III and VI of the Labor Code, as amended. Under this particular DOLE department order, the arrangement between petitioner and CAMPCO would qualify as permissible contracting. Department Order No. 3, series of 2001, revoked Department Order No. 10, series of 1997, and reiterated the prohibition on labor-only contracting. Attention is called to the fact that the acts complained of by the respondents occurred well before the issuance of the two DOLE department orders in 1997 and 2001. The Service Contract between DOLE and CAMPCO was executed on 17 August 1993. Respondents started working for petitioner sometime in 1993 and 1994. While some of them continued to work for petitioner, at least until the filing of the Complaint, others were put on "stay home status" at various times in 1994, 1995, and 1996. Respondents filed their Complaint with the NLRC on 19 December 1996. A basic rule observed in this jurisdiction is that no statute, decree, ordinance, rule or regulation shall be given retrospective effect unless explicitly stated. Since there is no provision at all in the DOLE department orders that expressly allowed their retroactive application, then the general rule should be followed, and the said orders should be applied only prospectively.

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Which now brings this Court to the question as to what was the prevailing rule on labor-only contracting from 1993 to 1996, the period when the occurrences subject of the Complaint before the NLRC took place. Article 106 of the Labor Code, as amended, permits legitimate job contracting, but prohibits labor-only contracting. The said provision reads ART. 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. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make 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, to prevent any violation or circumvention of any provision 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 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. To implement the foregoing provision of the Labor Code, as amended, Sections 8 and 9, Rule VIII, Book III of the implementing rules, in force since 1976 and prior to their amendment by DOLE Department Order No. 10, series of 1997, provided as follows Sec. 8. (1) Job contracting. There is job contracting permissible under the Code if the following conditions are met; 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. Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be

deemed to be engaged in labor-only contracting where such person: (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 persons are performing activities which are directly related to the

principal business or operations of the employer in which workers are habitually employed.

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(b)

Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be

considered merely as an agent or intermediary 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. (c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders

whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. Since these statutory and regulatory provisions were the ones in force during the years in question, then it was in consideration of the same that DOLE Regional Director Parel and DOLE Undersecretary Trajano issued their Orders on 19 September 1993 and 15 September 1994, respectively, both finding that CAMPCO was engaged in labor-only contracting. Petitioner, in its third assignment of error, questions the weight that the Court of Appeals gave these orders in its Decision, dated 20 May 2002, and Amended Decision, dated 27 November 2003.

San Miguel vs NLRC (2006) G.R. 147566 Facts: On 16 October 1990, Rafael M. Maliksi filed a complaint against the San Miguel Corporation-Magnolia Division, herein referred to as SMC and Philippine Software Services and Education Center herein referred to as PHILSSEC to compel the said respondents to recognize him as a regular employee. He amended the complaint on 12 November 1990 to include the charge of illegal dismissal because his services were terminated on 31 October 1990. The complainant's employment record indicates that he rendered service with Lipercon Services from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division, then from July 1983 to April 1985 with Skillpower, Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower, Inc. as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. The complainant considered himself as an employee of SMCMagnolia. Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-only contractors and any one of which had never been his employer. His dismissal, according to him, was in retaliation for his filing of the complaint for regularization in service. His dismissal was illegal there being no just cause for the action. He was not accorded due process neither was his dismissal reported to the Department of Labor and Employment. PHILSSEC disclaimed liability. As an entity catering (sic) computer systems and program for business enterprises, it has contracted with SMC-Magnolia to computerize the latter's manual accounting reporting systems of its provincial sales. PHILSSEC then conducted a three phase analysis of SMC-Magnolia set up: first the computer needs of the firm was (sic) determined; then, the development of computer systems or program suitable; and, finally, set up the systems and train the employees to operate the same. In all these phases, PHILSSEC uses its computer system and technology and provided the necessary manpower to compliment the transfer of the technology to SMC-Magnolia. Complainant Maliksi was one of those employed by PHILSSEC whose principal function was the manual control of data needed during the computerization. Like all assigned to the project, the complainant's work was controlled by PHILSSEC supervisors, his salary paid by the agency and he reported directly to PHILSSEC. The computerization project was completed on 31 October 1990, and so, the complainant was terminated on the said date.

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SMC, on the other hand, submitted its position. In the contract SMC entered with PHILSSEC, the latter undertook to set up the computerization of the provincial sales reporting system of Magnolia Division. To carry out the task, PHILSSEC utilized 3 computer programmers and the rest were data encoders. The complainant being one of the compliments (sic) performed the following functions. SMC likewise contends that PHILSSEC exercised exclusive managerial prerogative over the complainant as to hiring, payment of salary, dismissal and most importantly, the control over his work. SMC was interested only in the result of the work specified in the contract but not as to the means and methods of accomplishing the same. Moreover, PHILSSEC has substantial capital of its own. It has an IBM system, 3 computers, 17 IBM or IBM-compatible computers; it has a building where the computer training center and main office are located. What it markets to clients are computer programs and training systems on computer technology and not the usual labor or manpower supply to establishment concerns. Moreover, what PHILSSEC set up employing the complainant, among others, has no relation to the principal business of SMC, which is food and beverage. It was a single relationship between the people utilized by PHILSSEC and SMC. . . Issue: Whether or not private respondent Maliksi is an employee of SMC? Held: Yes. SMC concedes that Maliksi, before his employment with PHILSSEC, worked in SMC from November 1988 to April 1990, but as employee of Skillpower 7 and that he was previously assigned to SMC between 1981 up to February 1985, "for periods spread apart." The Labor Arbiter found, as earlier stated, that Maliksi rendered service with Lipercon from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division; from July 1983 to April 1985 with Skillpower as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. In all, it appears that, while under the employ of either Lipercon or Skillpower, Maliksi has undisputedly rendered service with SMC for at least three years and seven months. The Court takes judicial notice of the fact that Lipercon and Skillpower were declared to be labor-only contractors, providing as they do manpower services to the public for a fee. The existence of an employer-employee relationship is factual and we give due deference to the factual findings of both the NLRC and the CA that an employer-employee relationship existed between SMC (or its subsidiaries) and Maliksi. Indeed, having served SMC for an aggregate period of more than three (3) years through employment contracts with these two labor contractors, Maliksi should be considered as SMC's regular employee. The hard fact is that he was hired and re-hired by SMC to perform administrative and clerical work that was necessary to SMC's business on a daily basis. It is worth noting that, except for the computerization project of PHILSSEC, petitioner did not make any insinuation at all that the services of Maliksi with SMC was project-related such that an employment contract with Lipercon and Skillpower was necessary. We find respondent Maliksi to be similarly situated with those of the complainants in Madriaga. Indeed, Lipercon and Skillpower have figured in not just a few of our decisions, so much so that we are inclined to believe that these two were involved in labor-only contracting with respect to Maliksi. We hold that the finding of the NLRC and the CA as to SMC's resorting to labor-only contracting is entitled to consideration in its full weight. With respect to PHILSSEC, there was no need for Maliksi to be employed under the former's computerization program to be considered a regular employee of SMC at the time. Moreover, SMC itself admits that Maliksi's work under the computerization program did "not require the operation of a computer system, such as the software program being developed by PHILSSEC." Given this admission, we are simply at a loss to understand why Maliksi Ma. Cecelia Timbal LlB 2 Rm 402

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should be included in the computerization project as a project employee. Not being a computer expert, Maliksi's inclusion in the project was uncalled for. To our mind, his placement in the project was for the purpose of circumventing labor laws. The evidence shows that immediately before he entered the PHILSSEC project in October 1989, Maliksi was fresh out of his employment with SMC (through Skillpower) as acting clerk assigned to SMCMagnolia Finance (from October 1988 to 1989). Maliksi's work under the PHILSSEC project was mainly administrative in nature and necessary to the development of SMC's business. These were: a. b. c. d. e. posting manually the daily account balances in the work set; fitting the daily totals into the monthly totals; comparing the manual totals with the computer generated totals; locating the differences between the totals; and, adjusting and correcting errors.

Simply put, the data gathered by SMC on a daily basis through Maliksi's work would be submitted for analysis and evaluation, thereby allowing SMC to make the necessary business decisions that would enable it to market its products better, or monitor its sales and collection with efficiency. Without the data gatherer or encoder, no analysis could occur. SMC would then, for the most part, be kept in the dark. As to the petitioner's second assigned error, we hold that there is no need to resolve the present case under the principle that all doubts should be resolved in favor of the workingman. The perceived doubt does not obtain in the first place. We understand Maliksi's desperation in making his point clear to SMC, which unduly refuses to acknowledge his status as a regular employee. Instead, he was juggled from one employment contract to another in a continuous bid to circumvent labor laws. The act of hiring and re-hiring workers over a period of time without considering them as regular employees evidences bad faith on the part of the employer. Where, from the circumstances, it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, the policy, agreement or practice should be struck down as contrary to public policy, morals, good customs or public order. In point of law, any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall be liable for the damage. Ways and means contrived by employers to countermand labor laws granting regular employment status to their workers are numerous and long. For instance, they toss the poor workers from one job contractor to another, make them go through endless applications, lining up, paperwork, documentation, and physical examinations; make them sign five- or ten-month-only job contracts, yet re-hire them after brief "rest periods," but not after requiring them to go through the whole application and selection process once again; prepare and have them sign waivers, quitclaims, and the like; refuse to issue them identification cards, receipts or any other concrete proof of employment or documentary proof of payment of their salaries; fail to enroll them for entitlement to social security and other benefits; give them positions, titles or designations that connote short-term employment. Others are more creative: they set up "distributors" or "dealers" which are, in reality, shell or dummy companies. In this manner, the mother company avoids the employer-employee relations, and is thus shielded from liability from employee claims in case of illegal dismissal, closure, unfair labor practices and the like. In those instances, the poor Ma. Cecelia Timbal LlB 2 Rm 402

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employees, finding the shell or dummy company to be without assets, often end up confused and without recourse as to whom to run after. They sue the mother company which conveniently sets up the defense of absence of employer-employee relations. In San Miguel Corporation v. MAERC Integrated Services, Inc., we took note of the practice of hiring employees through labor contractors that catered exclusively to the employment needs of SMC or its divisions or other specific business interests, such that after the specific SMC business or division ceases to do business, the labor contractor likewise ceases its operations. The contrivances may be many and the schemes ingenious and imaginative. But this Court will not hesitate to put pen to a line and defend the worker's right to be secure in his (or her) proprietary right to regular employment and his right to a secure employment, viz, one that is free from fear and doubt, that anytime he could be removed, retrenched, his contract not renewed or he might not be re-hired. The ramifications may seem trivial, but we cannot allow the ordinary Filipino worker's right to tenurial security to be put in jeopardy by recurrent but abhorrent practices that threaten the very lives of those that depend on him. Considering, however, the supervening event that SMC's Magnolia Division has been acquired by another entity, it appears that private respondent's reinstatement is no longer feasible. Instead, he should be awarded separation pay as an alternative. Likewise, owing to petitioner's bad faith, it should be held liable to pay damages for causing undue injury and inconvenience to the private respondent in its contractual hiring-firing-rehiring scheme.

Eparwa vs Liceo (2006) G.R. 150402 Facts: On 1 December 1997, Eparwa and LDCU, through their representatives, entered into a Contract for Security Services. On 21 December 1998, 11 security guards ("security guards") whom Eparwa assigned to LDCU from 1 December 1997 to 30 November 1998 filed a complaint before the National Labor Relations Commission's (NLRC) Regional Arbitration Branch No. 10 in Cagayan de Oro City. Docketed as NLRC-RABX Case No. 10-01-00102-99, the complaint was filed against both Eparwa and LDCU for underpayment of salary, legal holiday pay, 13th month pay, rest day, service incentive leave, night shift differential, overtime pay, and payment for attorney's fees. LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards. In its decision dated 18 August 1999, the Labor Arbiter found that the security guards are entitled to wage differentials and premium for holiday and rest day work. The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code. LDCU filed an appeal before the NLRC. LDCU agreed with the Labor Arbiter's decision on the security guards' entitlement to salary differential but challenged the propriety of the amount of the award. LDCU alleged that security guards not similarly situated were granted uniform monetary awards and that the decision did not include the basis of the computation of the amount of the award. Eparwa also filed an appeal before the NLRC. For its part, Eparwa questioned its liability for the security guards' claims and the awarded cross-claim amounts. The Fifth Division of the NLRC resolved Eparwa and LDCU's separate appeals in its Resolution 7 dated 19 January 2000. The NLRC found that the security guards are entitled to wage differentials and premium for holiday and rest day work. Although the NLRC held Eparwa and LDCU solidarily liable for the wage differentials and premium for holiday and rest day work, the NLRC did not require Eparwa to reimburse LDCU for its payments to the security Ma. Cecelia Timbal LlB 2 Rm 402

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guards. The NLRC also ordered the recomputation of the monetary awards according to the dates actually worked by each security guard. Eparwa and LDCU again filed separate motions for partial reconsideration of the 19 January 2000 NLRC Resolution. LDCU questioned the NLRC's deletion of LDCU's entitlement to reimbursement by Eparwa. Eparwa, on the other hand, prayed that LDCU be made to reimburse Eparwa for whatever amount it may pay to the security guards. Issue: Is LDCU alone ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay? Held: For the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. This is the import of Eparwa and LDCU's solidary liability. Creditors, such as the security guards, may collect from anyone of the solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors are liable for only half of the payment. LDCU's ultimate liability comes into play because of the expiration of the Contract for Security Services. There is no privity of contract between the security guards and LDCU, but LDCU's liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwa's liability to the security guards remains because of their employer-employee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any reimbursement from Eparwa for any payment it may make to the security guards. Eparwa and LDCU's Solidary Liability and LDCU's Ultimate Liability Articles 106, 107 and 109 of the Labor Code read: Art. 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. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make 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, to prevent any violation or circumvention of any provision 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 such persons are performing activities which are directly related to the principal business of the 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.

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Article 107.

Indirect employer. The provisions of the immediately preceding Article shall likewise apply to

any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every

employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. This Court's ruling in Eagle Security Agency, Inc. v. NLRC squarely applies to the present case. In Eagle, we ruled that: This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the contractor's employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers' performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution [See Article II Sec. 18 and Article XIII Sec. 3]. In the case at bar, it is beyond dispute that the security guards are the employees of EAGLE [See Article VII Sec. 2 of the Contract for Security Services; G.R. No. 81447, Rollo, p. 34]. That they were assigned to guard the premises of PTSI pursuant to the latter's contract with EAGLE and that neither of these two entities paid their wage and allowance increases under the subject wage orders are also admitted [See Labor Arbiter's Decision, p. 2; G.R. No. 81447, Rollo, p. 75]. Thus, the application of the aforecited provisions of the Labor Code on joint and several liability of the principal and contractor is appropriate [See Del Rosario & Sons Logging Enterprises, Inc. v. NLRC, G.R. No. 64204, May 31, 1985, 136 SCRA 669].

Escario vs NLRC (2000) G.R. 124055 Facts: Petitioners allege that they were employed by CMC as merchandisers. Among the tasks assigned to them were the withdrawing of stocks from the warehouse, the fixing of prices, price-tagging, displaying of merchandise, and the inventory of stocks. These were done under the control, management and supervision of CMC. The materials and equipment necessary in the performance of their job, such as price markers, gun taggers, toys, pentel pen, streamers and posters were provided by CMC. 'Their salaries were being paid by CMC. According to petitioners, the hiring, control and supervision of the workers and the payment of salaries, were all coursed by CMC through its agent D.L. Admark in order for CMC to avoid its liability under the law. CMC, on the other hand, denied the existence of an employer-employee relationship between petitioner, and itself. Rather, CMC contended that it is D.L. Admark who is the employer of the petitioners. While CMC is engaged in the manufacturing of food products and distribution of such to wholesalers and retailers, it is not allowed by law to engage in retail or direct sales to end consumers. It, however, hired independent job contractors such as D.L. Admark, to provide the necessary promotional activities for its product lines.

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For its part, D.L. Admark asserted that it is the employer of the petitioners. Its primary purpose is to carry on the business of advertising, promotion and publicity, the sales and merchandising of goods and services and conduct survey and opinion polls. As an independent contractor it serves several clients among which include Purefoods, Corona Supply, Splash Cosmetics and herein respondent California Marketing. On 7 February 1992, petitioners filed a case against CMC before the Labor Arbiter for the regularization of their employment status. On 29 July 1994, the Labor Arbiter rendered a decision finding that petitioners are the employees of CMC as they were engaged in activities that are necessary and desirable in the usual business or trade of CMC. In justifying its ruling, the Labor Arbiter cited the case of Tabas vs. CMC which, likewise, involved private respondent CMC. In the Tabas case, this Court ruled that therein petitioner merchandisers were employees of CMC, to wit: There is no doubt that in the case at bar, Livi performs "manpower services," meaning to say, it contracts out labor in favor of clients. We hold that it is one not withstanding its vehement claims to the contrary, and notwithstanding the provision of the contract that it is "an independent contractor." The nature of one's business is not determined by selfserving appellations one attaches thereto but by the tests provided by statute and prevailing case law. The bare fact that Livi maintains a separate line of business does not extinguish the equal fact that it has provided California with workers to pursue the latter's own business. In this connection, we do not agree that the petitioner has been made to perform activities "which are not directly related to the general business of manufacturing," California's purported "principal operation activity. The petitioners had been charged with merchandising promotion or sale of the products of [California] in the different sales outlets in Metro Manila including task and occasional price tagging," an activity that is doubtless, an integral part of the manufacturing business. It is not, then, as if Livi had served as its (California's) promotions or sales arm or agent, or otherwise rendered a piece of work it (California) could not itself have done; Livi as a placement agency, had simply supplied it with manpower necessary to carry out its (California's) merchandising activities, using its (California's) premises and equipment. On appeal, the NLRC set aside the decision of the Labor Arbiter. It ruled that no employer-employee relationship existed between the petitioners and CMC. It, likewise, held that D.L. Admark is a legitimate independent contractor, hence, the employer of the petitioners. Finding no valid grounds existed for the dismissal of the petitioners by D.L. Admark, it ordered their reinstatement. Petitioners are of the position that D.L. Admark is a labor-only contractor and cites this Court's ruling in the case of Tabas, Issue: Whether petitioners are employees of CMC or D.L. Admark. Held: We cannot sustain the contention of the petitioner. In resolving this, it is necessary to determine whether D.L. Admark is a labor-only contractor or an independent contractor.Petitioners' reliance on the Tabas case is misplaced. In said case, we ruled that therein contractor Livi Manpower Services was a mere placement agency and had simply supplied herein petitioner with the manpower necessary to carry out the company's merchandising activity. We, however, further stated that: It would have been different, we believe, had Livi been discretely a promotions firm, and that California had hired it to perform the latter's merchandising activities. For then, Livi would have been truly the employer of its employees and California its client. In other words, CMC can validly farm out its merchandising activities to a legitimate independent contractor. There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

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(a)

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 (b) The workers recruited and placed by such person are performing activities which are directly related to the

principal business of the employer. In contrast, there is permissible job contracting when a principal agrees to put out or farm out with a contractor or a subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job or work or service is to be performed or completed within or outside the premises of the principal. In this arrangement, the following conditions must concur: (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; and (b) The contractor has substantial capital or investment in the form of tools, equipment, machineries (sic), work

premises, and other materials which are necessary in the conduct of his business. In the recent case of Alexander Vinoya vs. NLRC, et al., this Court ruled that in order to be considered an independent contractor it is not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises. In addition, the following factors need be considered: (a) whether the contractor is carrying on an independent business; (b) the nature and extent of the work; (c) the skill required; (d) the term and duration of the relationship; (e) the right to assign the performance of specified pieces of work; (f) the control and supervision of the workers; (g) the power of the employer with respect to the hiring, firing and payment of workers of the contractor; (h) the control of the premises; (i) the duty to supply premises, tools, appliances, materials, and labor; and (j) the mode, manner and terms of payment. Based on the foregoing criterion, we find that D.L. Admark is a legitimate independent contractor. Among the circumstances that tend to establish the status of D.L. Admark as a legitimate job contractor are: 1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional, advertising,

marketing and merchandising activities. 2) The service contract between CMC and D.L. Admark clearly provides that the agreement is for the supply of

sales promoting merchandising services rather than one of manpower placement. 3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions,

marketing and merchandising. It had several merchandising contracts with companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as evidenced by its magazine the "Phenomenon." 4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to P6

million and is therefore a highly capitalized venture. It had an authorized capital stock of P500,000.00. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied. Moreover, by applying the four-fold test used in determining employer-employee relationship, the status of D.L. Admark as the true employer of petitioners is further established. The elements of this test are (1) the selection and Ma. Cecelia Timbal LlB 2 Rm 402

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engagement of employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. As regards the first element, petitioners themselves admitted that they were selected and hired by D.L. Admark. As to the second element, the NLRC noted that D.L. Admark was able to present in evidence the payroll of petitioners, sample SSS contribution forms filed and submitted by DL Admark to the SSS, and the application for employment by R. de los Reyes, all tending to show that D.L. Admark was paying for the petitioners' salaries. In contrast, petitioners did not submit an iota of evidence that it was CMC who paid for their salaries. The fact that the agreement between CMC and D.L. Admark contains the billing rate and cost breakdown of payment for core merchandisers and coordinators does not in any way establish that it was CMC who was paying for their salaries. As correctly pointed out by both CMC 16 and the Office of the Solicitor General, such cost breakdown is a standard content of service contracts designed to insure that under the contract, employees of the job contractor will receive benefits mandated by law. Neither did the petitioners prove the existence of the third element. Again petitioners admitted that it was D.L. Admark who terminated their employment. To prove the fourth and most important element of control, petitioners presented the memoranda of CMC's sales and promotions manager. The Labor Arbiter found that these memos "indubitably show that the complainants were under the supervision and control of the CMC people." However, as correctly pointed out by the NLRC, a careful scrutiny of the documents adverted to, will reveal that nothing therein would remotely suggest that CMC was supervising and controlling the work of the petitioners: The memorandums were addressed to the store or grocery owners telling them about the forthcoming sales promotions of CMC products. While in one of the memorandums a statement is made that "our merchandisers and demonstrators will be assigned to pack the premium with your stocks in the shelves . . ., yet it does not necessarily mean to refer to the complainants, as they claim, since CMC has also regular merchandisers and demonstrators. It would be different if in the memorandums were sent or given to the complainants and their duties or roles in the said sales campaign are therein defined. It is also noted that in one of the memorandums it was addressed to: "All regular merchandisers/demonstrators." . . . we are not convinced that the documents sufficiently prove employer-employee relationship between complainants and respondents CMC. The Office of the Solicitor General, likewise notes that the documents fail to show anything that would remotely suggest control and supervision exercised by CMC over petitioners on the matter on how they should perform their work. The memoranda were addressed either to the store owners or "regular" merchandisers and demonstrators of CMC. Thus, petitioners, who filed a complaint for regularization against respondent CMC, thereby, conceding that they are not regular employees of the latter, cannot validly claim to be the ones referred to in said memos. Having proven the existence of an employer-employee relationship between D.L. Admark and petitioners, it is no longer relevant to determine whether the activities performed by the latter are necessary or desirable to the usual business or trade of CMC. On the issue of illegal dismissal, we agree with the findings of the NLRC that D.L. Admark "admits having dismissed the petitioners for allegedly disowning and rejecting them as their employer." Undoubtedly, the reason given is not just cause to terminate petitioners. D.L. Admark's belated claim that the petitioners were not terminated but simply did not report to work is not supported by the evidence on record. Moreover, there is no showing that due process was afforded the petitioners.

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Aboitiz vs Dimapatoi (2006) G.R. 148619 Facts: Petitioner Aboitiz Haulers, Inc. is a domestic corporation principally engaged in the nationwide and overseas forwarding and distribution of cargoes. Private respondents Monaorai Dimapatoi, Cecilia Agawin, Raul Mamate, Emmanuel Guerrero and Gemeniano Bigaw worked as checkers in the Mega Warehouse, which is owned by the petitioner, located at the Tabacalera Compound, United Nations Avenue, Manila. Respondents maintain that during their employment with the petitioner, they were not paid their regular holiday pay, night shift differential, 5-day service incentive leave, and overtime premium. They also averred that illegal deductions were being made on their wages, particularly the contributions for a Mutual Assistance Fund, a Cash Bond, and claims for damaged and misrouted cargoes incurred by petitioner. On 17 May 1996, respondent Raul Mamate filed a complaint before the Department of Labor and Employment (DOLE) for nonpayment of wages and other benefits, as well as illegal deductions. The other respondents filed their own complaints. Since the claims of the respondents exceeded Five Thousand Pesos (P5,000.00), the case was referred to the NLRC. Thereafter, respondents filed their complaint for illegal dismissal and other money claims before the Arbitration Branch of the NLRC. Petitioner claims that respondents are not its employees, rather they are the employees of Grigio Security Agency and General Services (Grigio), a manpower agency that supplies security guards, checkers and stuffers. It allegedly entered into a Written Contract of Service with Grigio on 1 March 1994. By virtue of the aforementioned Written Contract of Service, Grigio supplied petitioner with security guards, checkers and stuffers for petitioner's Mega Warehouse. The respondents were among the checkers that were assigned to the petitioner's warehouse. Petitioner emphasizes that Grigio retained control over the respondents by providing their own supervisors to oversee Grigio's personnel, as well as time cards to monitor the attendance of its personnel. Petitioner also alleges that on 9 May 1996, the respondents left the warehouse and did not report to work thereafter. As a result of the respondents' sudden abandonment of their work, there was no orderly and proper turnover of papers and other company property in connection with the termination of the Written Contract for Services. Respondents, on the other hand, claim that most of them worked as checkers in petitioner's warehouse even before 1 March 1994. Issue: Whether or not Grigio is a "labor-only" contractor. Held: Grigio is a "labor-only" contractor. The first issue that needs to be resolved is whether Grigio is a "labor-only" contractor, which is tantamount to a finding that the petitioner is the employer of the respondents. Article 106 of the Labor Code 24 explains the relations which may arise between an employer, a contractor and the contractor's employees thus: ART. 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. Ma. Cecelia Timbal LlB 2 Rm 402

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The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make 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, to prevent any violation or circumvention of any provision 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 such persons are performing activities which 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 first two paragraphs of Art. 106 set the general rule that a principal is permitted by law to engage the services of a contractor for the performance of a particular job, but the principal, nevertheless, becomes solidarily liable with the contractor for the wages of the contractor's employees. The third paragraph of Art. 106, however, empowers the Secretary of Labor to make distinctions between permissible job contracting and "labor-only" contracting, which is a prohibited act further defined under the last paragraph. 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, and the "labor-only" contractor is considered as a mere agent of the principal, the real employer. Section 7 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, reiterates the rules in determining the existence of employer-employee relationship between employer, contractor or subcontractor, and the contractor's or subcontractor's employee. Section 7. Existence of an employer-employee relationship. The contractor or subcontractor shall be

considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages. The principal shall be deemed the employer of the contractual employee in any of the following cases, as declared by a competent authority: a. b. where there is a labor-only contracting; or where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof.

In determining whether or not a "labor-only" contracting exists, Art. 106 of the Labor Code and Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, provides the following criteria: (1) 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 other things; (2) the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer; and (3) the contractor does not exercise the right to control the performance of the work of the contractual employee. In order that one is considered by law as a "labor-only" contractor, all three aforementioned criteria need not be present. If the contractor enters into an arrangement characterized by any one of the criteria provided, this would be a clear case of "labor-only contracting." The clear phrasing of Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, support this interpretation. Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited.

For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely

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recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are is present: i) 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 ii) the contractor does not exercise the right to control over the performance of the work of the contractual

employee. The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code, as amended. "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 reserved 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. The allegation of the petitioner that Grigio is an independent job contractor, and, therefore, this case is one of permissible job contracting, is without basis. In this case, the respondents' work, as warehouse checkers, is directly related to the principal business of the petitioner. Petitioner also exercises the right to control and determines not only the end to be achieved, but also the manner and means to be used in reaching that end. Lastly, petitioner failed to sufficiently prove that Grigio had "substantial capital or investment." The respondents, as checkers, were employed to check and inspect these cargoes, a task which is clearly necessary for the petitioner's business of forwarding and distributing of cargoes. The petitioner did not dispute the fact that the respondents were hired as checkers as early as 1992. The fact that they were employed before the Written Contract of Services took effect on 24 February 1994, and continued with their jobs until 1996, after the said contract had already expired on 24 February 1995, 29 indicates that the respondents' work was indeed necessary for the petitioner's business. In a similar case, Guarin v. National Labor Relations Commission, the workers' contracts were repeatedly renewed to perform services necessary for the employer's business. Thus, the Court described the arrangement as "labor-only" contracting: The jobs assigned to the petitioners as mechanics, janitors, gardeners, firemen and grasscutters were directly related to the business of Novelty as a garment manufacturer. In the case of Philippine Bank of Communications vs. NLRC, 146 SCRA 347, we ruled that the work of a messenger is directly related to a bank's operations. In its Comment, Novelty contends that the services which are directly related to manufacturing garments are sewing, textile cutting, designs, dying, quality control, personnel, administration, accounting, finance, customs, delivery and similar other activities; and that allegedly, "it is only by stretching the imagination that one may conclude that the services of janitors, janitresses, firemen, grasscutters, mechanics and helpers are directly related to the business of manufacturing garments" (p. 78, Rollo). Not so, for the work of gardeners in maintaining clean and well-kept grounds around the factory, mechanics to keep the machines functioning properly, and firemen to look out for fires, are directly related to the daily operations of a garment factory. That fact is confirmed by Novelty's rehiring the workers or renewing the contract with Lipercon every year from 1983 to 1986, a period of three (3) years.

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As Lipercon was a "labor-only" contractor, the workers it supplied Novelty became regular employees of the latter.Where the employees are tasked to undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered as a "labor-only" contractor and such employees are considered as regular employees of the employer. In addition, Grigio did not undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal. The work activities, work shifts, and schedules of the respondents, including the time allowed for "recess" were set under the Written Contract of Services. This clearly indicates that these matters, which consist of the means and methods by which the work is to be accomplished, were not within the absolute control of Grigio. By stipulating these matters in a contract, Grigio is constrained to follow these provisions and would no longer be able to exercise the freedom to alter these work shifts and schedules at its own convenience. Such being the case, Grigio cannot be considered as an independent job contractor. Petitioner's allegation that Grigio retained control over the respondents by providing supervisors to monitor the performance of the respondents cannot be given much weight. Instead of exercising their own discretion or referring the matter to the officers of Grigio, Grigio's supervisors were obligated to refer to petitioner's supervisors any discrepancy in the performance of the respondents with their specified duties. The Written Contract of Services provided that: 5.c. That the GRIGIO personnel, particularly the supervisors, shall perform the following:

The Supervisor for the warehouse operation shall monitor the performance and productivity of all the checkers, jacklifters, stuffers/strippers, forklift operators, drivers, and helpers. He shall coordinate with AHI's supervisors regarding the operations at the Warehouse to ensure safety at the place of work. He shall see to it that the cargoes are not overlanded, shortlanded, delivered at a wrong destination, or misdelivered to consignee's port of destination. Any discrepancy shall be reported immediately to AHI's Logistic Manager, Mr. Andy Valeroso. The control exercised by petitioner's supervisors over the performance of respondents was to such extent that petitioner's Warehouse Supervisor, Roger Borromeo, confidently gave an evaluation of the performance of respondent Monaorai Dimapatoi, who likewise felt obliged to obtain such Certification from Borromeo. Petitioner's control over the respondents is evident. And it is this right to control the employee, not only as to the result of the work to be done, but also as to the means and methods by which the same is to be accomplished, that constitutes the most important index of the existence of the employer-employee relationship. Lastly, the law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting. In this case, neither Grigio nor the petitioner was able to present any proof that Grigio had substantial capital. There was no evidence pertaining to its capitalization nor its investment in tools, equipment or implements actually used in the performance or completion of the job, work, or service that it was contracted to render. Grigio was merely expected to supply petitioner with manpower to carry out work necessary for its business, to be carried out in the manner which petitioner provided in the contract. Thus, Grigio is obviously a "labor-only" contractor since it did not have substantial capital or investment which relates to the service performed; the respondents performed activities which were directly related to the main business of the petitioner; and Grigio did not exercise control over the performance of the work of the respondents. Consequently, the petitioner is considered as the employer of the respondents.

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In prohibiting "labor-only" contracting and creating an employer-employee relationship between the principal and the supposed contractor's employees, the law intends to prevent employers from circumventing labor laws intended to protect employees. In the case of Aurora Land Projects Corp. v. National Labor Relations Commission, this Court pronounced: The question as to whether an employer-employee relationship exists in a certain situation continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee relationship in their enterprises because that judicial relation spawns obligations connected with workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism. In light of this observation, it behooves this Court to be ever vigilant in checking the unscrupulous efforts of some of our entrepreneurs, primarily aimed at maximizing their return on investments at the expense of the lowly workingman.

GSIS vs NLRC (2006) G.R. 157647 Facts: Tomas Lanting, doing business under the name and style of Lanting Security and Watchman Agency (LSWA) entered into a Security Service Contract to provide security guards to the properties of the Government Service Insurance System (GSIS) at the contract rate of P3,000.00 per guard per month. During the effectivity of the contract, LSWA requested the GSIS for an upward adjustment of the contract rate in view of Section 7 of Wage Order No. 1 and Section 3 of Wage Order No. 2, which were issued by the Regional Tripartite Wages and Productivity Board-NCR pursuant to Republic Act No. 6727, otherwise known as the Wage Rationalization Act. Acting on the request of LSWA, the GSIS, through its Board of Trustees and under Board Resolution No. 207, dated May 24, 1991, approved the upward adjustments of the contract price from P3,000.00 to P3,716.07 per guard, per month effective November 1, 1990 to January 7, 1991, and P4,200.00 effective January 8, 1991 to May 31, 1991. LSWA assigned security guards Daniel Fanila, Hector Moreno, Isauro Ferrer, Rubin Wilfredo, Jesus Delima Jr., Maria Legaspi, Santiago Noto Jr., and Virgilio Soriano (hereafter complainants) to guard one of GSIS's properties. On March 15, 1993, GSIS terminated the Security Service Contract with LSWA. All the complainants, except Virgilio Soriano, were absorbed by the incoming security agency. On March 7, 1994, complainants filed separate complaints against LSWA for underpayment of wages and non-payment of labor standard benefits from March 1991 to March 15, 1993. Virgilio Soriano also complained of illegal dismissal. In its Position Paper, LSWA alleged that complainants were estopped from claiming that they were underpaid because they were informed that the pay and benefits given to them were based on the contract rate of P103.00 per eight hours of work or about P3,100.00 per month. Issue: Whether GSIS is solidarily liable for payment of complainants-respondnents' salary differentials. Held: Yes. Articles 106 and 107 of the Labor Code provide: ART. 106. Contractor or subcontractor. Whenever an employer enters into contract with another person for

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In the event that the contractor or subcontractor fails to pay the wage 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. ART. 107 Indirect employer. The provisions of the immediately preceding Article shall likewise apply to

any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. In this case, the GSIS cannot evade liability by claiming that it had fully paid complainants' salaries by incorporating in the Security Service Contract the salary rate increases mandated by Wage Order Nos. 1 and 2 by increasing the contract price from P3,000.00 to P3,176.07 per guard per month effective November 1, 1990 to January 7, 1991, and P4,200.00 effective January 8, 1991 to May 31, 1991. In Rosewood Processing, Inc. v. National Labor Relations Commission, 25 the Court explained the rationale for the joint and several liability of the employer, thus: The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her status as a direct employer, and the principal as the indirect employer of the contractor's employees. This liability facilitates, if not guarantees, payment of the workers' compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution. This is not unduly burdensome to the employer. Should the indirect employer be constrained to pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service contract between itself and the contractor. Thus, the Court does not agree with the GSIS's claim that a double burden would be imposed upon the latter because it would be paying twice for complainants' services. Such fears are unfounded. Under Article 1217 of the Civil Code, if the GSIS should pay the money claims of complainants, it has the right to recover from LSWA whatever amount it has paid in accordance with the terms of the service contract between the LSWA and the GSIS. Joint and solidary liability is simply meant to assure aggrieved workers of immediate and sufficient payment of what is due them. This is in line with the policy of the State to protect and alleviate the plight of the working class.

Republic vs Asiapro Cooperative (2007) G.R. 172101 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 - a division of DOLE Philippines, Inc. and a company based in Bukidnon.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 different areas of trade it engages in, such as the income derived from the said Service Contracts with Stanfilco. The owners-

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members get their income from the service surplus generated by the quality and amount of services they rendered, which is determined by the Board of Directors of the respondent cooperative. In order to enjoy the benefits under the Social Security Law of 1997, the owners-members of the respondent cooperative, who were assigned to Stanfilco requested the services of the latter to register them with petitioner SSS as self-employed and to remit their contributions as such. Also, to comply with Section 19-A of Republic Act No. 1161, as amended by Republic Act No. 8282, the SSS contributions of the said owners-members were equal to the share of both the employer and the employee. On 26 September 2002, however, petitioner SSS through its Vice-President for Mindanao Division, Atty. Eddie A. Jara, sent a letter to the respondent cooperative, addressed to its Chief Executive Officer (CEO) and General Manager Leo G. Parma, informing the latter that based on the Service Contracts it executed with Stanfilco, respondent cooperative is actually a manpower contractor supplying employees to Stanfilco and for that reason, it is an employer of its owners-members working with Stanfilco.Thus, respondent cooperative should register itself with petitioner SSS as an employer and make the corresponding report and remittance of premium contributions in accordance with the Social Security Law of 1997.On 9 October 2002, respondent cooperative, through its counsel, sent a reply to petitioner SSSs letter asserting that it is not an employer because its owners-members are the cooperative itself; hence, it cannot be its own employer.Again, on 21 October 2002 petitioner SSS sent a letter to respondent cooperative ordering the latter to register as an employer and report its owners-members as employees for compulsory coverage with the petitioner SSS.Respondent cooperative continuously ignored the demand of petitioner SSS. Accordingly, petitioner SSS, on 12 June 2003, filed a Petition before petitioner SSC against the respondent cooperative and Stanfilco praying that the respondent cooperative or, in the alternative, Stanfilco be directed to register as an employer and to report respondent cooperatives owners-members as covered employees under the compulsory coverage of SSS and to remit the necessary contributions in accordance with the Social Security Law of 1997.The same was docketed as SSC Case No. 6-15507-03. Respondent cooperative filed its Answer with Motion to Dismiss alleging that no employer-employee relationship exists between it and its owners-members, thus, petitioner SSC has no jurisdiction over the respondent cooperative.Stanfilco, on the other hand, filed an Answer with Cross-claim against the respondent cooperative. Issue: Whether the petitioner SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS against the respondent cooperative. Held: 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.(Emphasis supplied.) 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

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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.(Emphasis supplied.) It is clear then from the aforesaid provisions that any issue regarding the compulsory coverage of the SSS is well within the exclusive domain of the petitioner SSC.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. It is axiomatic that the allegations in the complaint, not the defenses set up in the Answer or in the Motion to Dismiss, determine which court has jurisdiction over an action; otherwise, the question of jurisdiction would depend almost entirely upon the defendant. Moreover, it is well-settled that once jurisdiction is acquired by the court, it remains with it until the full termination of the case. The said principle may be applied even to quasi-judicial bodies. 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 ownersmembers 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.Although the Answer with Motion to Dismiss filed by the respondent cooperative challenged the jurisdiction of the petitioner SSC on the alleged lack of employer-employee relationship between itself and its owners-members, the same is not enough to deprive the petitioner SSC of its jurisdiction over the petition-complaint filed before it.Thus, the petitioner SSC cannot be faulted for initially assuming jurisdiction over the petition-complaint of the petitioner SSS. 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. The question on the existence of an employer-employee relationship is not within the exclusive jurisdiction of the National Labor Relations Commission (NLRC).Article 217 of the Labor Code enumerating the jurisdiction of the Labor Arbiters and the NLRC provides that: ART. 217.JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. - (a) x x 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. Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily include issues on the coverage thereof, because claims are undeniably rooted in the coverage by the system.Hence, the question on the existence of an employer-employee relationship for the purpose of determining the coverage of the Social Security System is explicitly excluded from the jurisdiction of the NLRC and falls

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within the jurisdiction of the SSC which is primarily charged with the duty of settling disputes arising under the Social Security Law of 1997. On the basis thereof, considering that the petition-complaint of the petitioner SSS involved the issue of compulsory coverage of the owners-members of the respondent cooperative, this Court agrees with the petitioner SSC when it declared in its Order dated 17 February 2004 that as an incident to the issue of compulsory coverage, it may inquire into the presence or absence of an employer-employee relationship without need of waiting for a prior pronouncement or submitting the issue to the NLRC for prior determination.Since both the petitioner SSC and the NLRC are independent bodies and their jurisdiction are well-defined by the separate statutes creating them, petitioner SSC has the authority to inquire into the relationship existing between the worker and the person or entity to whom he renders service to determine if the employment, indeed, is one that is excepted by the Social Security Law of 1997 from compulsory coverage. 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. 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.Wages are defined as remuneration or earnings, however designated , capable of being expressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered. In this case, the weekly stipends or the so-called shares in the service surplus given by the respondent cooperative to its ownersmembers were in reality wages, as the same were equivalent to an amount not lower than that prescribed by existing labor laws, rules and regulations, including the wage order applicable to the area and industry; or the same shall not be lower than the prevailing rates of wages. 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 cooperatives 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.As earlier opined, of the four elements of the employer-employee relationship, the control test is the most important.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 ownersmembers. 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. Ma. Cecelia Timbal LlB 2 Rm 402

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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 employment status of a person is defined and prescribed by law and not by what the parties say it should be . It is settled that the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them.However, 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. FerrerCalleja 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 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 bargain collectively with the cooperative.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-

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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 bylaws, 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 petitioncomplaint filed before it by the petitioner SSS

Jaguar Security and Investigation Agency vs Sales (2008) G.R. 162420 Facts: Petitioner Jaguar Security and Investigation Agency ("Jaguar") is a private corporation engaged in the business of providing security services to its clients, one of whom is Delta Milling Industries, Inc. ("Delta"). Private respondents Rodolfo Sales, Melvin Tamayo, Dionisio Caranyagan, Jesus Silva, Jr., Jaime Moron and Daneth Fetalvero were hired as security guards by Jaguar. They were assigned at the premises of Delta in Libis, Quezon City. Caranyagan and Tamayo were terminated by Jaguar on May 26, 1998 and August 21, 1998, respectively. Allegedly their dismissals were arbitrary and illegal. Sales, Moron, Fetalvero and Silva remained with Jaguar. All the guardemployees, claim for monetary benefits such as underpayment, overtime pay, rest day and holiday premium pay, underpaid 13th month pay, night shift differential, five days service and incentive leave pay. In addition to these money claims, Caranyagan and Tamayo argue that they were entitled to separation pay and back wages, for the time they were illegally dismissed until finality of the decision. Furthermore, all respondents claim for moral and exemplary damages. On September 18, 1998, respondent security guards instituted the instant labor case before the labor arbiter. On May 25, 1999, the labor arbiter rendered a decision in favor of private respondents Sales, et al., the dispositive portion of which provides: "WHEREFORE, judgment is hereby rendered dismissing the charges of illegal dismissal on the part of the complainants MELVIN R. TAMAYO and DIONISIO C. CARANYAGAN for lack of merit but ordering respondents JAGUAR SECURITY AND INVESTIGATION AGENCY and DELTA MILLING INDUSTRIES, INC., to jointly and severally pay all the six complainants, namely: RODOLFO A. SALES, MELVIN R. TAMAYO, JAIME MORON and DANETH FETALVERO the following money claims for their services rendered from April 24, 1995 to April 24, 1998: a) b) c) d) e) f) wage differentials overtime pay differentials (4 hours a day) rest day pay holiday pay holiday premium pay 13th month pay differentials

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g)

five days service incentive leave pay per year subject to the exception earlier cited.

The Research and Information Unit of this Commission is hereby directed to compute and quantify the above awards and submit a report thereon within 15 days from receipt of this decision. For purposes of any appeal, the appeal bond is tentatively set at P100,000.00. All other claims are DISMISSED for lack of merit. SO ORDERED." On July 1, 1999, petitioner Jaguar filed a partial appeal questioning the failure of public respondent NLRC to resolve its cross-claim against Delta as the party ultimately liable for payment of the monetary award to the security guards. In its Resolution dated September 19, 2000, the NLRC dismissed the appeal, holding that it was not the proper forum to raise the issue. It went on to say that Jaguar, being the direct employer of the security guards, is the one principally liable to the employees. Thus, it directed petitioner to file a separate civil action for recovery of the amount before the regular court having jurisdiction over the subject matter, for the purpose of proving the liability of Delta. Jaguar sought reconsideration of the dismissal, but the Commission denied the same in its Resolution dated November 9, 2001. Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated October 21, 2002 and Resolution dated February 13, 2004, dismissed the petition for lack of merit. Issue: Whether or not petitioner may claim reimbursement from Delta Milling through a cross-claim filed with the labor court? Held: The Court ruled in the negative. The jurisdiction of labor courts extends only to cases where an employer-employee relationship exists. In the present case, there exists no employer-employee relationship between petitioner and Delta Milling. In its crossclaim, petitioner is not seeking any relief under the Labor Code but merely reimbursement of the monetary benefits claims awarded and to be paid to the guard employees. There is no labor dispute involved in the cross-claim against Delta Milling. Rather, the cross-claim involves a civil dispute between petitioner and Delta Milling. Petitioner's crossclaim is within the realm of civil law, and jurisdiction over it belongs to the regular courts. Moreover, the liability of Delta Milling to reimburse petitioner will only arise if and when petitioner actually pays its employees the adjudged liabilities. Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors. In this case, it appears that petitioner has yet to pay the guard employees. The petition is DENIED.

Almeda et al., vs Asahi Glass (2008) G.R. 177785 Facts: This a complaint for illegal dismissal with claims for moral and exemplary damages and attorneys fees filed by Almeda, et al against Asahi Glass and San Sebastian Allied Services, Inc. SSASI. Petitioners alleged that Asahi and SSASI entered into a service contract whereby SSASI undertook to provide Asahi with the necessary manpower for its operations. Pursuant to such a contract, SSASI employed petitioners Randy Almeda, Edwin Audencial, Nolie Ma. Cecelia Timbal LlB 2 Rm 402

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Ramirez and Ernesto Calicagan as glass cutters, and petitioner Reynaldo Calicagan as Quality Controller, all assigned to work for respondent. Asahi terminated its service contract with SSASI, which in turn, terminated the employment of petitioners on the same date. Believing that SSASI was a labor-only contractor, and having continuously worked as glass cutters and quality controllers for the respondent - functions which are directly related to its main line of business as glass manufacturer - for three to 11 years, petitioners asserted that they should be considered regular employees of the Asahi; and that their dismissal from employment without the benefit of due process of law was unlawful. Asahi claimed that petitioners were employees of SSASI and were merely assigned by SSASI to work for respondent to perform intermittent services pursuant to an Accreditation Agreement. SSASI averred that it was the one who hired petitioners and assigned them to work for respondent on occasions that the latters work force could not meet the demands of its customers. Eventually, however, respondent ceased to give job orders to SSASI, constraining the latter to terminate petitioners employment. Issue: Are Almeda, et al employees of Asahi Glass even considering that they were originally hired by San Sebastian Allied Services, Inc.? Held: Yes. Almeda, et al are employees of Asahi Glass. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to 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. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) 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; (b) The contractor or subcontractor 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 selforganization, security of tenure, and social and welfare benefits. On the other hand, labor-only contracting, a prohibited act, is an arrangement in which the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In laboronly contracting, the following elements are present: (a) 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; (b) The employees recruited, supplied or placed by such contractor or subcontractor is performing activities which are directly related to the main business of the principal. In labor-only contracting, the statutes create an employer-employee relationship for a comprehensive purpose: to prevent circumvention of labor laws. The contractor is considered as merely the agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees are directly Ma. Cecelia Timbal LlB 2 Rm 402

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employed by the principal employer. Therefore, if SSASI was a labor-only contractor, then respondent shall be considered as the employer of petitioners who must bear the liability for the dismissal of the latter, if any. An important element of legitimate job contracting is that the contractor has substantial capital or investment, which respondent failed to prove. There is a dearth of evidence to prove that SSASI possessed substantial capital or investment when respondent began contractual relations with it more than a decade before 2003. The Court did not find a single financial statement or record to attest to the economic status and financial capacity of SSASI to venture into and sustain its own business independent from petitioner. Furthermore, the Court is unconvinced by respondents argume nt that petitioners were performing jobs that were not directly related to respondents main line of business. Respondent is engaged in glass manufacturing. One of the petitioners served as a quality controller, while the rest were glass cutters. The only excuse offered by respondent that petitioners services were required only when there was an increase in the markets demand with which respondent could not cope - only prove even more that the services rendered by petitioners were indeed part of the main business of respondent. It would mean that petitioners supplemented the regular workforce when the latter could not comply with the markets demand; necessarily, therefore, petitioners performed the same functions as the regular workforce. The indispensability of petitioners services was fortified by the length and continuity of their performance, lasting for periods ranging from three to 11 years. More importantly, the Court finds that the crucial element of control over petitioners rested in respondent. The power of control refers to the authority of the employer to control the employee not only with regard to the result of work to be done, but also to the means and methods by which the work is to be accomplished. It should be borne in mind that the power of control refers merely to the existence of the power and not 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 former has a right to wield the power. Petitioners followed the work schedule prepared by respondent. They were required to observe all rules and regulations of the respondent pertaining to, among other things, the quality of job performance, regularity of job output, and the manner and method of accomplishing the jobs. Other than being the one who hired petitioners, there was absolute lack of evidence that SSASI exercised control over them or their work. The fact that it was SSASI which dismissed petitioners from employment is irrelevant. It is hardly proof of control, since it was demonstrated only at the end of petitioners employment. What is more, the dismissal of petitioners by SSASI was a mere result of the termination by respondent of its contractual relations with SSASI. SSASI is a labor-only contractor; hence, it is considered as the agent of respondent. Respondent is deemed by law as the employer of petitioners. Equally unavailing is respondents stance that its relationship with petitioners should be governed by the Accreditation Agreement stipulating that petitioners were to remain employees of SSASI and shall not become regular employees of the respondent. A party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as labor-only contractor or as job contractor, it being crucial that its character be measured in terms of and determined by the criteria set by statute

Sasan, Sr et al, vs NLRC and EPCIB (2008) G.R. 176240 Facts:

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Equitable-PCI Bank (E-PCIBank), a banking entity entered into a Contract for Services with HI, a corporation primarily engaged in the business of providing janitorial and messengerial services. Pursuant to their contract, HI shall hire and assign workers to E-PCIBank to perform janitorial/messengerial and maintenance services. The contract was impliedly renewed year after year. Petitioners were among those employed and assigned to E-PCIBank at its branch along Gorordo Avenue, Lahug, Cebu City, as well as to its other branches in the Visayas. On 23 July 2001, petitioners filed with the Arbitration Branch of the NLRC separate complaints against E-PCIBank and HI for illegal dismissal, with claims for separation pay, service incentive leave pay, allowances, damages, attorneys fees and costs; later amended to include a claim for 13 th month-pay. Petitioners claimed that they had become regular employees of E-PCIBank with respect to the activities for which they were employed, having continuously rendered janitorial and messengerial services to the bank for more than one year; that E-PCIBank had direct control and supervision over the means and methods by which they were to perform their jobs; and that their dismissal by HI was null and void because the latter had no power to do so since they had become regular employees of E-PCIBank. E-PCIBank averred that it entered into a Contract for Services with HI, an independent job contractor which hired and assigned petitioners to the bank to perform janitorial and messengerial services thereat. It was HI that paid petitioners wages, monitored petitioners daily time records (DTR) and uniforms, and exercised direct contr ol and supervision over the petitioners and that therefore HI has every right to terminate their services legally. E-PCIBank could not be held liable for whatever misdeed HI had committed against its employees. HI asserted that it was an independent job contractor engaged in the business of providing janitorial and related services to business establishments, and E-PCIBank was one of its clients. Petitioners were its employees, part of its pool of janitors/messengers assigned to E-PCIBank. The Contract for Services between HI and E-PCIBank expired on 15 July 2000. E-PCIBank no longer renewed said contract with HI. HI designated petitioners to new work assignments, but the latter refused to comply with the same. Petitioners were not dismissed by HI, whether actually or constructively, thus, petitioners complaints before the NLRC were without basis. The LA rendered a Decision finding that HI was not a legitimate job contractor on the ground that it did not possess the required substantial capital or investment to actually perform the job, work, or service under its own account and responsibility as required under the Labor Code. HI is therefore a labor-only contractor and the real employer of petitioners is E-PCIBank which is held liable to petitioners. E-PCIBank and HI appealed the same to the NLRC. HI submitted before the NLRC several documents which it did not present before the LA. The NLRC took into consideration the documentary evidence presented by HI for the first time on appeal and, on the basis thereof, declared HI as a highly capitalized venture with sufficient capitalization, which cannot be considered engaged in labor-only contracting. Issues: 1. W/N HI is a labor-only contactor 2. W/N E-PCIBank should be deemed petitioners principal employer 3. W/N petitioners were illegally dismissed from their employment. Ma. Cecelia Timbal LlB 2 Rm 402

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Held: HI is a legitimate job contractor. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to 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. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) 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; (b) The contractor or subcontractor 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 and welfare benefits. In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present: (a) 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 (b) 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. In distinguishing between permissible job contracting and prohibited labor-only contracting, we elucidated in Vinoya v. National Labor Relations Commission, that it is not enough to show substantial capitalization or investment in the form of tools, equipment, etc. Other facts that may be considered include the following: whether or not the contractor is 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 work to another; the employers power with respect to the hiring, firing and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode and manner or terms of payment. Simply put, the totality of the facts and the surrounding circumstances of the case are to be considered. Each case must be determined by its own facts and all the features of the relationship are to be considered. We take note that HI has been issued by the Department of Labor and Employment (DOLE) Certificate of Registration Numbered VII-859-1297-048, stating among others that it had complied with the requirements as provided for under the Labor Code, as amended, and its Implementing Rules.

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The evidence on record also shows that HI is carrying on a distinct and independent business from E-PCIBank. The employees of HI are assigned to clients to perform janitorial and messengerial services, clearly distinguishable from the banking services in which E-PCIBank is engaged. Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipments, 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. An independent contractor must have either substantial capital or investment in the form of tools, equipment, machineries, work premises, among others. The law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. It is enough that it has substantial capital. In the case of HI, it has proven both. Once it is established that an entity such as in this case, HI has substantial capital, it was no longer necessary to adduce further evidence to prove that it does not fall within the purview of labor -only contracting. There is even no need for HI to refute the contention of petitioners that some of the activities they performed such as those of messengerial services are directly related to the principal business of E- PCIBank. In any event, we have earlier declared that while these services rendered by the petitioners as janitors, messengers and drivers are considered directly related to the principal business of a bank, in this case E-PCIBank, nevertheless, they are not necessary in the conduct of its (E-PCIBANKs) principal business. Etched in an unending stream of cases are four standards in determining the existence of an employer-employee relationship, namely: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of power of dismissal; and, (d) the presence or absence of control of the putative employees conduct. Most determinative among these factors is the so-called control test. All the circumstances establish that HI undertook said contract on its account, under its own responsibility, according to its own manner and method, and free from the control and direction of E-PCIBank. Where the control of the principal is limited only to the result of the work, independent job contracting exists. The janitorial service agreement between E-PCIBank and HI is a case of permissible job contracting. Considering the foregoing, plus taking judicial notice of the general practice in private, as well as in government institutions and industries, of hiring an independent contractor to perform special services, ranging from janitorial, security and even technical services, we can only conclude that HI is a legitimate job contractor. As such legitimate job contractor, the law creates an employer-employee relationship between HI and petitioners which renders HI liable for the latters claims. In view of the preceding conclusions, petitioners will never become regular employees of E-PCIBank regardless of how long they were working for the latter. Petitioners were not illegally dismissed by HI. Upon the termination of the Contract of Service between HI and EPCIBank, petitioners cannot insist to continue to work for the latter. Their pull-out from E-PCIBank did not constitute illegal dismissal since, first, petitioners were not employees of E-PCIBank; and second, they were pulled out from said assignment due to the non-renewal of the Contract of Service between HI and E-PCIBank. At the time they filed their complaints with the Labor Arbiter, petitioners were not even dismissed by HI; they were only off -detail pending their re-assignment by HI to another client. And when they were actually given new assignments by HI with other clients, petitioners even refused the same. Ma. Cecelia Timbal LlB 2 Rm 402

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Purefoods Corp., vs NLRC et al., (2008) G.R. 172241 Facts: Lolita Neri (Neri) originally filed a claim for nonpayment of additional wage increase, regularization, nonpayment of service incentive leave, underpayment of 13th month pay, and nonpayment of premium pay for holiday and holiday pay against Purefoods Corporation (Purefoods). By July 4, 1992, however, Neri was dismissed from her work as a Deli-Attendant. Subsequently, or on 13 July 1992, eleven (11) other complainants joined forces with Neri and together they filed an amended complaint, with Neri charging Purefoods with illegal dismissal. All the other complainants, save for Neri, were still working for Purefoods at the time of the filing of the amended complaint. On August 31, 1993, Labor declared Neri and the complainants as Purefoods' regular employees; and Neri as having been illegally dismissed and entitled to reinstatement with payment of backwages. Purefoods filed a partial appeal, praying that the claims of complainants be dismissed for lack of merit, or in the alternative, the case be remanded for formal hearing on the merits and to implead D.L. Admark as a party-respondent.The NLRC granted the appeal and remanded the case for further hearings on the factual issues. The case was remanded to Labor Arbiter, who, after finding that Neri is not an employee of petitioner, but rather of D.L. Admark, an independent labor contractor, dismissed the complaint. A memorandum on appeal was nominally filed by all the complainants; the NLRC ruled in complainants' favor and reversed and set aside the labor arbiter's decision. According to the NLRC, the pieces of evidence on record established the employer-employee relationship between Purefoods and Neri and the other complainants. Purefoods moved for the reconsideration of the decision but its motion was denied for lack of merit. Hence, its recourse to the Court of Appeals via a petition for certiorari. The Court of Appeals, relying on the case of Escario v. NLRC, held that D.L. Admark is a legitimate independent contractor. However, it ruled that complainants are regular employees of Purefoods. Citing Art. 280 of the Labor Code, the appellate court found that complainants were engaged to perform activities which are usually necessary or desirable in the usual business or trade of Purefoods, and that they were under the control and supervision of Purefoods' supervisors, and not of D.L. Admark's. It noted that in the Promotions Agreements between D.L. Admark and Purefoods, there was no mention of the list of D.L. Admark employees who will handle particular promotions for petitioner, and that complainants' periods of employment are not fully covered by the Promotions Agreements. Issue: Whether or not Neri and the other complainants are employees of PUREFOODS or A.D. ADMARKS? Held: The Court agrees with Purefoods' argument that Art. 280 of the Labor Code finds no application in a trilateral relationship involving a principal, an independent job contractor, and the latter's employees. Indeed, the Court has ruled that said provision is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of an employment relationship is in dispute. It is therefore erroneous on the part of the Court of Appeals to rely on Art. 280 in determining whether an employer-employee relationship exists between respondent Neri and Purefoods. Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the 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. In 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

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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. To support its position that respondent is not its employee, Purefoods relies on the following: (i) the Promotions Agreements it entered into with D.L. Admark; (ii) Department Order No. 10 (Series of 1997) which defines legitimate contracting or subcontracting; and (iii) Escario v. NLRC wherein the Court declared D.L. Admark as a legitimate labor contractor. On the other hand, early on, Neri and the rest of the complainants admitted that they worked for petitioner through D.L. Admark. However, they also averred that they were under the control and supervision of petitioner's employeessalesmen, poultry sales managers, deli supervisors who give them work orders and to whom they submit weekly inventory reports and monthly competitive sales report. In support of these statements, Neri appended several documents (various Identification Cards, Certification from Rustan's Supermarkets stating that respondent Neri is from Purefoods, Memoranda to respondent Neri written by a supervisor from Purefoods, letters from Purefoods area sales managers introducing complainants as Purefoods Merchandisers). Purefoods, meanwhile, claims that these documents must be taken in the context of the performance of the service contracted outpromotion of its products. In the first place, D.L. Admark's status as a legitimate independent contractor has already been established in Escario v. NLRC. In the said case, complainants, through D.L. Admark, worked as merchandisers for California Manufacturing Corporation (CMC). They filed a case before the labor arbiter for the regularization of their employment status with CMC, and while the case was pending, D.L. Admark sent termination letters to complainants. The complainants thereafter amended their complaint to include illegal dismissal. The Court considered the following circumstances as tending to establish D.L. Admark's status as a legitimate job contractor: 1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional, advertising, marketing and merchandising activities. 2) The service contract between CMC and D.L. Admark clearly provides that the agreement is for the supply of sales promoting merchandising services rather than one of manpower placement. 3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions, marketing and merchandising. It had several merchandising contracts with companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as evidenced by its magazine the "Phenomenon." 4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to P6 million and is therefore a highly capitalized venture. It had an authorized capital stock of P500,000.00. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied. Moreover, applying the four-fold test used in determining employer-employee relationship, the Court found that: the employees therein were selected and hired by D.L. Admark; D.L. Admark paid their salaries, as evidenced by the payroll prepared by D.L. Admark and sample contribution forms; D.L. Admark had the power of dismissal as it admitted that it was the one who terminated the employment of the employees; and finally, it was D.L. Admark who exercised control and supervision over the employees.

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Furthermore, it is evident from the Promotions Agreements entered into by Purefoods that D.L. Admark is a legitimate labor contractor. A sample agreement reads in part: WHEREAS, The FIRST PARTY is engaged in the general promotion business; WHEREAS, The SECOND PARTY will launch its "Handog sa Graduates" promotion project; WHEREAS, The FIRST PARTY has offered its services to the SECOND PARTY, in connection with the said promotion project, and the latter has accepted the said offer; NOW, THEREFORE, for and in consideration of the foregoing premises, and of the mutual convenience between them, the parties have agreed as follows: 1. The FIRST PARTY shall handle and implement the "Handog sa Graduates" promotion project of the SECOND PARTY, said project to last from February 1, 1992 to July 31, 1992. 2. The FIRST PARTY shall indemnify the SECOND PARTY for any loss or damage to the latter's properties, if such loss or damage is due to the fault or negligence of the FIRST PARTY or its agents or employees. 3. There shall be no employer-employee relationship between the FIRST PARTY or its agents or employees and the SECOND PARTY. 4. In consideration for the services to be rendered by the FIRST PARTY to the SECOND PARTY, the latter shall pay the former the amount of Two Million Six Hundred Fifty Two Thousand pesos only (P2,652,000.00) payable as follows: The agreements confirm that D.L. Admark is an independent contractor which Purefoods had engaged to supply general promotion services, and not mere manpower services, to it. The provisions expressly permit D.L. Admark to handle and implement Purefoods' project, and categorically state that there shall be no employer-employee relationship between D.L. Admark's employees and Purefoods. While it may be true that complainants were required to submit regular reports and were introduced as Purefoods merchandisers, these are not enough to establish Purefoods' control over them. Even if the report requirements are somehow considered as control measures, they were imposed only to ensure the effectiveness of the promotion services rendered by D.L. Admark. 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.Indeed, it would be foolhardy for any company to completely give the reins and totally ignore the operations it has contracted out. Significantly, the pieces of evidence submitted by Neri do not support her claim of having been a regular employee of Purefoods. We note that two "Statement of Earnings and Deductions"were issued for the same period, December 1989, and in one "Statement," someone deliberately erased the notation "January 1997," thereby casting doubt on the authenticity of the said documents. Even the identification cards presented by Neri are neither binding on Purefoods nor even indicative of her claimed employee status of Purefoods, issued as they were by the supermarkets concerned and not by Purefoods itself. Moreover, the check voucher issued by Purefoods marked "IN PAYMENT OF DL ADMARK DELI ATTENDANTS 12.00 PESOS ADJUSTMENT JAN 30, 1991 TO JUNE 22, 1992," signed and received by Neri, is proof that Purefoods never considered Neri as its own employee, but rather as one of D.L. Admark's deli attendants. We also note that Neri herself admitted in her Sinumpaang Salaysay and in the hearings that she applied with D.L. Admark and that she worked for Purefoods through D.L. Admark. Neri was aware from the start that D.L. Admark was her employer and not Purefoods. She had kept her contract with D.L. Admark, and inquired about her Ma. Cecelia Timbal LlB 2 Rm 402

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employment status with D.L. Admark. It was D.L. Admark, as her employer, which had the final say in, and which actually effected, her termination. In view of the foregoing, we hold that Neri is not an employee of Purefoods, but that of D.L. Admark. In the absence of employer-employee relations between Neri and Purefoods, the complaint for illegal dismissal and other monetary claims must fail.

Maranaw Hotels and Resort vs CA (2009) G.R. 149660 Facts: Oabel was hired by petitioner as an extra beverage attendant. He worked in Century Park Hotel, an establishment owned by the petitioner. Petitioner contracted with Manila Resource Development Corp or MANRED. Oabel was transferred to MANRED with the latter deporting itself as her employer. Oabel worked as secretary, public relations, gift shop attendant, waitress and shop attendant. Oabel filed a petition for regularization of employment. She was dismissed from employment. Petitioner argues that it entered into a service agreement with MANRED. MANRED maintains that Oabel is its employee and was willing to reinstate her. Held: Notably, private respondents purported employment with MANRED commenced only in 1996, way after she was hired by the petitioner as extra beverage attendant on April 24, 1995. There is thus much credence in the private respondents claim that the service agreement executed between the petitioner and MANRED is a mere ploy to circumvent the law on employment, in particular that which pertains on regularization. In this regard, it has not escaped the notice of the Court that the operations of the hotel itself do not cease with the end of each event or function and that there is an ever present need for individuals to perform certain tasks necessary in the petitioners business. Thus, although the tasks themselves may vary, the need for sufficient manpower to carry them out does not. In any event, as borne out by the findings of the NLRC, the petitioner determines the nature of the tasks to be performed by the private respondent, in the process exercising control. This being so, the Court finds no difficulty in sustaining the finding of the NLRC that MANRED is a labor-only contractor. Concordantly, the real employer of private respondent Oabel is the petitioner. It appears further that private respondent has already rendered more than one year of service to the petitioner, for the period 1995-1998, for which she must already be considered a regular employee, pursuant to Article 280 of the Labor Code: 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 service to be performed is seasonal in nature and the employment is for the duration of the season.

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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 exists. (Emphasis supplied)

Cola-Cola Bottlers Phils., vs Agito et al., (2009) G.R. 179546 Facts: Petitioner is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) and engaged in manufacturing, bottling and distributing soft drink beverages and other allied products. 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 without just cause and due process. However, they failed to state the reason/s for filing a complaint against Interserve; Peerless Integrated Services, Inc.; Better Builders, Inc.; and Excellent Partners, Inc. Petitioner filed its Position Paper (with Motion to Dismiss), where it averred that respondents were employees of Interserve who were tasked to perform contracted services in accordance with the provisions of the Contract of Services executed between petitioner and Interserve. Said Contract between petitioner and Interserve, covering the period of 1 April 2002 to 30 September 2002, constituted legitimate job contracting, given that the latter was a bona fide independent contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business. To prove the status of Interserve as an independent contractor, petitioner presented the following pieces of evidence: (1) the Articles of Incorporation of Interserve; (2) the Certificate of Registration of Interserve with the Bureau of Internal Revenue; (3) the Income Tax Return, with Audited Financial Statements, of Interserve for 2001; and (4) the Certificate of Registration of Interserve as an independent job contractor, issued by the Department of Labor and Employment (DOLE). As a result, 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 aga inst 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. Petitioner argues that there could not have been labor-only contracting, since respondents did not perform activities that were indispensable to petitioners principal business. And, even assuming that they did, such fact alone does not establish an employer-employee relationship between petitioner and the respondents, since respondents were unable Ma. Cecelia Timbal LlB 2 Rm 402

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to show that petitioner exercised the power to select and hire them, pay their wages, dismiss them, and control their conduct. Issue: WON Interserve is a legitimate job contractor. Held: Interserve is not a legitimate job contractor. Article 106. Contractor or subcontractor. - Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters 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. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restriction, he may make 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, to prevent any violation or circumvention of any provision of this Code. 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 formers 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 contractors 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 contractors 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 contractors employees and the former becomes solidarily liable for all the rightful claims of the employees. Section 5 of the Rules Implementing Articles 106-109 of the Labor Code, as amended, provides the guidelines in Ma. Cecelia Timbal LlB 2 Rm 402

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determining whether labor-only contracting exists: Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, 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 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 ii) The contractor does not exercise the right to control the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended. "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. (Emphasis supplied.) When there is labor-only contracting, Section 7 of the same implementing rules, describes the consequences thereof: Section 7. Existence of an employer-employee relationship.The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages. The principal shall be deemed the employer of the contractual employee in any of the following case, as declared by a competent authority: a. where there is labor-only contracting; or b. where the contracting arrangement falls within the prohibitions provided in Section 6 (Prohibitions) hereof. 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 contr actors 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, Ma. Cecelia Timbal LlB 2 Rm 402

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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. 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. 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. Interserve is a labor-only contractor under Section 5(ii) of the Rules Implementing Articles 106-109 of the Labor Code, as amended, since it did not exercise the right to control the performance of the work of respondents. Paragraph 3 of the Contract specified that the personnel of contractor Interserve, which included the respondents, would comply with "CLIENT" as well as "CLIENTs 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. Although under paragraph 4 of the same Contract, Interserve warranted that it would exercise the necessary and due supervision of the work of its personnel, there is a dearth of evidence to demonstrate the extent or degree of supervision exercised by Interserve over respondents or the manner in which it was actually exercised. There is even no showing that Interserve had representatives who supervised respondents work while they were in the premises of petitioner. Also significant was the right of petitioner under paragraph 2 of the Contract to "request the replacement of the CONTRACTORS personnel." True, this right was conveniently qualified by the phrase "if from its j udgment, the jobs or the projects being done could not be completed within the time specified or that the quality of the desired result is not being achieved," but such qualification was rendered meaningless by the fact that the Contract did not stipulate what work or job the personnel needed to complete, the time for its completion, or the results desired. 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 companys right of control as direct employer.1avvphil.zw+ Paragraph 4 of the same Contract, in which Interserve warranted to petitioner that the former would provide relievers and 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 Contract of Services between Interserve and petitioner did not identify the work needed to be performed and the final result required to be accomplished. Instead, the Contract specified the type of workers Interserve must provide petitioner ("Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD") and their qualifications (technical/vocational course graduates, physically fit, of good moral character, and have not been convicted of any crime). The Contract also states that, "to carry out the undertakings specified in the immediately preceding paragraph, the CONTRACTOR shall employ the necessary personnel," thus, acknowledging that Interserve did not Ma. Cecelia Timbal LlB 2 Rm 402

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yet have in its employ the personnel needed by petitioner and would still pick out such personnel based on the criteria provided by petitioner. In other words, Interserve did not obligate itself to perform an identifiable job, work, or service for petitioner, but merely bound itself to provide the latter with specific types of employees. These contractual provisions strongly indicated that Interserve was merely a recruiting and manpower agency providing petitioner with workers performing tasks directly related to the latters prin cipal business. 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.

South Davao Development Co. vs Gamo (2009) G.R. 171814 Facts: Petitioner South Davao Development Company is the operator of a coconut and mango farm in San Isidro, Davao Oriental and Inawayan/Baracatan, Davao del Sur. On 1963 petitioner hired respondent Sergio L. Gamo (Gamo) as a foreman. Sometime in 1987, petitioner appointed Gamo as a copra maker contractor. Respondents Ernesto Belleza, Carlos Rojas, Maximo Malinao were all employees in petitioners coconut farm, while respondents Felix Terona, Virgilio Cosep, Maximo Tolda, and Nelson Bagaan were assigned to petitioners mango farm. All of the abovenamed respondents (copra workers) were later transferred by petitioner to Gamo as the latters copraceros. From 1987 to 1999, Gamo and petitioner entered into a profit-sharing agreement wherein 70% of the net proceeds of the sale of copra went to petitioner and 30% to Gamo. The copra workers were paid by Gamo from his 30% share. Petitioner wanted to standardize payments to its "contractors" in its coconut farms. Petitioner proposed a new payment scheme to Gamo. The new scheme provided a specific price for each copra making activity. Gamo submitted his counter proposal. Petitioner did not accept Gamos counter proposal since it was higher by at least fifty percent (50%) from its original offer. Without agreeing to the new payment scheme, Gamo and his copra workers started to do harvesting work. Petitioner told them to stop. Eventually, petitioner and Gamo agreed that the latter may continue with the harvest provided that it would be his last "contract" with petitioner. Gamo suggested to petitioner to look for a new "contractor" since he was not amenable to the new payment scheme. Gamo and petitioner failed to agree on a payment scheme, thus, petitioner did not renew the "contract" of Gamo. Gamo and the copra workers alleged that they were illegally dismissed. On the other hand, respondent Eleonor Cosep (Eleonor) was employed as a mango classifier in the packing house of petitioners mango farm in San Isidro, Davao Oriental. Sometime in October 1999, she did not report for work as she had wanted to raise and sell pigs instead. Petitioner, through Malone Pacquiao, tried to convince Eleonor to report for work but to no avail.

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Respondents filed a complaint for illegal dismissal against petitioner. They alleged that sometime in December 1999, petitioner verbally terminated them en masse. Issues: (1) whether there is a valid job contracting between petitioner and Gamo; and (2) whether Eleonor had effectively abandoned her work. Held: To establish the existence of an independent contractor, we apply the following conditions: first, 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 to the result thereof; and second, the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. Gamo and the copra workers did not exercise independent judgment in the performance of their tasks. The tools used by Gamo and his copra workers like the karit, bolo, pangbunot, panglugit and pangtapok are not sufficient to enable them to complete the job. Reliance on these primitive tools is not enough. In fact, the accomplishment of their task required more expensive machineries and equipment, like the trucks to haul the harvests and the drying facility, which petitioner corporation owns. SC also ruled that there exist employer- employee relationship applying the 4 fold test especially the control power exercised by petitioner wherein petitioner corporation transferred the copra workers from their previous assignments to work as copraceros. It was also in the exercise of the same power that petitioner corporation put Gamo in charge of the copra workers although under a different payment scheme. Thus, it is clear that an employer-employee relationship has existed between petitioner corporation and respondents since the beginning and such relationship did not cease despite their reassignments and the change of payment scheme. 3.) It is well settled that abandonment as a just and valid ground for dismissal requires the deliberate and unjustified refusal of the employee to return for work. Two elements must be present, namely: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship. The second element is more determinative of the intent and must be evinced by overt acts. Mere absence, not being sufficient, the burden of proof rests upon the employer to show that the employee clearly and deliberately intended to discontinue her employment without any intention of returning. In Samarca v. Arc-Men Industries, Inc, we held that abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts. An employee who takes steps to protest her layoff cannot be said to have abandoned her work because a charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement. When Eleonor filed the illegal dismissal complaint, it totally negated p etitioners theory of abandonment. Also, to effectively dismiss an employee for abandonment, the employer must comply with the due process requirement of sending notices to the employee. In Brahm Industries, Inc. v. NLRC, we ruled that this requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of serious concern since it Ma. Cecelia Timbal LlB 2 Rm 402

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constitutes a safeguard of the highest order in response to mans innate sense of justice. Petitioner was not able to send the necessary notice requirement to Eleonor. Based on the foregoing, Eleonor did not abandon her work.

Jethro Intelligence & Security Corp., vs Secretary of DOLE (2009) G.R. 172537 Facts: Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security service contractor with a security service contract agreement with co-petitioner Yakult Phils., Inc. (Yakult). On the basis of a complaint filed by respondent Frederick Garcia (Garcia), one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13 th month pay, and night shift differential, the Department of Labor and Employment (DOLE)-Regional Office No. IV conducted an inspection at Yakults premises in Calamba, Laguna in the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required under Department Order No. 18-02. Hearings on Garcias complaint and on the subsequent complaints of his co-respondents Gil Cordero et al. were conducted during which Jethro submitted copies of payrolls covering June 16 to 30, 2003, February to May 16-31, 2004, June 16-30, 2003, and February 1-15, 2004. Jethro failed to submit daily time records of the claimants from 2002 to June 2004, however, despite the order for it to do so. By Order of September 9, 2004, the DOLE Regional Director, noting petitioners failure to rectify the violations noted during the above-stated inspection within the period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of EIGHT HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100 PESOS (P809,210.16) representing their wage differentials, regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential premium and rest day premium. Petitioners were also ordered to submit proof of payment to the claimants within ten calendar days, failing which the entire award would be doubled, pursuant to Republic Act No. 8188, and the corresponding writs of execution and garnishment would be issued. Issues: 1. Whether the SOLE has no jurisdiction over the case because, following Article 129 of the Labor Code, the aggregate money claim of each employee exceeded P5,000.00. 2. Whether petitioner Jethro, as the admitted employer of respondents, could not be expected to keep payrolls and daily time records in Yakults premises as its office is in Quezon City, hence, the inspection conducted in Yakults plant had no basis. 3. Whether or not the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order. Held: While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730). Art. 128 explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary xxx thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representative to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection

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In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakults premises in Calamba, as Jethros offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law. Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor standard violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law. It bears emphasis that the SOLE, under Article 106 of the Labor Code, as amended, exercises quasi-judicial power, at least to the extent necessary to determine violations of labor standards provisions of the Code and other labor legislation. He/she or the Regional Directors can issue compliance orders and writs of execution for the enforcement thereof. The significance of and binding effect of the compliance orders of the DOLE Secretary is enunciated in Article 128 of the Labor Code. And Sec. 5, Rule V (Execution) of the Rules on Disposition of Labor Standards Cases in Regional Offices provides that the filing of a petition for certiorari shall not stay the execution of the appealed order or decision, unless the aggrieved party secures a temporary restraining order (TRO) from the Court. In the case at bar, no TRO or injunction was issued, hence, the issuance of the questioned writs of execution and garnishment by the DOLE-Regional Director was in order.

Traveno et al., vs Bobongon Banana Growers Multi-purpose Coop et al., (2009) G.R. 164205 Facts: Petitioners asseverated that while they worked under the direct control of supervisors assigned by TACOR and DFI, these companies used different schemes to make it appear that petitioners were hired through independent contractors, including individuals, unregistered associations, and cooperatives; that the successive changes in the names of their employers notwithstanding, they continued to perform the same work under the direct control of TACOR and DFI supervisors; and that under the last scheme adopted by these companies, the nominal individual contractors were required to, as they did, join a cooperative and thus became members of respondent Bobongon Banana Growers Multi-purpose Cooperative. Issue: WON the relationship that exist between parties is job contracting. Held: To the Court, the Contract between the Cooperative and DFI, far from being a job contracting arrangement, is in essence a business partnership that partakes of the nature of a joint venture. The rules on job contracting are, therefore, inapposite. The Court may not alter the intention of the contracting parties as gleaned from their stipulations without violating the autonomy of contracts principle under Article 1306 of the Civil Code which gives the contracting parties the utmost liberality and freedom to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good custom, public order or public policy.

Aliviado vs Procter and Gamble Phils. Inc., et al (2010) G.R. 160506 Facts:

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Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or as late as June 1991, to either May 5, 1992 or March 11, 1993. They all individually signed employment contracts with either PrommGem 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 from Promm-Gem or SAPS. SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice. P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products. In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal. On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee relationship between petitioners and P&G. He found that the selection and engagement of the petitioners, the payment of their wages, the power of dismissal and control with respect to the means and methods by which their work was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors. Appealing to the NLRC, petitioners disputed the Labor Arbiters findings. On July 27, 1998, the NLRC rendered a Decision dismissing their appeal. Petitioners then filed a petition for certiorari with the CA, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Labor Arbiter and the NLRC. However, said petition was also denied by the CA. Petitioners filed a motion for reconsideration but the motion was also denied. Issue: Whether or not Promm-Gem and SAPS are labor-only contractors. Held: Promm-Gem is an independent contractor however, SAPS is a labor-only contractor. The pertinent Labor Code provision on the matter states: ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters 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 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 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.

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Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 1802, distinguishes between legitimate and labor-only contracting: Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service. Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, 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 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 ii) [T]he contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as amended. "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 reserved 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. Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. 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. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02. The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not Ma. Cecelia Timbal LlB 2 Rm 402

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merely contractual or project, employees. This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates on the part of Promm-Gem bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order. 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. In Vinoya v. National Labor Relations Commission, the Court held that "[w]ith the current economic atmosphere in the country, the paid-in capitalization of PMCI amounting to P75,000.00 cannot be considered as substantial capital and, as such, PMCI cannot qualify as an independent contractor."Applying the same rationale to the present case, it is clear that SAPS having a paid-in capital of only P31,250 - has no substantial capital. SAPS lack of substantial capital is underlined by the records which show that its payroll for its merchandisers alone for one month would already total P44,561.00. It had 6-month contracts with P&G. Yet SAPS failed to show that it could complete the 6-month contracts using its own capital and investment. Its capital is not even sufficient for one months payroll. SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate its needed revenue to sustain its operations independently. Substantial capital refers to capitalization used in the performance or completion of the job, work or service contracted out. In the present case, SAPS has failed to show substantial capital. Furthermore, the petitioners have been charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the manufacturing business, which is the principal business of P&G. 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. Consequently, petitioners recruited and supplied by SAPS -- which engaged in labor-only contracting -- are considered as the employees of P&G while those having worked under, and been dismissed by Promm-Gem, are considered the employees of Promm-Gem, not of P&G.

DBP vs NLRC (1995) G.R. 108031 Facts: In September 1983, petitioner Development Bank of the Philippines, as mortgagee of TPWII, foreclosed its plant facilities and equipment. Nevertheless, TPWII continued its business operations interrupted only by brief shutdowns for the purpose of servicing its plant facilities and equipment. In January 1986 petitioner took possession of the Ma. Cecelia Timbal LlB 2 Rm 402

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foreclosed properties. From then on the company ceased its operations. As a consequence private respondent Leonor A. Ang was on 15 April 1986 verbally terminated from the service. After hearing on a complaint for separation pay, 13th month pay, vacation and sick leave pay, salaries and allowances against TPWII, its General Manager, and petitioner, the Labor Arbiter found TPWII primarily liable to private respondent but only for her separation pay and vacation and sick leave pay because her claims for unpaid wages and 13th month pay were later paid after the complaint was filed. The General Manager was absolved of any liability. But with respect to petitioner, it was held subsidiarily liable in the event the company failed to satisfy the judgment. The Labor Arbiter rationalized that the right of an employee to be paid benefits due him from the properties of his employer is superior to the right of the latter's mortgagee, citing this Court's resolution in PNB v. Delta Motor Workers Union. On 16 November 1992 public respondent National Labor Relations Commission affirmed the ruling of the Labor Arbiter.Petitioner argues that the decision of public respondent runs counter to the consistent rulings of this Court in a long line of cases emphasizing that the applicant of Art. 110 of the Labor Code is contingent upon the institution of bankruptcy or judicial liquidation proceedings against the employer.

Issue: Whether or not Art. 110 of the Labor Code, as amended, which refers to worker preference in case of bankruptcy or liquidation of an employer's business, is applicable to the present case notwithstanding the absence of any formal declaration of bankruptcy or judicial liquidation of TPWII. Held: Article 110 is applicable NOT applicable in the absence of any formal declaration of bankruptcy or judicial liquidation of TPWII.We hold that public respondent gravely abused its discretion in affirming the decision of the Labor Arbiter. Art. 110 should not be treated apart from other laws but applied in conjunction with the pertinent provisions of the Civil Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the debtor is avoided. Art. 110, then prevailing, provides: ARTICLE 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of

an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. Complementing Art. 110, Sec. 10, Rule VIII, Book III, of the Revised Rules and Regulations Implementing the Labor Code provides: SECTION 10. Payment of wages in case of bankruptcy. Unpaid wages earned by the employees

before the declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. We interpreted this provision in Development Bank of the Philippines v. Santos to mean that . . . a declaration of bankruptcy or a judicial liquidation must be present before the worker's preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order . . .

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The rationale is that to hold Art. 110 to be applicable also to extrajudicial proceedings would be putting the worker in a better position than the State which could only assert its own prior preference in case of a judicial proceeding. Art. 110, which was amended by R.A. 6715 effective 21 March 1989, now reads: ARTICLE 110. Worker preference in case of bankruptcy. In the event of bankruptcy or liquidation of

an employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. Obviously, the amendment expanded the concept of "worker preference" to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. The Rules and Regulations Implementing R.A. 6715, approved 24 May 1989, also amended the corresponding implementing rule, and now reads: SECTION 10. Payment of wages and other monetary claims in case of bankruptcy. In case of

bankruptcy or liquidation of the employer's business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid. Although the terms "declaration" (of bankruptcy) or "judicial" (liquidation) have been notably eliminated, still in Development Bank of the Philippines v. NLRC , this Court did not alter its original position that the right to preference given to workers under Art. 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. In effect, we reiterated our previous interpretation in Development Bank of the Philippines v. Santos where we said: It (worker preference) will find application when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the 'claims of the Government and other creditors' may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476); the adjudication made will be binding on all parties-in-interest since those proceedings are proceedings in rem; and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony. In ruling, as we did, in Development Bank of the Philippines v. Santos, we took into account the following pronouncements:In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvent's creditors may be given and where the claims of preferred creditors may be bindingly adjudicated. The rationale therefore has been expressed in the recent case of DBP v. Secretary of Labor (G.R. No. 79351, 28 November 1989), which we quote: A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtors are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale (of) the debtor's specific property. Indubitably, the preferential right of

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credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established. In the present case, there is as yet no declaration of bankruptcy nor judicial liquidation of TPWII. Hence, it would be premature to enforce the worker's preference.The additional ratiocination of public respondent that "under Article 110 of the Labor Code complainant enjoys a preference of credit over the properties of TPWII being held in possession by DBP," is a dismal misconception of the nature of preference of credit, a subject matter which we have already discussed in clear and simple terms and even distinguished from a lien in Development Bank of the Philippines v. NLRC: . . . A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. . . . In the words of Republic v. Peralta, supra: 'Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered by Article 2241, number 6: 'claims for laborers' wages, on the goods manufactured or the work done'; or by Article 2242, number 3: 'claims of laborers and other workers engaged in the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals and other works. . . . To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6, and 2242, number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2244. The DBP anchors its claims on a mortgage credit. A mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable against the whole world. It is a lien on an identified immovable property, which a preference is not. A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article 110, when not falling within Article 2241 (6) and Article 2242 (3) of the Civil Code and not attached to any specific property, is an ordinary preferred credit although its impact is to move it from second priority to first priority in order of preference established by Article 2244 of the Civil Code. The present controversy could have been easily settled by public respondent had it referred to ample jurisprudence which already provides the solution. Stare decisis et non quieta movere. Once a case is decided by this Court as the final arbiter of any justiciable controversy one way, then another case involving exactly the same point at issue should be decided in the same manner. Public respondent had no choice on the matter. It could not have ruled any other way. This Court having spoken in a string of cases against public respondent, its duty is simply to obey judicial precedents. Any further disregard, if not defiance, of our rulings will be considered a ground to hold public respondent in contempt.

Batong Buhay Gold Mines vs Dela Serna (1999) G.R. 86963 Facts: Ma. Cecelia Timbal LlB 2 Rm 402

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On February 5, 1987, private respondents who are employees of petitioner Batong Buhay Gold Mines, Inc. (BBGMI), filed a complaint against BBGMI for non-payment of basic pay and allowances pursuant to Wage Orders Nos. 2 and 5, 13th month pay for 1985, 1986 and 1987, non-payment of salaries, vacation and sick leave and salaries of employees who were placed on forced leave since November 1985. Upon motion of private respondents, an inspection was conducted on BBGMI. The Regional Director adopted the recommendation of the Labor Standards and Welfare Officers and he issued an Order dated July 31, 1987 directing BBGMI to pay to private respondent the sum of P4,818,746.40. A writ of execution was issued and some of the properties of BBGMI were seized and sold at public auction. Finally, BBGMI posted a supersedeas bond which restrained further enforcement of the writ of execution. BBGMI appealed the Order dated July 31, 1987 of the Regional Director to public respondent Undersecretary Labor and Employment Dionisio dela Serna claiming that the Regional Director had no jurisdiction over the case. Acting thereon, the public respondent issued an Order dated September 16, 1988 upholding the jurisdiction of the Regional Director and annulling all the auction sales for nsufficiency of price. Consequently, motions for intervention were filed by MFT Corp. as the highest bidder in the auction sale conducted on October 29, 1987, and Salter Holdings Pty. Ltd. claiming that MFT Corp. had already assigned its rights over the subject properties in its favor. The said motions were granted by the public respondent and in his order dated December 14, 1988 it directed the exclusion from annulment of the properties sold at the October 29, 1987 auction sale as claimed by the intervenors. Hence, this petition which questioned the jurisdiction of the Regional Director over the complaint and whether or not the auction sales conducted are valid. The Court ruled that the Regional Director has jurisdiction over the BBGMI employees. The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional Director of the Department of Labor and Employment (DOLE). Labor standards refers to the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety and health standards. Labor standards cases are governed by Article 128 (b) of the Labor Code. Issue: Whether or not the auction sales conducted by Special Sheriff Ramos valid to satisfy the judgment award. Held: The auction sales in the first order were invalid but on different grounds. The auction sale in the second order. It bears stressing that the writ of execution issued by the Regional Director led to the several auction sales conducted on September 24, 1987, October 2, 1987, October 23, 1987, October 29, 1987 and October 30, 1987. In the first Order of public respondent, the five (5) auction sales were declared null and void. As the public respondent put it, "the scandalously low price for which the personal properties of the respondent were sold leads us to no other recourse but to invalidate the auction sales conducted by the special sheriff." In the September 16, 1988 Order of public respondent, the personal properties and corresponding prices for which they were sold were to satisfy the judgment award in the amount of P4,818,746.00." As a general rule, findings of fact and conclusion of law arrived at by quasi-judicial agencies are not to be disturbed absent any showing of grave abuse of discretion tainting the same. But in the case under scrutiny, there was grave abuse of discretion when the public respondent, without any evidentiary support, adjudged such prices as "scandalously low". He merely relied on the self-serving assertion by the petitioner that the value of the auctioned properties was more than the price bid. Obviously, this ratiocination did not suffice to set aside the auction sales. The Ma. Cecelia Timbal LlB 2 Rm 402

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presumption of regularity in the performance of official function is applicable here. Conformably, any party alleging irregularity vitiating auction sales must come forward with clear and convincing proof. Furthermore, it is a well-settled principle that: "Mere inadequacy of price is not, of itself sufficient ground to set

aside an execution sale where the sale is regular, proper and legal in other respects, the parties stand on an equal footing, there are no confidential relation between them, there is no element of fraud, unfairness, or oppression, and there is no misconduct, accident, mistake or surprise connected with, and tending to cause, the inadequacy." Consequently, in declaring the nullity of the subject auction sales on the ground of inadequacy of price, the public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction. But, this is not to declare the questioned auction sales as valid. The same are null and void since on the properties of petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines. The aforementioned documents were executed between the petitioner and Development Bank of the Philippines (DBP) even prior to the filing of the complaint of petitioner's employees. The properties having been mortgaged to DBP, the applicable law is Section 14 of Executive Order No. 81, dated 3 December 1986, otherwise known as the "The 1986 Revised Charter of the Development Bank of the Philippines," which exempts the properties of petitioner mortgaged to DBP from attachment or execution sales. Section 14 of E.O. 81, reads: "SECTION 14. Exemption from Attachment. The provisions of any law to the contrary notwithstanding,

securities on loans and/or other accommodations granted by the Bank or its predecessor-in-interest shall not be subject to attachment, execution or any other court process, nor shall they be included in the property of insolvent persons or institutions, unless all debts and obligations of the Bank or its predecessor-in-interest, penalties, collection of expenses, and other charges, subject to the provisions of paragraph (e) of Sec. 9 of this Charter." Private respondents contend that even if subject properties were mortgaged to DBP (now under Asset Privatization Trust), Article 110 of the Labor Code, as amended by RA 6715, applies just the same. According to them, the said provision of law grants preference to money claims of workers over and above all credits of the petitioner. This contention is untenable. In the case of DBP vs. NLRC, the Supreme Court held that the workers preference regarding wages and other monetary claims under Article 110 of the Labor Code, as amended, contemplates bankruptcy or liquidation proceedings of the employer's business. What is more, it does not disregard the preferential lien of mortgagees considered as preferred credits under the provisions of the New Civil Code on the classification, concurrence and preference of credits. It is well to remember that the said properties were transferred to the intervenors, when Fidel Bermudez, the highest bidder at the auction sale, sold the properties to MFT Corporation which, in turn, sold the same properties to Salter Holdings Pty., Ltd. Public respondent opined that the contract of sale between the intervenors and the highest bidder should be respected as these sales took place during the interregnum after the auction sale was conducted on October 29, 1987 and before the issuance of the first disputed Order declaring all the auction sales null and void. On this issue, the Court rules otherwise.As regards personal properties, the general rule is that title, like a stream, cannot rise higher than its source. Consequently, a seller without title cannot transfer a title better than what he holds. MFT Corporation and Salter Holdings Pty., Ltd. trace their title from Fidel Bermudez, who was the highest bidder of a void auction sale over properties exempt from execution. Such being the case, the subsequent sale made by him (Fidel Bermudez) is incapable of vesting title or ownership in the vendee. The Order dated December 14, 1988, declaring the October 29, 1987 auction sale as valid, was issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Ma. Cecelia Timbal LlB 2 Rm 402

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Barayoga vs Asset Privatization Trust (2005) G.R. 160073 Facts: Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili, Camarines Sur.On December 8, 1986, [Respondent] Asset Privatization Trust (APT), a public trust was created under Proclamation No. 50, as amended, mandated to take title to and possession of, conserve, provisionally manage and dispose of non-performing assets of the Philippine government identified for privatization or disposition. Pursuant to Section 23 of Proclamation No. 50, former President Corazon Aquino issued Administrative Order No. 14 identifying certain assets of government institutions that were to be transferred to the National Government. Among the assets transferred was the financial claim of the Philippine National Bank against BISUDECO in the form of a secured loan. Consequently, by virtue of a Trust Agreement executed between the National Government and APT on February 27, 1987, APT was constituted as trustee over BISUDECO's account with the PNB. Sometime later, on August 28, 1988, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor) to take over the management of the sugar plantation and milling operations until August 31, 1992. Meanwhile, because of the continued failure of BISUDECO to pay its outstanding loan with PNB, its mortgaged properties were foreclosed and subsequently sold in a public auction to APT, as the sole bidder. On April 2, 1991, APT was issued a Sheriff's Certificate of Sale. On July 23, 1991, the union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages and other labor standard benefits plus damages. In the meantime, on July 15, 1992, APT's Board of Trustees issued a resolution accepting the offer of Bicol-Agro-Industrial Cooperative (BAPCI) to buy the sugar plantation and mill. Again, on September 23, 1992, the board passed another resolution authorizing the payment of separation benefits to BISUDECO's employees in the event of the company's privatization. Then, on October 30, 1992, BAPCI purchased the foreclosed assets of BISUDECO from APT and took over its sugar milling operations under the trade name Peafrancia Sugar Mill (Pensumil). On December 17, 1992, the union filed a similar complaint, later to be consolidated with its earlier complaint and docketed as RAB V Case No. 07-00184-91. On March 2, 1993, it filed an amended complaint, impleading as additional party respondents APT and Pensumil. In their Position Paper, the union alleged that when Philsucor initially took over the operations of the company, it retained BISUDECO's existing personnel under the same terms and conditions of employment. Nonetheless, at the start of the season sometime in May 1991, Philsucor started recalling workers back to work, to the exception of the union members. Management told them that they will be re-hired only if they resign from the union. Just the same, thereafter, the company started to employ the services of outsiders under the 'pakyaw' system. BISUDECO, Pensumil and APT all interposed the defense of lack of employer-employee relationship.After due proceedings, on April 30, 1998, Labor Arbiter Fructuoso T. Aurellano disposed as follows: 'WHEREFORE, premises considered, respondent APT is hereby ordered to pay herein complainants of the mandated employment benefits provided for under Section 27 of Proclamation No. 50 which benefits had been earlier extended to other employees similarly situated.

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The NLRC affirmed APT's liability for petitioners' money claims. While no employer-employee relationship existed between members of the petitioner union and APT, at the time of the employees' illegal dismissal, the assets of BISUDECO had been transferred to the national government through APT. Moreover, the NLRC held that APT should have treated petitioners' claim as a lien on the assets of BISUDECO. The Commission opined that APT should have done so, considering its awareness of the pending complaint of petitioners at the time BISUDECO sold its assets to BAPCI, and APT started paying separation pay to the workers. Finding their computation to be in order, the NLRC awarded to petitioners their money claims for underpayment, labor-standard benefits, and ECOLA. It also awarded them their back wages, computed at the prevailing minimum wage, for the period May 1, 1991 (the date of their illegal dismissal) until October 30, 1992 (the sale of BISUDECO assets to the BAPCI). On the other hand, the NLRC ruled that petitioners were not entitled to separation pay because of the huge business losses incurred by BISUDECO, which had resulted in its bankruptcy. Respondent sought relief from the CA via a Petition for Certiorari under Rule 65 of the Rules of Court. The CA ruled that APT should not be held liable for petitioners' claims for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages, as well as other labor-standard benefits plus damages. As found by the NLRC, APT was not the employer of petitioners, but was impleaded only for possessing BISUDECO's mortgaged properties as trustee and, later, as the highest bidder in the foreclosure sale of those assets. Citing Batong Buhay Gold Mines v. Dela Serna, 8 the CA concluded that petitioners' claims could not be enforced against APT as mortgagee of the foreclosed properties of BISUDECO. Clarification of the facts according to the SC: It should be stressed at the outset that, pursuant to Administrative Order No. 14, Series of 1987, PNB's assets, loans and receivables from its borrowers were transferred to APT as trustee of the national government. Among the liabilities transferred to APT was PNB's financial claim against BISUDECO, not the latter's assets and chattel. Contrary to petitioners' assertions, BISUDECO remained the owner of the mortgaged properties in August 1988, when the Philippine Sugar Corporation (Philsucor) undertook the operation and management of the sugar plantation until August 31, 1992, under a so-called Contract of Lease between the two corporations. At the time, APT was merely a secured creditor of BISUDECO. It was only in April 1991 that APT foreclosed the assets and chattels of BISUDECO because of the latter's continued failure to pay outstanding loan obligations to PNB/APT. The properties were sold at public auction to APT, the highest bidder, as indicated in the Sheriff's Certificate of Sale issued on April 2, 1991. It was only in September 1992 (after the expiration of the lease/management Contract with Philsucor in August 1992), however, when APT took over BISUDECO assets, preparatory to the latter's privatization. In the present case, petitioner-union's members who were not recalled to work by Philsucor in May 1991 seek to hold APT liable for their monetary claims and allegedly illegal dismissal. Significantly, prior to the actual sale of BISUDECO assets to BAPCI on October 30, 1992, the APT board of trustees had approved a Resolution on September 23, 1992. The Resolution authorized the payment of separation benefits to the employees of the corporation in the event of its privatization. Not included in the Resolution, though, were petitioner-union's members who had not been recalled to work in May 1991. Issues and Rulings: I. Whether or not APT is liable to pay petitioners' monetary claims, including back wages from May 1, 1991, to

October 30, 1992 (the date of the sale of BISUDECO assets to BAPCI).

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We rule in the negative. The duties and liabilities of BISUDECO, including its monetary liabilities to its employees, were not all automatically assumed by APT as purchaser of the foreclosed properties at the auction sale. Any assumption of liability must be specifically and categorically agreed upon. In Sundowner Development Corp. v. Drilon, the Court ruled that, unless expressly assumed, labor contracts like collective bargaining agreements are not enforceable against the transferee of an enterprise. Labor contracts are in personam and thus binding only between the parties. No succession of employment rights and obligations can be said to have taken place between the two. Between the employees of BISUDECO and APT, there is no privity of contract that would make the latter a substitute employer that should be burdened with the obligations of the corporation. To rule otherwise would result in unduly imposing upon APT an unwarranted assumption of accounts not contemplated in Proclamation No. 50 or in the Deed of Transfer between the national government and PNB. Furthermore, under the principle of absorption, a bona fide buyer or transferee of all, or substantially all, the properties of the seller or transferor is not obliged to absorb the latter's employees. The most that the purchasing company may do, for reasons of public policy and social justice, is to give preference of reemployment to the selling company's qualified separated employees, who in its judgment are necessary to the continued operation of the business establishment. In any event, the national government (in whose trust APT previously held the mortgage credits of BISUDECO) is not the employer of petitioner-union's members, who had been dismissed sometime in May 1991, even before APT took over the assets of the corporation. Hence, under existing law and jurisprudence, there is no reason to expect any kind of bailout by the national government. Even the NLRC found that no employer-employee relationship existed between APT and petitioners. Thus, the Commission gravely abused its discretion in nevertheless holding that APT, as the transferee of the assets of BISUDECO, was liable to petitioners. A careful reading of the Court's Decision in that case plainly shows that it does not contain the words quoted by counsel for petitioners. At this juncture, we admonish their counsel of his bounden duty as an officer of the Court to refrain from misquoting or misrepresenting the text of its decisions. Ever present is the danger that, if not faithfully and exactly quoted, they may lose their proper and correct meaning, to the detriment of other courts, lawyers and the public who may thereby be misled. In that case, contrary to the assertions of petitioners, the Court held as follows: "There can be no controversy for it is a principle well-recognized, that it is within the employer's legitimate sphere of management control of the business to adopt economic policies or make some changes or adjustments in their organization or operations that would insure profit to itself or protect the investment of its stockholders. As in the exercise of such management prerogative, the employer may merge or consolidate its business with another, or sell or dispose all or substantially all of its assets and properties which may bring about the dismissal or termination of its employees in the process. Such dismissal or termination should not however be interpreted in such a manner as to permit the employer to escape payment of termination pay. . . . . "In a number of cases on this point, the rule has been laid down that the sale or disposition must be motivated by good faith as an element of exemption from liability. Indeed, an innocent transferee of a business establishment has no liability to the employees of the transferor to continue employing them. Nor is the transferee liable for past unfair labor practices of the previous owner, except, when the liability therefor is assumed by the new employer under the contract of sale, or when liability arises because of the new owner's participation in thwarting or defeating the rights of the employees." Ma. Cecelia Timbal LlB 2 Rm 402

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In other words, the liabilities of the previous owner to its employees are not enforceable against the buyer or transferee, unless (1) the latter unequivocally assumes them; or (2) the sale or transfer was made in bad faith. Thus, APT cannot be held responsible for the monetary claims of petitioners who had been dismissed even before it actually took over BISUDECO's assets. II. Whether or not the claims of herein petitioners can be enforced against the foreclosed properties of

BISUDECO. No. It should be remembered that APT merely became a transferee of BISUDECO's assets for purposes of conservation because of its lien on those assets a lien it assumed as assignee of the loan secured by the corporation from PNB. Subsequently, APT, as the highest bidder in the auction sale, acquired ownership of the foreclosed properties. Relevant to this transfer of assets is Article 110 of the Labor Code, as amended by Republic Act No. 6715, which reads: "Article 110. Worker's preference in case of bankruptcy. In the event of bankruptcy or liquidation of the employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims shall be paid in full before the claims of the Government and other creditors may be paid." This Court has ruled in a long line of cases that under Articles 2241 and 2242 of the Civil Code, a mortgage credit is a special preferred credit that enjoys preference with respect to a specific/determinate property of the debtor. On the other hand, the worker's preference under Article 110 of the Labor Code is an ordinary preferred credit. While this provision raises the worker's money claim to first priority in the order of preference established under Article 2244 of the Civil Code, the claim has no preference over special preferred credits. Thus, the right of employees to be paid benefits due them from the properties of their employer cannot have any preference over the latter's mortgage credit. In other words, being a mortgage credit, APT's lien on BISUDECO's mortgaged assets is a special preferred lien that must be satisfied first before the claims of the workers. Development Bank of the Philippines v. NLRC explained the rationale of this ruling as follows: ". . . . A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent's assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. . . ." Furthermore, workers' claims for unpaid wages and monetary benefits cannot be paid outside of a bankruptcy or judicial liquidation proceedings against the employer. 26 It is settled that the application of Article 110 of the Labor Code is contingent upon the institution of those proceedings, during which all creditors are convened, their claims ascertained and inventoried, and their preferences determined. Assured thereby is an orderly determination of the preference given to creditors' claims; and preserved in harmony is the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code. The Court hastens to add that the present Petition was brought against APT alone. In holding that the latter, which has never really been an employer of petitioners, is not liable for their claims, this Court is not reversing or ruling upon their entitlement to back wages and other unpaid benefits from their previous employer. Ma. Cecelia Timbal LlB 2 Rm 402

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Philippine Airlines vs Zamora (2007) G.R. 166996 Facts: On 1 February 2005, the Court of Appeals promulgated an Amended Decision modifying its 13 August 2004 Decision but at the same time resolving petitioner PAL's Motion for Reconsideration in this wise: WHEREFORE, this Court's August 13, 2004 decision is hereby AMENDED, the dispositive portion to read as follows: WHEREFORE, in view of the foregoing, the petition is GRANTED. The NLRC resolution dated April 27, 2001 is MODIFIED. Considering that petitioner is a detention prisoner making reinstatement impossible, PAL is hereby ordered to pay petitioner Zamora his separation pay, in lieu of reinstatement, to be computed at one month salary for every year of service from February 9, 1981 and backwages to be computed from December 19, 1995, both up to October 1, 2000, the date of his incarceration. Considering that PAL is still under receivership, the monetary claims of petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits. The Court of Appeals took into account respondent Zamora's incarceration when it recalled its order of reinstatement. Anent its earlier pronouncement against the suspension of the proceedings of the case owing to the present rehabilitation of petitioner PAL, the appellate court only had this to say: However, since PAL is still under receivership, the provisions of PD 902-A, should apply. The enforcement of the monetary claims of petitioner should be brought before the PAL Rehabilitation Receiver for proper disposition. Issue: WON respondent Zamoras monetary claim should be presented to the PAL rehabilitation receiver, subject to the rules on preference of credits. Held: No. The relevant law dealing with the suspension of actions for claims against corporations is Presidential Decree No. 902-A, 52 as amended. The term "claim," as contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers "to debts or demands of a pecuniary nature. It means 'the assertion of a right to have money paid. It is plain from the foregoing provisions of law that "upon the appointment [by the SEC] of a management committee or a rehabilitation receiver," all actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions, neither should this Court. Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension what are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the execution stage after the case had become final and executory. The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. As to the appellate court's amended directive that "the monetary claims of petitioner Zamora must be presented to the PAL Ma. Cecelia Timbal LlB 2 Rm 402

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Rehabilitation Receiver, subject to the rules on preference of credits," the same is erroneous for there has been no declaration of bankruptcy or judicial liquidation. Thus, the rules on preference of credits do not apply.

Philippine Airlines vs Philippine Airlines Employees Association (2007) G.R. 142399 Facts: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, as amended, seeking to set aside the 30 April 1999 Decision, and 10 March 2000 Resolution of the Court of Appeals, in CA-G.R. SP No. 50161 entitled, "Philippine Airlines, Inc. v. National Labor Relations Commission and Philippine Airlines Employees Association (PALEA)." In the assailed decision, the Court of Appeals dismissed the petition filed by herein petitioner Philippine Airlines, Inc. (PAL); accordingly, the appellate court affirmed the 28 January 1998 Decision and 23 June 1998 Resolution, of the First Division of the National Labor Relations Commission (NLRC), reversing and setting aside the 12 March 1990 Decision, of the Labor Arbiter in NLRC NCR No. 00-03-01134-89, and ordering the herein PAL to "pay the 13th month pay or mid-year bonus of the (concerned) members (of PALEA). Issue: Can a court or quasi-judicial agency amend or alter a Collective Bargaining Agreement by expanding its coverage to non-regular employees who are not covered by the bargaining unit? Held: All told, this Court is constrained to suspend the progress, development and other proceedings in the present petition.We take note, however, that the Securities and Exchange Commission (SEC) had mandated the rehabilitation of PAL. On 17 May 1999, the SEC approved the "Amended and Restated Rehabilitation Plan" of PAL and appointed a "permanent rehabilitation receiver for the latter." To date, PAL is still undergoing rehabilitation. The pertinent law concerning the suspension of actions for claims against corporations is Presidential Decree No. 902A, as amended.The underlying principle behind the suspension of claims pending rehabilitation proceedings was explained in the case of BF Homes, Incorporated v. Court of Appeals. This Court clarified that:In light of these powers, the reason for suspending actions for claims against the corporation should not be difficult to discover. It is not really to enable the management committee or the rehabilitation receiver to substitute the defendant in any pending action against it before any court, tribunal, board or body. Obviously, the real justification is to enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from any judicial or extrajudicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation. The Court holds that rendition of judgment while petitioner is under a state of receivership could render violence to the rationale for suspension of payments in Section 6 (c) of P.D. 902-A, if the judgment would result in the granting of private respondent's claim to separation pay, thus defeating the basic purpose behind Section 6 (c) of P.D. 902-A which is to prevent dissipation of the distressed company's resources. In another PAL case, specifically, Philippine Airlines, Inc. v. Court of Appeals, this Court again resolved to grant PAL's Motion for Suspension of Proceedings by reason of the SEC Orders dated 23 June 1998 and 1 July 1998, appointing an Interim Rehabilitation Receiver and enjoining the suspension of all claims for payment against PAL, respectively. Therein it was declared that this Court is "not prepared to depart from the well-established doctrines" essentially maintaining that all actions for claims against a corporation pending before any court, tribunal or board

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shall ipso jure be suspended in whatever stage such actions may be found upon the appointment by the SEC of a management committee or a rehabilitation receiver. And, most recently, is the case of Philippine Airlines v. Zamora, we held in simple terms that: Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension what are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the execution stage after the case had become final and executory. The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. In actual fact, allowing such actions to proceed would only increase the work-load of the management committee or the rehabilitation receiver, whose precious time and effort would be dissipated and wasted in defending suits against the corporation, instead of being channeled toward restructuring and rehabilitation.

Castillo vs Uniwide Warehouse Club (2010) G.R. 169725 Facts: This case stems from a complaint filed by Castillo against Uniwide and its President Jimmy Gow for payment of Saturdays worked for the year 2001; holiday pay; separation pay; actual, moral and exemplary damages; and attorneys fees. Two months after the filing of the complaint however, the respondents moved to dismiss said complaint on the ground that it petitioned the SEC for suspension of payments and approval of its rehabilitation plan. It appears that on June 29, 1999, the SEC had ruled favorably on the petition and ordered that all claims, actions and proceedings against herein respondents pending before any court, tribunal, board, office, body or commission be suspended, and that following the appointment of an interim receiver, the suspension order had been extended to until February 7, 2000. On April 11, 2000, the SEC declared the Uniwide Group of Companies to be in a state of suspension of payments and approved its rehabilitation plan. Labor Arbiter and NLRC denied the motion of respondent. Respondent then filed a petition under Rule 65 with the Court of Appeals which found merit in the petition and reversed the resolutions of the NLRC affirming the Labor Arbiter. Held: Petioner argues that suspension of the proceedings is not in order, because his claim against respondent and the latters corresponding liability are yet to be determined. Respondents countered by saying that the CA was correct since it was among those actions for claims that are automatically suspended on the appointment of a management committee or receiver according to Se. 6 of PD 902-A. Respondents advance the notion that while said Section 6 expressly referred to suspension of pending claims, the clear and unmistakable intention of the law is to bar the filing of any such claims in order to maintain parity of status among the different creditors of the distressed corporation at least while the rehabilitation efforts are ongoing. To begin with, corporate rehabilitation connotes the restoration of the debtor to a position of successful operation and solvency, if it is shown that its continued operation is economically feasible and its creditors can recover by way of the present value of payments projected in the rehabilitation plan, more if the corporation continues as a going concern than if it is immediately liquidated. It Whether or not the proceeding can be validly suspended. Contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency, the purpose being to enable the company to gain a new lease on life and allow its creditors to be paid their claims out of Ma. Cecelia Timbal LlB 2 Rm 402

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its earnings. An essential function of corporate rehabilitation is the mechanism of suspension of all actions and claims against the distressed corporation, which operates upon the due appointment of a management committee or rehabilitation receiver. P.D. No. 902-A, as amended. Section 6(c) of the law mandates that, upon appointment of a management committee, rehabilitation receiver, board, or body, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board, or body shall be suspended. In a plethora of cases, the Court has upheld the suspension of proceedings regaring claims against distressed coprations pursuant to PD902-A. The actions that were suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. More importantly, the new rules on corporate rehabilitation, as well as the interim rules, provide an all-encompassing definition of the term and, thus, include all claims or demands of whatever nature or character against a debtor or its property, whether for money or otherwise. There is no doubt that petitioners claim in this case, arising as it does from his alleged illegal dismissal, is a claim covered by the suspension order issued by the SEC, as it is one for pecuniary consideration. Jurisprudence is settled that the suspension of proceedings referred to in the law uniformly applies to all actions for claims file d against a corporation, partnership or association under management or receivership, without distinction, except only those expenses incurred in the ordinary course of business. In the oft-cited case of Rubberworld (Phils.) Inc. v. NLRC, the Court noted that aside from the given exception, the law is clear and makes no distinction as to the claims that are suspended once a management committee is created or a rehabilitation receiver is appointed. Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. Philippine Airlines, Inc. v. Zamora declares that the automatic suspension of an action for claims against a corporation under a rehabilitation receiver or management committee embraces all phases of the suit, that is, the entire proceedings of an action or suit and not just the payment of claims. It must be conceded that the date when the claim arose, or when the action was filed, has no bearing at all in deciding whether the given action or claim is covered by the stay or suspension order. What matters is that as long as the corporation is under a management committee or a rehabilitation receiver, all actions for claims against it, whether for money or otherwise, must yield to the greater imperative of corporate revival, excepting only, as already mentioned, claims for payment of obligations incurred by the corporation in the ordinary course of business. In the instant case, a Certification issued by the SEC and signed by its General Counsel states that as of August 17, 2006, the petition of Uniwide Sales, Inc. for declaration of suspension of payments and rehabilitations was still pending with it, and that the company was still under its rehabilitation proceedings. Hence, since petitioners claim was one for wages accruing from the time of dismissal, as well as for benefits and damages, the same should have been suspended pending the rehabilitation proceedings. In other words, the Labor Arbiter should have abstained from resolving the illegal dismissal case and, instead, directed petitioner to present his claim to the rehabilitation receiver duly appointed by the SEC, inasmuch as the stay or suspension order was effective and it subsisted from issuance until the dismissal of the petition for rehabilitation or the termination of the rehabilitation proceedings. The Court of Appeals was thus correct in directing the suspension of the proceedings.

Bank of the Philippine Islands vs NLRC (1989) G.R. 69746-47 Facts: On March 22, 1983, the NLRC resolved the bargaining deadlock between BPI and its employees by fixing the wage increases and other economic benefits and ordering them to be embodied in a new collective bargaining agreement to be concluded by BPIEU-Metro Manila and ALU with BPI. It did not decide the intra-union dispute, however, holding that this was under the original jurisdiction of the med-arbiter and the exclusive appellate jurisdiction of the Bureau of Labor Relations. Ma. Cecelia Timbal LlB 2 Rm 402

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Following the promulgation by the NLRC of its decision of March 23, 1983, in Certified Cases Nos. 0279 and 0281, private respondent Ignacio Lacsina filed a motion for the entry of attorney's lien for legal services to be rendered by him as counsel of BPIEU in the negotiation of the new collective bargaining agreement with BPI.The basis of this motion was a resolution dated August 26, 1982, signed by members of the BPI Employees Union, providing for the terms and conditions, including attorneys fees and his authority to check -off with the company. Accordingly, BPI deducted the amount of P200.00 from each of the employees who had signed the authorization. Upon learning about this, the petitioners (ALU and BPIEU-ALU) challenged the said order, on the ground that it was not authorized under the Labor Code. On April 15, 1983, the NLRC issued a resolution setting aside the order and requiring BPI to safe-keep the amounts sought to be deducted "until the rights thereto of the interested parties shall have been determined in appropriate proceedings. Subsequently, the NLRC issued an en banc resolution dated September 27, 1983, ordering the release to Lacsina of the amounts deducted "except with respect to any portion thereof as to which no individual signed authorization has been given by the members concerned or where such authorization has been withdrawn. The petitioners now impugn this order as contrary to the provisions and spirit of the Labor Code. While conceding that Lacsina is entitled to payment for his legal services, they argue that this must be made not by the individual workers directly, as this is prohibited by law, but by the union itself from its own funds. In support of this contention, they invoke Article 222(b) of the Labor Code, providing as follows: Art. 222. Appearances and Fees. (b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining

negotiations or conclusions of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorneys fees may be charged against union funds in an amount to be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void. They also cite the case of Pacific Banking Corporation v. Clave, where the lawyer's fee was taken not from the total economic benefits received by the workers but from the funds of their labor union. Issue: Is the mentioned Resolution signed by the BPI employees granting attorneys fees to Lacsina to be deducted from the employees wages valid? Held: Yes. The Court reads the afore-cited provision as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own funds as distinguished from the union funds. The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations with the management. The obligation to pay the attorney's fees belongs to the union and cannot be shunted to the workers as their direct responsibility. Neither the lawyer nor the union itself may require the individual workers to assume the obligation to pay the attorney's fees from their own pockets. So categorical is this intent that the law also makes it clear that any agreement to the contrary shall be null and void ab initio. We see no such imposition in the case at bar. A reading of the above-cited resolution will clearly show that the signatories thereof have not been in any manner compelled to undertake the obligation they have there assumed. On the contrary, it is plain that they were voluntarily authorizing the check-off of the attorney's fees from their payment of benefits and the turnover to Lacsina of the amounts deducted, conformably to their agreement with him. There is no compulsion here. And significantly, the authorized deductions affected only the workers who adopted and signed Ma. Cecelia Timbal LlB 2 Rm 402

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the resolution and who were the only ones from whose benefits the deductions were made by BPI. No similar deductions were taken from the other workers who did not sign the resolution and so were not bound by it. That only those who signed the resolution could be subjected to the authorized deductions was recognized and made clear by the order itself of the NLRC. It was there categorically declared that the check-off could not be made where "no individual signed authorization has been given by the members concerned or where such authorization has been withdrawn." The Pacific Banking Corporation case is not applicable to the present case because there was there no similar agreement as that entered into between Lacsina and the signatories of the resolution in question. Absent such an agreement, there was no question that the basic proscription in Article 222 would have to operate. It is noteworthy, though, that the Court there impliedly recognized arrangements such as the one at bar with the following significant observation: Moreover, the case is covered squarely by the mandatory and explicit prescription of Art. 222 which is another guarantee intended to protect the employee against unwarranted practices that would diminish his compensation without his knowledge and consent. A similar recognition was made in Galvadores v. Trajano, where the payment of the attorney's fees from the wages of the employees was not allowed because: "No check-offs from any amount due to employees may be effected without individual written authorities duly signed by the employees specifically stating the amount, purpose and beneficiary of the deduction. The required individual authorizations in this case are wanting." Finally, we hold that the agreement in question is in every respect a valid contract as it satisfies all the elements thereof and does not contravene law, morals, good customs, public order, or public policy. On the contrary, it enables the workers to avail themselves of the services of the lawyer of their choice and confidence under terms mutually acceptable to the parties and, hopefully, also for their mutual benefit.

Traders Royal Bank Employees Union vs NLRC (1997) G.R. 120592 Facts: Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking to render the services enumerated in their contract. During the existence of that agreement, petitioner union referred to private respondent the claims of its members for holiday, mid-year and year-end bonuses against their employer, Traders Royal Bank (TRB). These employees obtained favorable decision from their complaint which went through the SC. The Supreme Court, in its decision promulgated on August 30, 1990, modified the decision of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the amount of P175,794.32. Petitioner never contested the amount thus found by TRB. The latter duly paid its concerned employees their respective entitlement in said sum through their payroll. After private respondent received the above decision of the Supreme Court on September 18, 1990, he notified the petitioner union, the TRB management

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and the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay differential through a letter dated October 8, 1990. Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay and remit said amount to him. The LA and the NLRC affirmed Atty. Cruz motion. Petitioner union filed a comment and opposition to said motion on July 15, 1991. Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in upholding the award of attorney's fees in the amount of P17,574.43, or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in violation of the retainer agreement; and that the challenged resolution of the NLRC is null and void, for the reasons hereunder stated. Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the award for attorney' s fees should have been incorporated in the main case and not after the Supreme Court had already reviewed and passed upon the decision of the NLRC. Since the claim for attorney's fees by private respondent was neither taken up nor approved by the Supreme Court, no attorney's fees should have been allowed by the NLRC. Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no longer be altered or modified even by the court which rendered the same. Issue: Whether or not Atty. Cruz is entitled to 10 % of the judgment award as his attorneys fees even if it was not taken up in the main decision of the SC. Held: Yes, not in the concept contemplatedin Article 111 of the Labor Code. The Labor Arbiter erroneously set the amount of attorney's fees on the basis of Art. 111 of the Labor Code; a hearing should have been conducted for the proper determination of attorney's fees. There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. It is the first type of attorney's fees which private respondent demanded before the labor arbiter. Also, the present controversy stems from petitioner's apparent misperception that the NLRC has jurisdiction over claims for attorney's fees only before its judgment is reviewed and ruled upon by the Supreme Court, and that thereafter the former may no longer entertain claims for attorney's fees. It will be noted that no claim for attorney's fees was filed by private respondent before the NLRC when it acted on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was only after the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed his claim before the NLRC for a percentage thereof as attorney's fees.

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It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme Court thereafter to make an award for attorney's fees when no claim therefor was pending before them. Courts generally rule only on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter ordered the payment of attorney's fees, he did not in any way modify the judgment of the Supreme Court. A CLAIM FOR ATTORNEY'S FEES MAY BE ASSERTED EITHER IN THE VERY ACTION IN WHICH THE SERVICES OF A LAWYER HAD BEEN RENDERED OR IN A SEPARATE ACTION - It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action. Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid. While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client. It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the award's complete resolution. To declare that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this Court. The provisions of the contract entered into between petitioner and respondents are clear and need no further interpretation; all that is required to be done in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a special retainer. RETAINER FEES, GENERAL RETAINER AND A SPECIAL RETAINER A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities. A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer. THE P3,000.00 MONTHLY FEE PROVIDED IN THE RETAINER AGREEMENT BETWEEN THE UNION AND THE LAW FIRM REFERS TO A GENERAL RETAINER OR A RETAINING FEE. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a

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consideration for the law firm's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there. We have already shown that the P3,000.00 is independent and different from the compensation which private respondent should receive in payment for his services. While petitioner and private respondent were able to fix a fee for the latter's promise to extend services, they were not able to come into agreement as to the law firm's actual performance of services in favor of the union. Hence, the retainer agreement cannot control the measure of remuneration for private respondent's services. PRIVATE RESPONDENT'S ENTITLEMENT TO AN ADDITIONAL REMUNERATION FOR SPECIAL SERVICES RENDERED IN THE INTEREST OF PETITIONER IS BASED ON QUASI-CONTRACT. The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration therefor in favor of the latter. Obligations do not emanate only from contracts. One of the sources of extra-contractual obligations found in our Civil Code is the quasi-contract premised on the Roman maxim that nemo cum alterius detrimento locupletari protest. As embodied in our law, certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. A quasicontract between the parties in the case at bar arose from private respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the latter's consent and approval. Petitioner cannot deny that it did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay differential in favor of the union. It cannot even hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount. THE LABOR ARBITER ERRONEOUSLY SET THE AMOUNT OF ATTORNEY'S FEES ON THE BASIS OF ART. 111 OF THE LABOR CODE; A HEARING SHOULD HAVE BEEN CONDUCTED FOR THE PROPER DETERMINATION OF ATTORNEY'S FEES. - Here, then, is the flaw we find in the award for attorney's fees in favor of private respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of attorney's fees at P17,574.43. As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits the maximum allowable amount of attorney's fees, it does not direct instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees. As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits the

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maximum allowable amount of attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees. It is axiomatic that the reasonableness of attorney's fees is a question of fact. Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by private respondent to petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of private respondent. For that purpose, we have duly taken into account the accepted guidelines therefor and so much of the pertinent data as are extant in the records of this case which are assistive in that regard. On such premises and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by private respondent to petitioner before the labor arbiter and the NLRC.

Brahm Industries vs NLRC (1997) G.R. 118853 Facts: On 8 February 1994 Labor Arbiter Fatima J. Franco ruled that complainants Roberto M. Durian and Jone M. Comendador were illegally dismissed by BRAHM and accordingly ordered the latter to: (a) reinstate complainants to their former positions or equivalent positions without loss of seniority rights, but if reinstatement was no longer possible, to pay them separation pay equivalent to one (1) month for every year of service; (b) pay Roberto M. Durian the amount of Forty-Eight Thousand Thirty-Eight Pesos and Twenty-Five Centavos (P48,038.25) representing his back wages; and, Jone M. Comendador the amount of Sixty Thousand Four Hundred Seventy-Four Pesos and Ninety-Two Centavos (P60,474.92) representing his back wages, 13th month pay and service incentive leave pay; and, (c) pay complainants the amount equivalent to 10% of the total award as attorney's fees. Upon appeal by BRAHM, the NLRC affirmed the decision of the Labor Arbiter, subject to the modification that the attorney's fees awarded be reduced to five percent (5%) of the total monetary award.BRAHM now argues that the NLRC gravely abused its discretion when it held that: (a) private respondents Roberto M. Durian and Jone M. Comendador were regular employees and not merely contractual employees hired on a per project basis; (b) they were illegally dismissed; and, (c) they were entitled to attorney's fees despite the fact that the award lacks factual and legal basis. Issue: Whether or not private respondents are entitled to attorneys fees. Held: Yes. With regard to the propriety of the award of attorney's fees in favor of private respondents, petitioner contends that it was erroneous for the NLRC to merely reduce the award of attorney's fees when it should have been completely deleted. Petitioner claims that the award is baseless since the matter of attorney's fees was touched only once in the dispositive portion of the Labor Arbiter's decision and no discussion or reason was stated therefor.

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This argument is unfounded. A perusal of the decision shows that the reason for the award of attorney's fees is clearly and unequivocally set forth in the body of the Labor Arbiter's decision, to witHaving been compelled to litigate, complainants should be paid an amount equivalent to ten percent (10%) of the total award as and for attorney's fees." It used as basis Art. 2208 of the Civil Code which allows attorney's fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. However, nothing precludes the appellate courts from reducing the award of attorney's fees when it is found to be unconscionable or excessive under the circumstances. Thus, we agree with the NLRC's ruling that the award of attorney's fees is proper on account of complainants' being compelled to litigate their claims against respondent. The amount is however reduced to five percent (5%) of the adjudged relief, it appearing that the substantial portion of the award refers to complainants' back wages and not to withheld salaries. Finally, this Court has consistently held that findings of fact of administrative agencies and quasi-judicial bodies which have acquired expertise because their jurisdiction is confined to specific matters are generally accorded not only respect but even finality and are binding upon this Court unless there is grave abuse of discretion or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. Petitioner failed to convince us that we should depart from this time-honored rule.

Heirs of Aniban vs NLRC (1997) G.R. 155034

Facts: Reynaldo Aniban was employed by the Philippine Transmarine Carriers, Inc. (TRANSMARINE) acting in behalf of its foreign principal Norwegian Ship Management A/S (NORWEGIAN) as radio operator on board the vessel "Kassel." Aniban died due to myocardial infarction during the period of his employment. A claim was made for additional death benefits under the Collective Bargaining Agreement between Associated Marine Officers and Seamen's Union of the Philippines and NORWEGIAN. The claim was rejected on the ground that myocardial infarction was not an occupational disease. However, on 11 January 1994 the POEA ruled that myocardial infarction was an occupational disease in the case of R/O Aniban and granted the prayer of his heirs for payment of death benefits under the POEA Standard Employment Contract as well as under the Collective Bargaining Agreement plus attorney's fees of US$6,700.00 equivalent to 10% of the total award. On appeal, the NLRC reversed the POEA and denied the claim on the ground that it was the Employees' Compensation Commission (ECC) which had original jurisdiction to hear and determine the claim for death benefits. NLRC likewise deleted he award of attorneys fees on the ground that there was no unlawful withhol ding of wages. A motion to reconsider the decision of the NLRC was denied; hence, this petition by the heirs of Aniban. The Supreme Court ruled that the Employees Compensation Commission may not be considered as having jurisdiction over money claims, albeit death compensation benefits of overseas contract workers. Article 180 of the Labor Code provides that the Commission exercises appellate jurisdiction only over decisions rendered either by the GSIS or the SSS in the exercise of their respective original and exclusive jurisdictions. On the issue of whether the death of Aniban due to myocardial infarction is compensable, the Court ruled that it is compensable. Although the physical exertion involved in carrying out the functions of a radio operator may have been quite minimal, the pressure and

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strain that went with the position should be considered. Furthermore, the Court stressed that probability and not the ultimate degree of certainty is the test of proof in compensation. Issue: WON attorneys fees can be awarded in a case not involving unlawful withholding of wages. Held: Yes. ARTICLE 111 OF THE LABOR CODE DOES NOT LIMIT THE AWARD OF ATTORNEY'S FEES TO CASES OF UNLAWFUL WITHHOLDING OF WAGES ONLY; WHAT THE PROVISION EXPLICITLY PROHIBITS IS THE AWARD OF ATTORNEY'S FEES WHICH EXCEEDED 10% OF THE AMOUNT OF WAGES RECOVERED. On the award of attorney's fees which NLRC deleted on the ground that there was no unlawful withholding of wages, suffice it to say that Art.111 of the Labor Code does not limit the award of attorney's fees to cases of unlawful withholding of wages only. What it explicitly prohibits is the award of attorney's fees which exceed 10% of the amount of wages recovered. Thus, under the circumstances, attorney's fees are recoverable for the services rendered by petitioner's counsel to compel Aniban's employer to pay its monetary obligations under the CBA. However the amount of P50,000.00 claimed as attorney's fees in this case is the reasonable compensation based on the records and not the maximum 10% of the total award as granted by POEA. The reduction of unreasonable attorney's fees is within our regulatory powers.

Sapio vs Undaloc Construcion et al., (2008) G.R. 155034 Facts: The controversy started with a complaint filed by petitioner against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction business in Cebu City. Petitioner avers that he was paid a daily salary way below the minimum wage provided for by law. 14 His claim of salary differential represents the difference between the daily wage he actually received and the statutory minimum wageTo counter petitioner's assertions, respondents submitted typewritten and signed payroll sheets from 2 September to 8 December 1996, from 26 May to 15 June 1997, and from 12 January to 31 May 1998. 15 These payroll sheets clearly indicate that petitioner did receive a daily salary of P141.00. Banking on the fact that the December 1995 payroll sheet was written in pencil, the Labor Arbiter concluded that the entries were susceptible to change or erasure and that that susceptibility in turn rendered the other payroll sheets though typewritten less credible. Thereupon, the Labor Arbiter proceeded to grant petitioner's salary differential to the tune of P24,902.88. Attorney's fee of P3,000.00 was also awarded. Respondents appealed the award of salary differential to the National Labor Relations Commission (NLRC). In a Decision dated 28 August 2000, the NLRC sustained the findings of the Labor Arbiter. The Court of Appeals did not subscribe to the common findings of the Labor Arbiter and the NLRC. The appellate court pointed out that allegations of fraud in the preparation of payroll sheets must be substantiated by evidence and not by mere suspicions or conjectures. Thus, it deleted the award of salary differential and attorney's fees. Issue: Whether or not the award petitioner-employee Saipo is entitled to salary differential and attorneys fees.

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Held: Yes. It is elementary in this jurisdiction that whoever alleges fraud or mistake affecting a transaction must substantiate his allegation, since it is presumed that a person takes ordinary care of his concerns and private transactions have been fair and regular. Persons are presumed to have taken care of their business. Absent any indication sufficient enough to support a conclusion, we cannot uphold the findings of the Labor Arbiter and the NLRC. The conclusion of the Labor Arbiter that entries in the December 1995 payroll sheet could have been altered is utterly baseless. While we adhere to the position of the appellate court that the "tendency" to alter the entries in the payrolls was not substantiated, we cannot however subscribe to the total deletion of the award of salary differential and attorney's fees, as it so ruled.The Labor Arbiter granted a salary differential of P24,902.88. The Labor Arbiter erred in his computation. He fixed the daily wage rate actually received by petitioner at P105.00 without taking into consideration the P141.00 rate indicated in the typewritten payroll sheets submitted by respondents. Moreover, the Labor Arbiter misapplied the wage orders when he wrongly categorized respondent as falling within the first category. Based on the stipulated number of employees and audited financial statements, respondents should have been covered by the second category. To avoid further delay in the disposition of this case which is not in consonance with the objective of speedy justice, we have to adjudge the rightful computation of the salary differential based on the applicable wage orders. After all, the supporting records are complete. The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00. However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188. Respondents are required to pay double the amount owed to petitioner, bringing their total liability to P13,156.00. The award of attorney's fees is warranted under the circumstances of this case. Under Article 2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of wages of laborers and actions for indemnity under employer's liability laws but shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

Atty. Ortiz vs San Miguel Corp., (2008) G.R. 151983-84 Facts: Petitioner is a member of the Philippine Bar who represented the complainants in NLRC Cases No. V0255-94 and No. V-0068-95 instituted against herein private respondent San Miguel Corporation sometime in 1992 and 1993. Private respondent, on the other hand, is a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines. It is primarily engaged in the manufacture and sale of food and beverage particularly beer products. In line with its business, it operates breweries and sales offices throughout the Philippines. The complainants in NLRC Cases No. V-0255-94 and No. V-0068-95 was employees at private respondents Sales Offices in the provinces. NLRC Case No. V-0255-94 (Aguirre Cases) In 1992, several employees from the Bacolod, Cadiz, and Himamaylan Beer Sales Offices filed with the Labor Arbiter separate complaints against private respondent for illegal dismissal with prayer for reinstatement with backwages; elevation of employment status from casualtemporary to regular- permanent reckoned after six months from the start of complainants employment; underpayment of salaries; non-payment of holiday pay, service incentive leave pay, allowances and sick leaves; nonpayment of benefits under the existing Collective Bargaining Agreements (CBA); attorneys fees; moral, Ma. Cecelia Timbal LlB 2 Rm 402

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exemplary and other damages; and interest. The foregoing complaints were consolidated and initially docketed as RAB Cases No. 06-01-10031-92; 06-01-10048-92; 06-01-10049-92; 06-0210210-92; 06-02-10211-92; and 06-03-10255-92 (hereinafter collectively referred to as theAguirre Cases). After conducting a full-blown trial, the parties were given the opportunity to submit their respective memoranda. Subsequently, the cases were submitted for resolution. On 30 June 1994, Labor Arbiter Reynaldo J. Gulmatico (Labor Arbiter Gulmatico) rendered a Decision in the Aguirre Cases finding all the complainants to have been illegally dismissed. He ordered complainants reinstatement to their previous or equivalent positions without loss of seniority rights. He also ordered private respondent to pay the complainants (1) full backwages and other CBA benefits in the total amount of P6,197,952.88; (2) rice subsidy or its monetary equivalent; and (3) attorneys fees equivalent to 10% of the monetary award or in the amount of P619,795.28. Labor Arbiter Gulmatico, however, dismissed complainants claim for overtime pay, holiday pay, 13th month pay differential, service incentive leave pay, moral damages and all other claims for lack of merit. Unsatisfied with Labor Arbiter Gulmaticos monetary and economic awards, complainants appealed to the NLRC, where the Aguirre Cases were collectively docketed as NLRC Case No. V-0255-94. The NLRC would later render a Decision dated 21 July 1995 in the Aguirre Cases affirming the Decision of Labor Arbiter Gulmatico, with the following modifications: (1) granting sales commission to the complainants and adopting their computation thereof in their Appeal Memorandum[8] filed before the NLRC; (2) adjusting and/or reducing the amounts awarded to complainants Alfredo Gadian, Jr., Renato Junsay, Agustines Llacuna, and Florencio de la Piedra depending on the dates they were employed; (3) determining that Modesto Jabaybay, who died on 28 December 1993, was to receive only the amount of P356,128.02; (4) declaring that all the complainants except Romeo Magbanua, who withdrew his complaint, were entitled to whatever benefits were given under the CBA; and (5) that complainants Romeo Magbanua and Modesto Jabaybay shall no longer be reinstated. Private respondent moved for the reconsideration of the aforesaid 21 July 1995 NLRC Decision, but its motion was denied by the NLRC in its Resolution dated 27 February 1996. NLRC Case No. V-0068-95 (Toquero Case) While the Aguirre Cases were still pending resolution by Labor Arbiter Gulmatico, three other employees at the San Carlos Sales Office filed with the Labor Arbiter a similar complaint for illegal dismissal against private respondent in 1993. Their complaint was docketed as RAB Case No. 06-0710404-93 (hereinafter referred to as the Toquero Case). On 26 December 1994, Labor Arbiter Ray Allan T. Drilon (Labor Arbiter Drilon) rendered his Decision in the Toquero Case also ruling that the three complainants were illegally dismissed. Thus, he ordered the complainants immediate reinstatement to their former positions without loss of seniority rights. He ordered private respondent to pay complainants (1) backwages and other benefits in the amount of P572,542.50; (2) all benefits, privileges and rights enjoyed by the private respondents regular employees in the total amount of P339,055.00; (3) a total of 159 sacks of rice ration; (4) sales commissions based on the monthly sales of beer sold by their office for the last three years; and (5) attorneys fees in the amount of P91,159.75. Again, the complainants were not contented with Labor Arbiter Drilons Decision, and they appealed their case to the NLRC which was then docketed as NLRC Case No. V-0068-95. On 25 July 1995, the NLRC rendered a Decision modifying the 26 December 1994 Decision of Labor Arbiter Drilon by ordering the private respondent to pay the complainants the following: (1) additional awards of sales commission; (2) tailoring allowance; (3) monetary equivalent of their uniform for two years consisting of 24 sets of t-shirts and 6 pairs of pants; and (4) attorneys fees of 10% of the total monetary award or P198,296.95. In its Resolution dated 9 October 1995, the NLRC partially granted private respondents motion for reconsideration by allowing the deduction from the award of backwages any earnings of complainants elsewhere during the pendency of their case. CA-G.R. SP No. 54576-77 Failing to get a favorable ruling from the NLRC in both the Aguirre and Toquero Cases, private respondent elevated the NLRC Decisions to this Court via a Petition for Certiorari, where they were docketed as G.R. No. 124426 and G.R. No. 122975, respectively. On 15 July 1996, this Court issued a Resolution consolidating the two cases.In another Resolution dated 30 June 1999; this Court referred the said cases to the Court of Appeals conforming to its ruling in St. Martin Funeral Home v. NLRC and Bienvenido Aricayos. The Court of Appeals accepted the consolidated cases in its Resolution dated 7 September 1999, and docketed the same as CA-G.R. SP No. 54576-77. While the private respondents Petitions for Certiorari were pending Ma. Cecelia Timbal LlB 2 Rm 402

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before the Court of Appeals, all but one of the remaining complainants in the Aguirre and Toquero Cases appeared on various dates before Labor Arbiters Gulmatico and Drilon, and in the presence of two witnesses, signed separate Deeds of Release, Waiver and Quitclaim in favor of private respondent. Based on the Deeds they executed, the complainants agreed to settle their claims against private respondent for amounts less than what the NLRC actually awarded. Private respondent withheld 10% of the total amount agreed upon by the parties in the said Deeds as attorneys fees and handed it over to petitioner. Private respondent then attached the Deeds of Release, Waiver and Quitclaim to its Manifestation and Motion filed before the appellate court. On 22 August 2001, the Court of Appeals rendered a Decision in CA-G.R. SP No. 54576-77 affirming the NLRC Decision dated 21 July 1995 and Resolution dated 27 February 1996 in the Aguirre Cases, only insofar as it concerned complainant Alfredo Gadian, Jr. (complainant Gadian), the only complainant who did not execute a Deed of Release, Waiver and Quitclaim. With respect to the other complainants in the Aguirre and Toquero Cases, their complaints were dismissed on account of their duly executed Deeds of Release, Waiver and Quitclaim. Private respondent moved for the partial reconsideration of the 22 August 2001 Decision of the Court of Appeals, seeking the reversal and setting aside of the 22 August 2001 Decision of the Court of Appeals in CA-G.R. SP. No. 54576-77, which affirmed the 21 July 1995 Decision and 27 February 1996 Resolution of the NLRC in the Aguirre Cases, insofar as complainant Gadian was concerned; and the dismissal of complainant Gadians complaint against private respondent for lack of merit. Complainant Gadian and his counsel, herein petitioner, for their part, likewise moved for the partial reconsideration of the same Decision of the appellate court praying that the award of attorneys fees of 10% should be based on the monetary awards adjudged by the NLRC. In a Resolution dated9 January 2002, the appellate court denied both motions. G.R. No. 151421 and No. 151427 Private respondent appealed before this Court by filing a Petition for Review, docketed as G.R. No. 151421 and No. 151427. However, private respondents Petition was denied due course by this Court in a Resolution dated 18 March 2002 for failure of the private respondent to show that a reversible error had been committed by the appellate court. Held: This Court has consistently ruled that a question of law exists when there is a doubt or controversy as to what the law is on a certain state of facts. On the other hand, there is a question of fact when the Whether petitioner is entitled to additional attorneys fees on top of what was already doubt or difference arises as to the alleged truth or falsehood of the alleged facts. For a question to be one of law, it must involve no examination of the probative value of the evidence presented by the litigants or any of them.[35] The test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a question of fact. In the case at bar, the core issue presented by the petitioner is with respect to the amount of attorneys fees to which he should be entitled: whether he is entitled to the amount of attorneys fees as adjudged by the NLRC in its Decisions in the Aguirre and Toquero Cases or only to the 10% of the amounts actually paid to his clients, the complainants who signed the Deeds of Release, Waiver and Quitclaim. The aforesaid issue evidently involves a question of law. In determining whether the petitioner should be entitled to the attorneys fees stated in the NLRC Decisions, this Court does not need to go over the pieces of evidence submitted by the parties in the proceedings below to determine their probative value. What it needs to do is ascertain and apply the relevant law and jurisprudence on the award of attorneys fees to the prevailing parties in labor cases. Article 111 of the Labor Code, as amended, specifically provides: ART. 111. ATTORNEYS FEES. - (a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered. (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorneys fees which exceed ten percent of the amount of wages recovered. (Emphasis supplied.)

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Masmud vs NLRC (2009) G.R. 183385 Facts: On July 9, 2003, Evangelina Masmuds (Evangelina) husband, the late Alexander J. Masmud (Alexander), filed a complaint3 against First Victory Shipping Services and Angelakos (Hellas) S.A. for non-payment of permanent disability benefits, medical expenses, sickness allowance, moral and exemplary damages, and attorneys fees. Alexander engaged the services of Atty. Rolando B. Go, Jr. (Atty. Go) as his counsel. In consideration of Atty. Gos legal services, Alexander agreed to pay attorneys fees on a contingent basis, as follows: twenty percent (20%) of total monetary claims as settled or paid and an additional ten percent (10%) in case of appeal. It was likewise agreed that any award of attorneys fees shall pertain to respondents law firm as compensation. On November 2 1, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary claims of Alexander. The dispositive portion of the decision, as quoted in the CA Decision, reads: WHEREFORE, foregoing considered, judgment is rendered finding the [First Victory Shipping Services and Angelakos (Hellas) S.A.+ jointly and severally liable to pay *Alexanders+ total permanent disability benefits in the amount of US$60,000.00 and his sickness allowance of US$2,348.00, both in Philippine currency at the prevailing rate of exchange at the time of payment; and to pay further the amount of P200,000.00 as moral damages,P100,000.00 as exemplary damages and attorneys fees equivalent to ten percent (10%) of the total monetary award. *Alexanders+ claim for payment of medical ex penses is dismissed for lack of basis. SO ORDERED. Alexanders employer filed an appeal before the National Labor Relations Commission (NLRC). During the pendency of the proceedings before the NLRC, Alexander died. After explaining the terms of the lawyer s fees to Evangelina, Atty. Go caused her substitution as complainant. On April 30, 2004, the NLRC rendered a Decision dismissing the appeal of Alexanders employer. The employer subsequently filed a motion for reconsideration. The NLRC denied the same in an Order dated October 26, 2004. On appeal before the CA, the decision of the LA was affirmed with modification. The award of moral and exemplary damages was deleted.5 Alexanders employers filed a petition for certiorari6 before this Court. On February 6, 2006, the Court issued a Resolution dismissing the case for lack of merit. Eventually, the decision of the NLRC became final and executory. Atty. Go moved for the execution of the NLRC decision, which was later granted by the LA. The surety bond of the employer was garnished. Upon motion of Atty. Go, the surety company delivered to the NLRC Cashier, through the NLRC Sheriff, the check amounting toP3,454,079.20. Thereafter, Atty. Go moved for the release of the said amount to Evangelina. On January 10, 2005, the LA directed the NLRC Cashier to release the amount of P3,454,079.20 to Evangelina. Out of the said amount, Evangelina paid Atty. Go the sum of P680,000.00. Dissatisfied, Atty. Go filed a motion to record and enforce the attorneys lien alleging that Evangelina reneged on their contingent fee agreement. Evangelina paid only the amount of P680,000.00, equivalent to 20% of the award as attorneys fees, thus, leaving a balance of 10%, plus the award pertaining to the counsel as attorneys fees. In respons e to the motion filed by Atty. Go, Evangelina filed a comment with motion to release the amount deposited with the NLRC Cashier. In her comment, Evangelina manifested that Atty. Gos claim for attorneys fees of 40% of the total monetary award was null and void based on Article 111 of the Labor Code. In effect, petitioner seeks affirmance of her conviction that the legal compensation of a lawyer in a labor proceeding should be based on Article 111 of the Labor Code. There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services rendered to the latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party, such that, in any of the cases provided by law where such award can be made, e.g., those authorized in Article 2208 of the Civil Code, the amount is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. Here, we apply the ordinary concept of attorneys fees, or the compensation that Atty. Go is entitled to receive for representing Evangelina, in substitution of her husband, before the labor tribunals and before the court. Evangelina maintains that Article 111 of the Labor Code is the law that should govern Atty. Gos compensation as her counsel and assiduously opposes their agreed retainer contract.

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Article 111 of the said Code provides: ART. 111. Attorney's fees. (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of the wages recovered. Held: Contrary to Evangelinas proposition, Article 111 of the Labor Code deals with the extraordinary concept of attorneys fees. It regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used as the standard in fixing the amount payable to the lawyer by his client for the legal services he rendered. In this regard, Section 24, Rule 138 of the Rules of Court should be observed in determining Atty. Gos compensation. Considering that Atty. Go successfully represented his client, it is only proper that he should receive adequate compensation for his efforts. Even as we agree with the reduction of the award of attorney's fees by the CA, the fact that a lawyer plays a vital role in the administration of justice emphasizes the need to secure to him his honorarium lawfully earned as a means to preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to judicial protection against injustice or imposition of fraud on the part of his client as the client is against abuse on the part of his counsel. The duty of the court is not alone to ensure that a lawyer acts in a proper and lawful manner, but also to see that a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client; he himself would not get his due. WHEREFORE, in view of the foregoing, the Decision dated October 31, 2007 and the Resolution dated June 6, 2008 of the Court of Appeals in CA-G.R. SP No. 96279 are hereby AFFIRMED.

Bernardo vs. NLRC (1999) G.R. 122917 Facts: Complainants numbering 43 are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called 'Employment Contract for Handicapped Workers.' Petitioners maintain that they should be considered regular employees, because their task as money sorters and counters was necessary and desirable to the business of respondent bank. They further allege that their contracts served merely to preclude the application of Article 280 and to bar them from becoming regular employees. Private respondent, on the other hand, submits that petitioners were hired only as "special workers and should not in any way be considered as part of the regular complement of the Bank." Rather, they were "special" workers under Article 80 of the Labor Code. Private respondent contends that it never solicited the services of petitioners, whose employment was merely an "accommodation" in response to the requests of government officials and civic-minded citizens. They were told from the start, "with the assistance of government representatives," that they could not become regular employees because there were no plantilla positions for "money sorters," whose task used to be performed by tellers. Their contracts were renewed several times, not because of need "but merely for humanitarian reasons." Respondent submits that "as of the present, the 'special position' that was created for the petitioners no longer exists in private respondent bank, after the latter had decided not to renew anymore their special employment contracts." In affirming the ruling of the labor arbiter that herein petitioners could not be deemed regular employees under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated as follows:

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"We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were hired as an accommodation to [the] recommendation of civic oriented personalities whose employment[s] were covered by . . . Employment Contract[s] with special provisions on duration of contract as specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the law between the parties." The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, "considering the prevailing circumstances/milieu of the case." Issues: 1. 2. Whether or not petitioners have become regular employees. Whether or not the provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscription

against discrimination against disabled persons is applicable in this case. Held: Yes. The petition is meritorious. However, only the employees, who worked for more than six months and whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be deemed regular employees. As such, they have acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a consequence of law and justice. The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, after which the employer shall determine whether or not they should be allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a just and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically expire at the end of the term. According to private respondent, the employment contracts were prepared in accordance with Article 80 of the Labor Code, which provides: "ARTICLE 80. Employment agreement. Any employer who employs handicapped workers shall enter into an

employment agreement with them, which agreement shall include: (a) (b) The names and addresses of the handicapped workers to be employed; The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the

applicable legal minimum wage; (c) (d) The duration of employment period; and The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor or his duly authorized representatives."The stipulations in the employment contracts indubitably conform with the aforecited provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), however, justify the application of Article 280 of the Labor Code. Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the

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handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them. QUALIFIED DISABLED PERSONS REMOVE CONTRACT FROM AMBIT OF ARTICLE 80 OF LABOR CODE. - In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same terms and conditions of employment as a qualified able-bodied person. Section 5 of the Magna Carta provides: "SECTION 5. Equal Opportunity for Employment. No disabled person shall be denied access to opportunities

for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person." The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides: "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 of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists." TEST WHETHER EMPLOYEE IS REGULAR - The test of whether an employee is regular was 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 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 one 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." Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than six months. As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments, ad infinitum." The contract signed by petitioners is akin to a probationary employment, during which the bank determined the employees' fitness for the job. When the bank renewed the contract after the lapse of the six-month Ma. Cecelia Timbal LlB 2 Rm 402

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probationary period, the employees thereby became regular employees. No employer is allowed to determine indefinitely the fitness of its employees. As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be terminated only for a just or authorized cause. Because respondent failed to show such cause, these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights and other privileges. Considering the allegation of respondent that the job of money sorting is no longer available because it has been assigned back to the tellers to whom it originally belonged, petitioners are hereby awarded separation pay in lieu of reinstatement. Because the other sixteen worked only for six months, they are not deemed regular employees and hence not entitled to the same benefits. EMPLOYMENT CONTRACT WITH FIXED TERM; RULING IN BRENT CASE NOT APPLICABLE IN CASE AT BAR - Respondent bank, citing Brent School v. Zamora, in which the Court upheld the validity of an employment contract with a fixed term, argues that the parties entered into the contract on equal footing. It adds that the petitioners had in fact an advantage, because they were backed by then DSWD Secretary Mita Pardo de Tavera and Representative Arturo Borjal. We are not persuaded. The term limit in the contract was premised on the fact that the petitioners were disabled, and that the bank had to determine their fitness for the position. Indeed, its validity is based on Article 80 of the Labor Code. But as noted earlier, petitioners proved themselves to be qualified disabled persons who, under the Magna Carta for Disabled Persons, are entitled to terms and conditions of employment enjoyed by qualified able-bodied individuals; hence, Article 80 does not apply because petitioners are qualified for their positions. The validation of the limit imposed on their contracts, imposed by reason of their disability, was a glaring instance of the very mischief sought to be addressed by the new law. Employment contract; impressed with public interest; parties are not at liberty to insulate themselves. - Moreover, it must be emphasized that a contract of employment is impressed with public interest. 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." Clearly, the agreement of the parties regarding the period of employment cannot prevail over the provisions of the Magna Carta for Disabled Persons, which mandate that petitioners must be treated as qualified able-bodied employees. Respondent's reason for terminating the employment of petitioners is instructive. Because the Bangko Sentral ng Pilipinas (BSP) required that cash in the bank be turned over to the BSP during business hours from 8:00 a.m. to 5:00 p.m., respondent resorted to nighttime sorting and counting of money. Thus, it reasons that this task "could not be done by deaf mutes because of their physical limitations as it is very risky for them to travel at night." We find no basis for this argument. Travelling at night involves risks to handicapped and able-bodied persons alike. This excuse cannot justify the termination of their employment. EMPLOYMENT; CHARACTER OF EMPLOYMENT; HOW DETERMINED - Respondent argues that petitioners were merely "accommodated" employees. This fact does not change the nature of their employment. As earlier noted, 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. Equally unavailing are private respondent's arguments that it did not go out of its way to recruit petitioners, and that its plantilla did not contain their positions. In L. T . Datu v. NLRC, the Court held that "the determination of whether

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employment is casual or regular does not depend on the will or word of the employer, and the procedure of hiring . . . but on the nature of the activities performed by the employee, and to some extent, the length of performance and its continued existence." Private respondent argues that the petitioners were informed from the start that they could not become regular employees. In fact, the bank adds, they agreed with the stipulation in the contract regarding this point. Still, we are not persuaded. In this light, we iterate our ruling in Romares v. NLRC : Article 280 was emplaced in our statute books to prevent the circumvention of the employee's right to be secure in his tenure by indiscriminately and completely ruling out all written and oral agreements inconsistent with the concept of regular employment defined therein. Where an employee has been engaged to perform activities which are usually necessary or desirable in the usual business of the employer, such employee is deemed a regular employee and is entitled to security of tenure notwithstanding the contrary provisions of his contract of employment. "At this juncture, the leading case of Brent School, Inc. v. Zamora proves instructive. As reaffirmed in subsequent cases, this Court has upheld the legality of fixed-term employment. It ruled 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 the parties for the commencement and termination of their employment relationship. But this Court went on to say that where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals." In rendering this Decision, the Court emphasizes not only the constitutional bias in favor of the working class, but also the concern of the State for the plight of the disabled. The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights like any other regular employees.

Philippine Telegraph & Telephone Co vs NLRC (1997) G.R. 118978 Facts: Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged concealment of civil status and defalcation of company funds as grounds to terminate the services of an employee. That employee, herein private respondent Grace de Guzman, contrarily argues that what really motivated PT&T to terminate her services was her having contracted marriage during her employment, which is prohibited by petitioner in its company policies. She thus claims that she was discriminated against in gross violation of law, such a proscription by an employer being outlawed by Article 136 of the Labor Code. Issue: WON the policy of not accepting or considering as disqualified from work any woman worker who contracts marriage is valid?

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Held: Petitioners policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social and political life, provides a gamut of protective provisions. Acknowledged as paramount in the due process scheme is the constitutional guarantee of protection to labor and security of tenure. Thus, an employer is required, as a condition sine qua non prior to severance of the employment ties of an individual under his employ, to convincingly establish, through substantial evidence, the existence of a valid and just cause in dispensing with the services of such employee, ones labor being regarded as constitutionally protected property. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows: ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage. In the case at bar, it can easily be seen from the memorandum sent to private respondent by the branch supervisor of the company, with the reminder, that youre fully aware that the company is not accepting married women employee (sic), as it was verbally instructed to you. Again, in the termination notice sent to her by the same branch supervisor, private respondent was made to understand that her severance from the service was not only by reason of her concealment of her married status but, over and on top of that, was her violation of the companys policy against marriage (and even told you that married women employees are not appl icable [sic] or accepted in our company. Petitioners policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioners policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.

Del Monte Phils vs Velasco (2007) G.R. 153447 Facts: Velasco started working with Del Monte Philippines (petitioner) on October 21, 1976 as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was as Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences. On May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her absences without permission and a forfeiture of her vacation leave entitlement for the year 1990-1991 was imposed against her. On September 14, 1992, another warning letter was sent to respondent regarding her absences without permission during the year 1991-1992. Her vacation entitlement for the said employment year affected was consequently forfeited. In view of the said alleged absences without permission, on September 17, 1994, a notice of hearing was sent to respondent notifying her of the charges filed against her for violating the Absence Without Official Leave rule: that is

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for excessive absence without permission on August 15-18, 29-31 and September 1-10, 1994. Respondent having failed to appear on September 23, 1994 hearing, another notice of hearing was sent to her resetting the investigation on September 30, 1994. It was again reset to October 5, 1994. After hearing, the petitioner terminated the services of respondent effective January 16, 1994 due to excessive absences without permission. Issue: WON the employment of respondent had been terminated on account of her pregnancy, and therefore violates the Labor Code which prohibits an employer to discharge an employee on account of the latter's pregnancy. Held: Respondent's sickness was pregnancy-related and, therefore, the petitioner cannot terminate respondent's services because in doing so, petitioner will, in effect, be violating the Labor Code which prohibits an employer to discharge an employee on account of the latter's pregnancy. Article 137 of the Labor Code provides: that it shall be unlawful for any employer: (1) To deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code; (2) To discharge such woman on account of her pregnancy, while on leave or in confinement due to her pregnancy; or (3) To discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. Respondent was able to subsequently justify her absences in accordance with company rules and policy; that the respondent was pregnant at the time she incurred the absences; that this fact of pregnancy and its related illnesses had been duly proven through substantial evidence; that the respondent attempted to file leaves of absence but the petitioner's supervisor refused to receive them; that she could not have filed prior leaves due to her continuing condition; and that the petitioner, in the last analysis, dismissed the respondent on account of her pregnancy, a prohibited act. Petitioner terminated the services of respondent on account of her pregnancy which justified her absences and, thus, committed a prohibited act rendering the dismissal illegal.

Ultra Villa Food Haus vs, Geniston (1999) G.R. 120473 Facts: Private respondent Renato Geniston was employed by petitioner Ultra Villa Food House and/or its alleged owner Rosie Tio. Private respondent alleged that he was employed as a "do it all guy" acting as waiter, driver and maintenance man, in said restaurant. During the elections of May 11, 1992, private respondent acted as Poll Watcher. The counting of votes lasted until 3:00 p.m. the next day, May 12. Private respondent did not report for work on both days on account of his poll watching. As a result, his employment was terminated by petitioner Tio on the ground of abandonment. Private respondent filed a case of illegal dismissal against petitioners. Petitioner Tio maintained that private respondent was her personal driver, not an employee of Ultra Villa Food Haus and denied dismissing private respondent whom she claimed abandoned his job. The Labor Arbiter found that private respondent was indeed petitioner's personal driver. The Labor Arbiter concluded that private respondent, being a personal driver, was not entitled to overtime pay, premium pay, service incentive leave and 13th month pay.On appeal, the NLRC reversed the decision of the labor arbiter and ordered the reinstatement of private respondent and payment of backwages, overtime pay, premium pay for holiday and rest days, etc. The NLRC also granted private respondent separation pay in lieu of reinstatement on account of the Ma. Cecelia Timbal LlB 2 Rm 402

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establishment's closure but denied his prayer for moral, actual and exemplary damages, and attorney's fees. Petitioner moved for reconsideration but was denied. Issues: (1) Whether private respondent was an employee of the Ultra Villa Food Haus or the personal driver of

petitioner; and (2) Held: I. THE LABOR ARBITER CORRECTLY RULED THAT PRIVATE RESPONDENT WAS PETITIONER'S PERSONAL DRIVER AND NOT AN EMPLOYEE OF THE SUBJECT ESTABLISHMENT. We find that private respondent was indeed the personal driver of petitioner, and not an employee of the Ultra Villa Food Haus. There is substantial evidence to support such conclusion, namely: (1) Private respondent's admission during the mandatory conference that he was petitioner's personal driver. (2) Copies of the Ultra Villa Food Haus payroll which do not contain private respondent's name. (3) Affidavits of Ultra Villa Food Haus employees attesting that private respondent was never an employee of said establishment. (4) Petitioner Tio's undisputed allegation that she works as the branch manager of the CFC Corporation whose office is located in Mandaue City. This would support the Labor Arbiter's observation that private respondents' position as driver would be "incongruous" with his functions as a waiter of Ultra Villa Food Haus. (5) The Joint Affidavit of the warehouseman and warehouse checker of the CFC Corporation stating that: Renato Geniston usually drive[s] Mrs. Tio from her residence to the office. Thereafter, Mr. Geniston will wait for Mrs. Tio in her car. Most of the time, Renato Geniston slept in the car of Mrs. Tio and will be awakened only when the latter will leave the office for lunch. Mr. Geniston will again drive Mrs. Tio to the office at around 2:00 o'clock in the afternoon and thereafter the former will again wait for Mrs. Tio at the latter's car until Mrs. Tio will again leave the office to make her rounds at our branch office at the downtown area. In contrast, private respondent has not presented any evidence other than his self-serving allegation to show that he was employed in the Ultra Villa Food Haus. On this issue, therefore, the evidence weighs heavily in petitioner's favor. The Labor Arbiter thus correctly ruled that private respondent was petitioner's personal driver and not an employee of the subject establishment. Accordingly, the terms and conditions of private respondent's employment are governed by Chapter III, Title III, Book III of the Labor Code as well as by the pertinent provisions of the Civil Code. PETITIONER IS NOT OBLIGED UNDER THE LAW TO GRANT PRIVATE RESPONDENT OVERTIME PAY, HOLIDAY PAY, PREMIUM PAY AND SERVICE INCENTIVE LEAVE. Chapter III, Title III, Book III, however, is silent on the grant of overtime pay, holiday pay, premium pay and service incentive leave to those engaged in the domestic or household service. Moreover, the specific provisions mandating these benefits are found in Book III, Title I of the Labor Code, and Article 82, which defines the scope of the application of these provisions, expressly excludes domestic helpers from its coverage: Ma. Cecelia Timbal LlB 2 Rm 402 Whether private respondent was illegally dismissed from employment.

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Art. 82. Coverage. The provision of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. The limitations set out in the above article are echoed in Book III of the Omnibus Rules Implementing the Labor Code. Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits. II. PRIVATE RESPONDENT IS ENTITLED TO BE INDEMNIFIED FOR HIS UNJUST DISMISSAL AND FOR PETITIONER'S FAILURE TO COMPLY WITH THE REQUIREMENTS OF DUE PROCESS IN EFFECTING HIS DISMISSAL. To constitute abandonment, two requisites must concur: (1) the failure to report to work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship as manifested by some overt acts, with the second requisite as the more determinative factor. The burden of proving abandonment as a just cause for dismissal is on the employer. Petitioner failed to discharge this burden. The only evidence adduced by petitioner to prove abandonment is her affidavit. It is quite unbelievable that private respondent would leave a stable and relatively well paying job as petitioner's family driver to work as an election watcher. Though the latter may pay more in a day, elections in this country are so far in between that it is unlikely that any person would abandon his job to embark on a career as an election watcher, the functions of which are seasonal and temporary in nature. Consequently, we do not find private respondent to have abandoned his job. His dismissal from petitioner's employ being unjust, petitioner is entitled to an indemnity under Article 149 of the Labor Code. Petitioner likewise concedes that she failed to comply with due process in dismissing private respondent since private respondent had already abandoned his job. As we have shown earlier however, petitioner's theory of abandonment has no leg to stand on, and with it, her attempts to justify her failure to accord due process must also fall. Accordingly, private respondent is ordered to pay private respondent the sum of P1,000.00.

Remington Industrial Sales Corp,. vs Castaneda (2007) G.R. 153477 Facts: Erlinda alleged that she started working in August 1983 as company cook with a salary of Php 4,000.00 for Remington, a corporation engaged in the trading business; that she worked for six (6) days a week, starting as early as 6:00 a.m. because she had to do the marketing and would end at around 5:30 p.m., or even later, after most of the employees, if not all, had left the company premises; that she continuously worked with Remington until she was unceremoniously prevented from reporting for work when Remington transferred to a new site in Edsa, Caloocan City. She averred that she reported for work at the new site in Caloocan City on January 15, 1998, only to be informed that Remington no longer needed her services. Erlinda believed that her dismissal was illegal because she was not given the notices required by law; hence, she filed her complaint for reinstatement without loss of seniority rights, salary differentials, service incentive leave pay, 13th month pay and 10% attorney's fees.

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Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper, not a regular employee; Erlinda worked as a cook and this job had nothing to do with Remington's business of trading in construction or hardware materials, steel plates and wire rope products. It also contended that contrary to Erlinda's allegations that she worked for eight (8) hours a day, Erlinda's duty was merely to cook lunch and "merienda", after which her time was hers to spend as she pleased. Remington also maintained that it did not exercise any degree of control and/or supervision over Erlinda's work as her only concern was to ensure that the employees' lunch and "merienda" were available and served at the designated time. Remington likewise belied Erlinda's assertion that her work extended beyond 5:00 p.m. as she could only leave after all the employees had gone. The truth, according to Remington, is that Erlinda did not have to punch any time card in the way that other employees of Remington did; she was free to roam around the company premises, read magazines, and to even nap when not doing her assigned chores. Remington averred that the illegal dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda who refused to report for work when Remington moved to a new location in Caloocan City. LA and NLRC decided the case in favor of the complainant. Petitioner appealed to the CA. While the petition was pending with the Court of Appeals, the NLRC rendered another Decision in the same case on August 29, 2001, which included the retirement pay not included in their first decision. Petitioner challenged the second decision of the NLRC, including the resolution denying its motion for reconsideration, through a second Issues and Rulings: The petition must fail. I. Whether or not respondent is petitioner's regular employee or a domestic helper. We affirm that respondent was a regular employee of the petitioner and that the latter was guilty of illegal dismissal. Petitioner relies heavily on the affidavit of a certain Mr. Antonio Tan and contends that respondent is the latter's domestic helper and not a regular employee of the company since Mr. Tan has a separate and distinct personality from the petitioner. It maintains that it did not exercise control and supervision over her functions; and that it operates as a trading company and does not engage in the restaurant business, and therefore respondent's work as a cook, which was not usually necessary or desirable to its usual line of business or trade, could not make her its regular employee.This contention fails to impress. In Apex Mining Company, Inc. v. NLRC, this Court held that a househelper in the staff houses of an industrial company was a regular employee of the said firm. We ratiocinated that:Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper" or "domestic servant" are defined as follows: "The term 'househelper' as used herein is synonymous to the term 'domestic servant' and shall refer to any person, whether male or female, who renders services in and about the employer's home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's family." The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employer's home to minister exclusively to the personal comfort and enjoyment of the employer's family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and similar househelps. The criteria is the personal comfort and enjoyment of the family of the employer in the home of said employer. While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a Ma. Cecelia Timbal LlB 2 Rm 402

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company staffhouse may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or within the premises of the business of the employer. In such instance, they are employees of the company or employer in the business concerned entitled to the privileges of a regular employee. Petitioner contends that it is only when the househelper or domestic servant is assigned to certain aspects of the business of the employer that such househelper or domestic servant may be considered as such an employee. The Court finds no merit in making any such distinction. The mere fact that the househelper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended. In the case at bar, the petitioner itself admits in its position paper that respondent worked at the company premises and her duty was to cook and prepare its employees' lunch and merienda. Clearly, the situs, as well as the nature of respondent's work as a cook, who caters not only to the needs of Mr. Tan and his family but also to that of the petitioner's employees, makes her fall squarely within the definition of a regular employee under the doctrine enunciated in the Apex Mining case. That she works within company premises, and that she does not cater exclusively to the personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioner's right of control over her functions, which is the primary indicator of the existence of an employer-employee relationship. Moreover, it is wrong to say that if the work is not directly related to the employer's business, then the person performing such work could not be considered an employee of the latter. The determination of the existence of an employer-employee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved. Indeed, it would be the height of injustice if we were to hold that despite the fact that respondent was made to cook lunch and merienda for the petitioner's employees, which work ultimately redounded to the benefit of the petitioner corporation, she was merely a domestic worker of the family of Mr. Tan. We note the findings of the NLRC, affirmed by the Court of Appeals, that no less than the company's corporate secretary has certified that respondent is a bonafide company employee; she had a fixed schedule and routine of work and was paid a monthly salary of P4,000.00; she served with the company for 15 years starting in 1983, buying and cooking food served to company employees at lunch and merienda, and that this service was a regular feature of employment with the company. Indubitably, the Court of Appeals, as well as the NLRC, correctly held that based on the given circumstances, the respondent is a regular employee of the petitioner. II. Whether or not respondent was illegally dismissed. Petitioner contends that there was abandonment on respondent's part when she refused to report for work when the corporation transferred to a new location in Caloocan City, claiming that her poor eyesight would make long distance travel a problem. Thus, it cannot be held guilty of illegal dismissal. On the other hand, the respondent claims that when the petitioner relocated, she was no longer called for duty and that when she tried to report for work, she was told that her services were no longer needed. She contends that the petitioner dismissed her without a just or authorized cause and that she was not given prior notice, hence rendering the dismissal illegal.

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We rule for the respondent. As a regular employee, respondent enjoys the right to security of tenure under Article 279 38 of the Labor Code and may only be dismissed for a just or authorized cause, otherwise the dismissal becomes illegal and the employee becomes entitled to reinstatement and full backwages computed from the time compensation was withheld up to the time of actual reinstatement. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty; hence, a just cause for termination of employment by the employer under Article 282 of the Labor Code, which enumerates the just causes for termination by the employer. For a valid finding of abandonment, these two factors should 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 as the more determinative factor which is manifested by overt acts from which it may be deduced that the employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified. This, the petitioner failed to do in the case at bar. Alongside the petitioner's contention that it was the respondent who quit her employment and refused to return to work, greater stock may be taken of the respondent's immediate filing of her complaint with the NLRC. Indeed, an employee who loses no time in protesting her layoff cannot by any reasoning be said to have abandoned her work, for it is well-settled that the filing of an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of her desire to return to work, thus, negating the employer's charge of abandonment. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. The employer's case succeeds or fails on the strength of its evidence and not on the weakness of the employee's defense. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. III. Whether the second NLRC decision promulgated during the pendency of the first petition for certiorari has basis in law. The petitioner contends that the respondent's motion for reconsideration, upon which the second NLRC decision was based, was not under oath and did not contain a certification as to why it was not decided on time as required under the New Rules of Procedure of the NLRC. Furthermore, the former also raises for the first time the contention that respondent's motion was filed beyond the ten (10)-calendar day period required under the same Rules, since the latter received a copy of the first NLRC decision on December 6, 2000, and respondent filed her motion only on December 18, 2000. Thus, according to petitioner, the respondent's motion for reconsideration was a mere scrap of paper and the second NLRC decision has no basis in law. We do not agree. It is well-settled that the application of technical rules of procedure may be relaxed to serve the demands of substantial justice, particularly in labor cases. Labor cases must be decided according to justice and equity and the substantial merits of the controversy. Rules of procedure are but mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be avoided. This Court has consistently held that the requirement of verification is formal, and not jurisdictional. Such requirement is merely a condition affecting the form of the pleading, non-compliance with which does not necessarily render it fatally defective. Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. The court may order the correction of the pleading if verification is lacking or act on the

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pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. Anent the argument that respondent's motion for reconsideration, on which the NLRC's second decision was based, was filed out of time, such issue was only brought up for the first time in the instant petition where no new issues may be raised by a party in his pleadings without offending the right to due process of the opposing party. Nonetheless, the petitioner asserts that the respondent received a copy of the NLRC's first decision on December 6, 2000, and the motion for reconsideration was filed only on December 18, 2000, or two (2) days beyond the ten (10)calendar day period requirement under the New Rules of Procedure of the NLRC and should not be allowed. This contention must fail. Under Article 223 of the Labor Code, the decision of the NLRC shall be final and executory after ten (10) calendar days from the receipt thereof by the parties. While it is an established rule that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an appeal has the effect of rendering the judgment final and executory, it is equally settled that the NLRC may disregard the procedural lapse where there is an acceptable reason to excuse tardiness in the taking of the appeal. Among the acceptable reasons recognized by this Court are (a) counsel's reliance on the footnote of the notice of the decision of the Labor Arbiter that "the aggrieved party may appeal . . . within ten (10) working days"; (b) fundamental consideration of substantial justice; (c) prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is from a decision granting separation pay which was already granted in an earlier final decision; and (d) special circumstances of the case combined with its legal merits or the amount and the issue involved. We hold that the particular circumstances in the case at bar, in accordance with substantial justice, call for a liberalization of the application of this rule. Notably, respondent's last day for filing her motion for reconsideration fell on December 16, 2000, which was a Saturday. In a number of cases, we have ruled that if the tenth day for perfecting an appeal fell on a Saturday, the appeal shall be made on the next working day. The reason for this ruling is that on Saturdays, the office of the NLRC and certain post offices are closed. With all the more reason should this doctrine apply to respondent's filing of the motion for reconsideration of her cause, which the NLRC itself found to be impressed with merit. Indeed, technicality should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties for the ends of justice are reached not only through the speedy disposal of cases but, more importantly, through a meticulous and comprehensive evaluation of the merits of a case. Finally, as to petitioner's argument that the NLRC had already lost its jurisdiction to decide the case when it filed its petition for certiorari with the Court of Appeals upon the denial of its motion for reconsideration, suffice it to state that under Section 7 of Rule 65 of the Revised Rules of Court, the petition shall not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued against the public respondent from further proceeding with the case. Thus, the mere pendency of a special civil action for certiorari, in connection with a pending case in a lower court, does not interrupt the course of the latter if there is no writ of injunction. Clearly, there was no grave abuse of discretion on the part of the NLRC in issuing its second decision which modified the first, especially since it failed to consider the respondent's motion for reconsideration when it issued its first decision.

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Tolosa vs NLRC (2008) G.R. 149578 Facts: Petitioner was the widow of Capt. Virgilio Tolosa who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk, to be the master of the Vessel named M/V Lady Dona. His contract officially began on November 1, 1992, as supported by his contract of employment when he assumed command of the vessel in Yokohama, Japan. The vessel departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time of embarkation, CAPT. TOLOSA was allegedly shown to be in good health. During 'channeling activities' upon the vessel's departure from Yokohama sometime on November 6, 1992, CAPT. TOLOSA was drenched with rainwater. The following day, November 7, 1992, he had a slight fever and in the succeeding twelve (12) days, his health rapidly deteriorated resulting in his death on November 18, 1992. When petitioner filed a complaint with the POEA, transferred to the DOLE, NLRC, the Labor Arbiter ruled in her favor. The NLRC, affirmed by the Court of Appeals, however, ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. Hence, this appeal. Summary of Ruling: The Court affirmed the appealed decision. Petitioner's action was recovery of damages based on a quasi-delict or tort, not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. Petitioner is actually suing shipmates Garate and Asis for gross negligence, and the said shipmates have no employer-employee relations with Capt. Tolosa. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws, but also damages under the Civil Code, these relief must still be based on an action that has reasonable causal connection with matters Issues and Rulings: 1. Whether or not the NLRC has jurisdiction over the case (whether the labor arbiter and the NLRC had jurisdiction over petitioner's action). Petitioner argues that her cause of action is not predicated on a quasi delict or tort, but on the failure of private respondents as employers of her husband (Captain Tolosa) to provide him with timely, adequate and competent medical services under Article 161 of the Labor Code: "ART 161. Assistance of employer. It shall be the duty of any employer to provide all the necessary

assistance to ensure the adequate and immediate medical and dental attendance and treatment to an injured or sick employee in case of emergency." Likewise, she contends that Article 217 (a) (4) of the Labor Code vests labor arbiters and the NLRC with jurisdiction to award all kinds of damages in cases arising from employer-employee relations. Petitioner also alleges that the "reasonable causal connection" rule should be applied in her favor. Citing San Miguel Corporation v. Etcuban, she insists that a reasonable causal connection between the claim asserted and the employeremployee relation confers jurisdiction upon labor tribunals. She adds that she has satisfied the required conditions: 1) the dispute arose from an employer-employee relation, considering that the claim was for damages based on the failure of private respondents to comply with their obligation under Article 161 of the Labor Code; and 2) the dispute can be resolved by reference to the Labor Code, because the material issue is whether private respondents complied with their legal obligation to provide timely, adequate and competent medical services to guarantee Captain Tolosa's occupational safety. We disagree.

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We affirm the CA's ruling that the NLRC and the labor arbiter had no jurisdiction over petitioner's claim for damages, because that ruling was based on a quasi delict or tort per Article 2176 of the Civil Code. REMEDIAL LAW; CIVIL PROCEDURE; JURISDICTION; LABOR TRIBUNALS; ACTION BASED ON QUASI DELICT THAT DOES NOT INVOLVE LABOR DISPUTE, NOT INCLUDED - Time and time again, we have held that the allegations in the complaint determine the nature of the action and, consequently, the jurisdiction of the courts. After carefully examining the complaint/position paper of petitioner, we are convinced that the allegations therein are in the nature of an action based on a quasi delict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross negligence. Petitioner's complaint/position paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who had no employer-employee relation with Captain Tolosa. The labor arbiter himself classified petitioner's case as "a complaint for damages, blacklisting and watchlisting (pending inquiry) for gross negligence resulting in the death of complainant's husband, Capt. Virgilio Tolosa." We stress that the case does not involve the adjudication of a labor dispute, but the recovery of damages based on a quasi delict. The jurisdiction of labor tribunals is limited to disputes arising from employer-employee relations, as we ruled in Georg Grotjahn GMBH & Co. v. Isnani: "Not every dispute between an employer and employee involves matters that only labor arbiters and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement." The pivotal question is whether the Labor Code has any relevance to the relief sought by petitioner. From her paper, it is evident that the primary reliefs she seeks are as follows: (a) loss of earning capacity denominated therein as "actual damages" or "lost income" and (b) blacklisting. The loss she claims does not refer to the actual earnings of the deceased, but to his earning capacity based on a life expectancy of 65 years. This amount is recoverable if the action is based on a quasi delict as provided for in Article 2206 of the Civil Code, 18 but not in the Labor Code. DAMAGES PROVIDED BY THE CIVIL CODE; AWARD PROPER IF RELIEF SOUGHT HAS CAUSAL RELATIONS WITH LABOR MATTERS - While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages governed by the Civil Code, these reliefs must still be based on an action that has a reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining agreements. The central issue is determined essentially from the relief sought in the complaint. In San Miguel Corporation v. NLRC, this Court held:"It is the character of the principal relief sought that appears essential in this connection. Where such principal relief is to be granted under labor legislation or a collective bargaining agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim." The labor arbiter found private respondents to be grossly negligent. He ruled that Captain Tolosa, who died at age 58, could expect to live up to 65 years and to have an earning capacity of US$176,400.

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LOSS OF EARNING CAPACITY; NOT TO BE EQUATED WITH LABOR BENEFITS COGNIZED IN LABOR DISPUTES - It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages, overtime compensation or separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim resulting from a quasi delict or a similar cause within the realm of civil law. Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations. In the present case, petitioner's claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a safety and health standard under Book IV of the same Code. The enforcement of this labor standard rests with the labor secretary. Thus, claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages before the labor arbiter. REGULAR COURTS HAVE AUTHORITY OVER ACTION FOR DAMAGES PREDICATED ON QUASI DELICT AND HAS NO CONNECTION WITH LABOR-RELATED CLAIMS - It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is merely incidental, and in which the cause of action proceeds from a different source of obligation such as a tort. Since petitioner's claim for damages is predicated on a quasi delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes, or collective bargaining agreements, jurisdiction over the action lies with the regular courts not with the NLRC or the labor arbiters. 2. Whether or not Evelyn is entitled to the monetary awards granted by the labor arbiter (whether the monetary award granted by the labor arbiter has already reached finality). ISSUES NOT RAISED IN COURTS A QUO CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL Petitioner contends that the labor arbiter's monetary award has already reached finality, since private respondents were not able to file a timely appeal before the NLRC. This argument cannot be passed upon in this appeal, because it was not raised in the tribunals a quo. Well-settled is the rule that issues not raised below cannot be raised for the first time on appeal. Thus, points of law, theories, and arguments not brought to the attention of the Court of Appeals need not and ordinarily will not be considered by this Court. Petitioner's allegation cannot be accepted by this Court on its face; to do so would be tantamount to a denial of respondents' right to due process. Furthermore, whether respondents were able to appeal on time is a question of fact that cannot be entertained in a petition for review under Rule 45 of the Rules of Court. In general, the jurisdiction of this Court in cases brought before it from the Court of Appeals is limited to a review of errors of law allegedly committed by the court a quo.

Phil Global Communications Inc vs de Vera (2005) G.R. 157214 Facts:

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De Vera and petitioner company entered into a contract where respondent was to attend to the medical needs of petitioner s employees while being paid a retainer fee of P4,000 per month. Later, De Vera was informed y petitioner that the retainership will be discontinued. Respondent filed a case for illegal dismissal. Issue: Whether or not de Vera is an employee of PhilComm or an independent contractor. Held: Applying the four fold test, de Vera is not an employee. There are several indicators apart from the fact that the power to terminate the arrangement lay on both parties: from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); he was subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employer-employee relationship; the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees. It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary. Finally, the element of control is absent. Petition granted.

U-Bix Corp. vs Bandiola (2007) G.R. 157168 Facts: Sometime in April 1995, Bandiola was employed by U-BIX to install furniture for its customers. On 13 April 1997, Bandiola and two other U-BIX employees were involved in a vehicular accident on their way to Baguio, where they were assigned by U-BIX to install furniture for an exhibit. As a result of the accident, Bandiola sustained a fracture on his left leg. Bandiola and his co-employees were initially brought to the Rosario District Hospital. The next day, 14 April 1997, they were transferred to the Philippine Orthopedic Hospital (Orthopedic). After his broken leg was cemented, Bandiola was advised to go back for further medical treatment. U-BIX paid for the medical expenses incurred in both mentioned hospitals. When Bandiola asked for additional financial assistance for further expenses in the treatment of his leg which even needed to be casted in fiberglass, U-BIX allegedly refused. On September 1998, Bandiola filed a Complaint before the Labor Arbiter, where he alleged underpayment of salary; non-payment of overtime pay; premium pay for work performed on holidays and rest days; separation pay; service incentive leave pay; 13th month pay; and the payment of actual, moral and exemplary damages. In its Decision, dated 16 September 1998, Labor Arbiter allowed Bandiola's claim for salary differential, service incentive leave pay and 13th month pay due to U-BIX's failure to present payrolls or similar documents. Incidentally, the award of these claims is no longer questioned in the present petition. The other claims, particularly those for medical expenses that Bandiola allegedly incurred and for moral and exemplary damages, were dismissed. Bandiola asserts that U-BIX failed to extend to him any financial assistance after he was injured in the performance of his duties, and that as a result, he suffered physical pain, mental torture, fright, sleepless nights, and serious anxiety. He claims that this entitles him to moral and exemplary damages. Bandiola filed an appeal before the NLRC. NLRC amended the Decision rendered by the Labor Arbiter ruling that UBIX should reimburse Bandiola the amount for the medical expenses he incurred in connection with his fractured leg; and further ruled that U-BIX is liable to pay Bandiola P25,000.00 in moral damages and P25,000.00 in exemplary damages for refusing to reimburse Bandiola for the medical expenses he incurred after it failed to report to the Social Security System (SSS) the injuries sustained by Bandiola

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It affirmed Bandiola's entitlement to reimbursement of his medical expenses, but reduced the amount to P7,742.50, the amount of actual damages he was able to prove. It also affirmed without modification the award of moral and exemplary damages, and the monetary award granted by the Labor Arbiter Issue: WON petitioner U-BIX should reimburse respondent Bandiola for alleged medical expenses of P7,742.50 and pay for moral damages of P25,000.00 and exemplary damages of P25,000.00 to said respondent Bandiola. Held: Yes. Contrary to the arguments put forward by U-BIX, it is liable to reimburse Bandiola the amount of P7,742.50 for medical expenses because its failure to comply with its duty to record and report Bandiola's injury to the SSS precluded Bandiola from making any claims. Moreover, U-BIX, by its own admission, reimbursed its other employees who were involved in the same accident for their medical expenses. Clearly, the reimbursement of medical expenses for injuries incurred in the course of employment is part of the benefits enjoyed by U-BIX's employees. The only justification for its refusal to reimburse Bandiola was that he intended to defraud the company by presenting spurious receipts amounting to P7,742.50 that were allegedly issued four months before their presentation. EMPLOYEES COMPENSATION FOR WORK-RELATED INJURIES, DISABILITIES AND DEATHS - Articles 205 and 206 of the Labor Code set the reportorial requirements in cases when an employee falls sick or suffers an injury arising in the course of employment. An injury is said to arise "in the course of employment" when it takes place within the period of employment, at a place where the employee may reasonably be, and while he is fulfilling his duties or is engaged in doing something incidental thereto. 20 The aforecited provisions of the Labor Code provide that: ART 205. (a) RECORD OF DEATH OR DISABILITY

All employers shall keep a logbook to record chronologically the sickness, injury or death of their

employees, setting forth therein their names, dates and places of the contingency, nature of the contingency and absences. Entries in the logbook shall be made within five days from notice or knowledge of the occurrence of contingency. Within five days after entry in the logbook, the employer shall report to the System only those contingencies he deems to be work-connected. (b) All entries in the employers logbook shall be made by the employer or any of his authorized official after

verification of the contingencies or the employees absences for a period of a day or more. Upon request by the System, the employer shall furnish the necessary certificate regarding information about any contingency appearing in the logbook, citing the entry number, page number and date. Such logbook shall be made available for inspection to the duly authorized representatives of the System. ART 206. NOTICE OF SICKNESS, INJURY OR DEATH

Notice of sickness, injury or death shall be given to the employer by the employee or by his dependents or anybody on his behalf within five days from the occurrence of the contingency. No notice to the employer shall be required if the contingency is known to the employer or his agents or representatives. GENERAL RULE AND EXCEPTION ON NOTIFICATION - As a general rule, the injured employee must notify his employer, who is obligated to enter the notice in a logbook within five days after notification. Within five days after making the entry, the employer of a private company reports the work-related sickness or injury to the SSS. The claim is forwarded to the SSS, which decides on the validity of the claim. When the SSS denies the claim, the denial may be appealed to the Employees' Compensation Commission (ECC) within 30 days.

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However, the law provides an exception to the rule requiring an employee to notify his or her employer of his injuries. Under Section B of ECC Board Resolution No. 2127, issued on 5 August 1982, notice of injury, sickness or death of the employee need not be given to the employer in any of the following situations: (1) (2) When the employee suffers the contingency within the employer's premises; When the employee officially files an application for leave of absence by reason of the contingency from

which he suffers; (3) When the employer provides medical services and/or medical supplies to the employee who suffers from

the contingency; and (4) When the employer can be reasonably presumed to have had knowledge of the employee's contingency, in

view of the following circumstances: (4.1) (4.2) (4.3) The employee was performing an official function for the employer when the contingency occurred; The employee's contingency has been publicized through mass media outlets; or The specific circumstances of the occurrence of the contingency have been such that the employer can be

reasonably presumed to have readily known it soon thereafter; or (4.4) Any other circumstances that may give rise to a reasonable presumption that the employer has been aware

of the contingency. In the present case, there is no dispute that Bandiola's leg injury was sustained in the course of his employment with U-BIX. At the time of the accident, Bandiola was on the way to Baguio, where he was ordered by U-BIX to install furniture for an exhibit. Moreover, U-BIX was aware that Bandiola, as well as his other co-employees, were injured during the accident. U-BIX admitted to providing Bandiola and his co-employees with medical assistance and it even sent its representative, Rey Reynes, to Rosario District Hospital, where they were confined, and had them transferred to the Orthopedic. U-BIX was also aware that the Orthopedic instructed Bandiola to return for further medical treatment. It is implicit that Bandiola needed further treatment for his broken leg and was, thus, incapacitated to work. Given the foregoing circumstances, U-BIX had the legal obligation to record pertinent information in connection with the injuries sustained by Bandiola in its logbook within five days after it had known about the injuries; and to report the same to the SSS within five days after it was recorded in the logbook, in accordance with Articles 205 and 206 of the Labor Code. Had U-BIX performed its lawful duties, the SSS, or the ECC on appeal, could have properly considered whether or not Bandiola was entitled to reimbursement for his medical expenses, as well as disability benefits while he was unable to work. However, U-BIX did not present any evidence showing that it had complied with these legal requirements. It had not even replied to Bandiola's allegations in his Position Paper, dated 13 April 1998, that its employees were not even members of the SSS. HISTORY AND IMPORTANCE OF EMPLOYEES COMPENSATION - As early as 1938, this Court emphasized, in the case of Murillo v. Mendoza, 22 that labor laws have demonstrated an impetus towards ensuring that employees are compensated for work-related injuries. The law has since treated such compensation as a right, which the employees can claim, instead of an act of charity to be given at the employer's discretion.

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The intention of the Legislature in enacting the Workmen's Compensation Act was to secure workmen and their dependents against becoming objects of charity, by making a reasonable compensation for such accidental calamities as are incidental to the employment. Under such act injuries to workmen and employees are to be considered no longer as results of fault or negligence, but as the products of the industry in which the employee is concerned. Compensation for such injuries is, under the theory of such statute, like any other item in the cost of production or transportation, and ultimately charged to the consumer. The law substitutes for liability for negligence an entirely new conception; that is, that if the injury arises out of and in the course of the employment, under the doctrine of man's humanity to man, the cost of compensation must be one of the elements to be liquidated and balanced in the course of consumption. In other words, the theory of law is that, if the industry produces an injury, the cost of that injury shall be included in the cost of the product of the industry. In De Jesus v. Employee's Compensation Commission, this Court further noted that while the present law protects employers from spurious and long overdue claims, it stresses at the same time that the claims for compensation are to be promptly and properly addressed. More importantly, employers no longer need to determine the validity of a claim or to defend themselves from spurious claims. Their duties are thus limited to paying the monthly premiums and reporting the sickness, injury or death for which compensation is due. The new law establishes a state insurance fund built up by the contributions of employers based on the salaries of their employees. The injured worker does not have to litigate his right to compensation. No employer opposes his claim. There is no notice of injury nor requirement of controversion. The sick worker simply files a claim with a new neutral Employees' Compensation Commission which then determines on the basis of the employee's supporting papers and medical evidence whether or not compensation may be paid. The payment of benefits is more prompt. The cost of administration is low. The amount of death benefits has also been doubled. On the other hand, the employer's duty is only to pay the regular monthly premiums to the scheme. It does not look for insurance companies to meet sudden demands for compensation payments or set up its own funds to meet these contingencies. It does not have to defend itself from spuriously documented or long past claims. The new law applies the social security principle in the handling of workmen's compensation. The Commission administers and settles claims from a fund under its exclusive control. The employer does not intervene in the compensation process and it has no control, as in the past, over payment of benefits. . . . . Since there is no employer opposing or fighting a claim for compensation, the rules on presumption of compensability and controversion cease to have importance. The lopsided situation of an employer versus one employee, which called for equalization through the various rules and concepts favoring the claimant, is now absent. By failing to report Bandiola's injury to the SSS, U-BIX disregarded the law and its purpose; that is, to provide a proper and prompt settlement of his claims. Instead, U-BIX arrogated upon itself the duty of determining which medical expenses are proper for reimbursement. In doing so, it could unnecessarily delay and unjustifiably refuse to reimburse Bandiola for medical expenses even if they were adequately supported by receipts, as was done in this instance. The expense and delay undergone by Bandiola since 1997 in obtaining reimbursement for his medical expenses of P7,742.50 very clearly defeat the purpose of the law. BURDEN OF PROOF ON THE DEFENDANT OF A CLAIM - U-BIX does not question its liability to pay for medical expenses incurred in connection with the 13 April 1997 accident; it admits that it paid for all the medical expenses of its other employees, who were involved in the accident. It refused, however, to reimburse Bandiola for further medical expenses on the ground that the receipts were counterfeit and belatedly presented to U-BIX.

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Bandiola presented eight receipts with a total amount of P7,742.50 issued by MCP and his attending physician, Dr. Celestino Musngi. The amounts indicated therein range from P200.00 to P2,936.00. The receipts were issued on 24 April 1997 and 6 May 1997, or around the time the accident occurred on 13 April 1997. From the face of the receipts, there is no showing that these documents are false or falsified. U-BIX could have easily confirmed with MCP or Dr. Celestino Musngi, who issued said receipts, the authenticity of the documents. However, it failed to allege that it took any steps to check the authenticity of the receipts. It also failed to present any evidence that these receipts are fake. Absent any proof, no weight can be attached to the allegation that the receipts are spurious. The party who alleges the fact has the burden of proving it. The burden of proof is assigned to the defendant of a claim when he or she alleges an affirmative defense, which is not a denial of an essential ingredient in the complainant's cause of action the existence of the receipts, in the present case but is one which, if established, will be a good defense, i.e., an avoidance of the claim. One who alleges an affirmative defense that is denied by the complainant the falsity of the receipts, in this case has the burden of proving it. Unless the party asserting the affirmative of an issue sustains the burden of proof, his or her cause will not succeed. If he or she fails to establish the facts of which the matter asserted is predicated, the complainant is entitled to a verdict or decision in his or her favor. In this case, U-BIX's affirmative defense that the receipts are spurious is rejected due to utter lack of proof. U-BIX asserts that no demand was made by the petitioner and that it only came to know of Bandiola's medical expenses when it received the Summons to attend a preliminary conference before the Labor Arbiter. For his part, Bandiola insists that before filing the case with the NLRC, he approached U-BIX three times for financial assistance in connection with his medical expenses, but he was refused. Bandiola identified the persons he spoke to as Rey Reynes and a certain Ms. Clarisse. U-BIX alleges that it sent Rey Reynes to look for Bandiola in the address recorded in their office files, but that he no longer resided therein. Bandiola contested this allegation by stating that he had not changed his residence. As of 20 September 2006, Bandiola still resided at the same address, Sampaloc Site II-B, Barangay B.F. Homes, Paraaque City, as evidenced by the Certificate of Indigency issued by Barangay BF Homes Chairperson Florencia N. Amurao. U-BIX maintains that Bandiola kept the company in the dark regarding his medical expenses because he intended to file a baseless suit aimed at extorting money from the company. This Court finds it implausible that a worker who received less than minimum wage would choose to initiate legal proceedings before even seeking to collect from his employer. To automatically presume that Bandiola intended to defraud the company despite the absence of supporting evidence would constitute a hasty and unsubstantiated generalization, which displays a prejudice against ordinary workers, such as Bandiola. U-BIX's continued and stubborn refusal to reimburse Bandiola's medical expenses was made evident during the mandatory conference before the Labor Arbiter when it refused to recognize the receipts shown to it. If U-BIX had refused to take cognizance of the receipts presented during a quasi-judicial proceeding before a public officer, then it would have been more likely that it ignored, if not flat-out refused, to consider the said receipts when the same were presented by a lowly employee. Under the facts of the case, Bandiola is entitled to moral and exemplary damages. There is no question that moral damages may be awarded in cases when a wrongful act or omission has caused the complainant mental anguish, fright and serious anxiety. Articles 2217 and 2219, in connection with Article 21 of the Civil Code, read:

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Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission. Art. 2219. Moral damages may be recovered in the following and analogous cases: (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. U-BIX failed to perform its legal obligation to report to the SSS the injuries suffered by Bandiola, and, thereafter, failed to extend the same "financial aid" it extended to other employees who were involved in the same accident. After it was shown the receipts for the medical expenses Bandiola paid for in connection with the injuries, U-BIX unreasonably refused to reimburse him for the expenses. It is not difficult to accept Bandiola's claim that he suffered mental anguish, serious anxiety and fright when U-BIX left him without any options for financial support while he was suffering from and rendered incapacitated by work-related injuries. He was severely distressed by his plight that he felt that he could no longer continue to work for U-BIX. U-BIX's unjustified and continued refusal to reimburse Bandiola after it failed to report his injury to the SSS, despite the receipts he presented, demonstrates bad faith. By singling out Bandiola from its other employees, who were reimbursed for their medical expenses, and forcing him to litigate for ten years in order to claim the unsubstantial amount of P7,742.50, U-BIX was clearly indulging in malicious conduct. AWARD ON MORAL DAMAGES - As regards the award of moral damages, this Court has ruled that there is no hard and fast rule in determining the fair amount for moral damages, since each case must be governed by its own peculiar circumstances. It should enable the injured parties to obtain means, diversions or amusements that will serve to alleviate the moral sufferings the injured party has undergone by reason of defendant's culpable action. In other words, the award of moral damages is aimed at a restoration within the limits of the possible, of the spiritual and/or psychological status quo ante; and therefore it must be proportionate to the suffering inflicted. Therefore, in light of the sufferings sustained by Bandiola, this Court sustains the award of P25,000.00 as moral damages. Article 2229 of the Civil Code provides that exemplary damages may be imposed by way of example or correction for public good. It reads: Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the

public good, in addition to the moral, temperate, liquidated or compensatory damages. Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious consequences, and their imposition is required by public policy to suppress the wanton acts of the offender. The Labor Code provides for the medical expenses, as well as disability benefits of workers suffering from workrelated injuries and recognizes such compensation as their right. Indeed, a system has been put in place for the prompt collection of the benefits, which are given by law to injured employees. All that U-BIX was required to do was to report the injury; it need not have defended itself from what it perceived to be spurious claims. Instead, it took upon itself the duty of determining the validity of Bandiola's claims and unjustifiably refused to reimburse his properly receipted medical expenses. The prolonged litigation of his valid claims is not the only miserable situation which the present labor laws sought to prevent, but the pathetic situation wherein a laborer is placed at the mercy of his or her employer for recompense that is his or hers by right. Exemplary damages are, thus, rightfully imposed against U-BIX. Ma. Cecelia Timbal LlB 2 Rm 402

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Escasinas et al., vs Shangri-la Mactan Island Resort et al., (2009) G.R. 178827 Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-las Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and supervise the work of nurses under her.

The Labor Arbiter (LA) declared petitioners to be regular employees of Shangri-la, noting that the petitioners usually perform work which is necessary and desirable to Shangri-las business, and thus ordered Shangri-la to grant them the wages and benefits due them as regular employees from the time their services were engaged.

Upon appeal, the NLRC declared that no employer-employee relationship existed between Shangri-la and petitioners. It ruled that contrary to the finding of the LA, even if Art. 280 of the Labor Code states that if a worker performs work usually necessary or desirable in the business of an employer, he cannot be automatically deemed a regular employee, and that the Memorandum of Agreement between the respondent and the respondent doctor amply shows that respondent doctor was in fact engaged by Shangri-la on retainer basis, under which she could hire her own nurses and other clinic personnel.

The Court of Appeals (CA) affirmed the NLRC decision, concluding that all aspects of employment of petitioners being under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of providing medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la. Issues:

1. Whether or not Article 157 of the Labor Code make it mandatory for covered establishment to employ health personnel; 2. Whether or not there exists an employer-employee relationship between Shangri-la and petitioners.

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Held: The Court holds that, contrary to petitioners postulation, Art. 157 does not require the engage ment of full-time nurses as regular employees of a company employing not less than 50 workers. Thus, the Article provides:

ART. 157. Emergency medical and dental services. It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of: (a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of this Article;

(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees exceeds two hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight [8] hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.

Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to furnish its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its employees, not necessarily to hire or employ a service provider. As held in Philippine Global Communications vs. De Vera: x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the employer to retain, not employ, a part-time physician who needed to stay in the premises of the nonhazardous workplace for two (2) hours. Ma. Cecelia Timbal LlB 2 Rm 402

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The term full-time in Art. 157 cannot be construed as referring to the type of employment of the person engaged to provide the services, for Article 157 must not be read alongside Art. 280 in order to vest employeremployee relationship on the employer and the person so engaged. So De Vera teaches:

x x For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latters business, even without being hired as an employee. This set -up is precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. x x x

The phrase services of a full-time registered nurse should thus be taken to refer to the kind of services that the nurse will render in the companys premises and to its employees, not the manner of his engagement.

The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether the contractor is 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 a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.

On the other hand, existence of an employer- employee relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration.

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-las principal business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employees last drawn sa lary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-las guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their Ma. Cecelia Timbal LlB 2 Rm 402

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SSS premium as well as their wages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, Clinic Policies and Employee Manual claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the employee manual being followed by Shangri-las regular workers, governs how they perform their respective tasks and responsibilities. In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners employer.

ISS Indochina Corp., vs Ferrer (2005) G.R. 156381 Facts: Respondents, in their complaint, alleged that petitioner hired them as construction workers for its Taiwan-based principal/employer Formosa Plastics Corporation. Pursuant to the parties' contracts of employment, each respondent would receive a monthly salary of NT$15,360.00. Their employment covered a period of one (1) year or from May 1, 1997 to May 1, 1998. On May 1, 1997, respondents, along with other Filipino contract workers, were deployed to Taiwan. But upon their arrival, only 20 workers, excluding respondents, were employed as construction workers at Formosa Plastics Corporation. Aggrieved, they sought assistance from Manila Economic and Cultural Office (MECO) officials who directed them to sign separate affidavits alleging that they were assigned, not as construction workers for Formosa Plastics Corporation, but as cable tray/pipe tract workers at Shin Kwan Enterprise Co., Ltd. On May 17, 1997, they were repatriated to the Philippines. They alleged that they were forced to resign since "they were left out from among those workers who were considered for employment."Subsequetly, a complaint was filed by private respondents for illegal dismissal, payment of salaries, refund of placement fee, damages and attorney's fees filed with the Office of the Labor Arbiter against JSS Indochina Corporation, petitioner, docketed as NLRC NCR OFW Case (L) 97-05-3715. Petitioner denied the allegations in the complaint, claiming that, assisted by MECO officials, respondents preterminated their respective contracts of employment as they refused to work after being assigned as cable tray/pipe tract workers by Formosa Plastics Corporation to 33 KV Worksite being administered by Shin Kwan Construction Company Limited. Issue: Whether or not respondents were illegally dismissed from employment by petitioner. Held: We take this opportunity to stress the need for strict enforcement of the law and the rules and regulations governing Filipino contract workers abroad. Many hapless citizens of this country who have sought foreign employment to earn a few dollars to ensure for their families a life worthy of human dignity and provide proper education and a decent future for their children have found themselves enslaved by foreign masters, harassed or abused and deprived of their employment for the slightest cause. No one should be made to unjustly profit from their suffering. Hence, recruiting agencies must not only faithfully comply with Government-prescribed responsibilities; they must impose upon themselves the duty, borne out of a social conscience, to help citizens of this

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country sent abroad to work for foreign principals. They must keep in mind that this country is not exporting slaves but human beings, and above all, fellow Filipinos seeking merely to improve their lives. There is no question that petitioner violated its contract with respondents. As found by the Labor Arbiter, the NLRC and the Appellate Court, petitioner did not assign them as construction workers for Formosa Plastics Corporation. Instead, they were directed to work as cable tray/pipe tract workers at Shin Kwan Enterprise Co., Ltd. The Labor Arbiter found that respondents' "decision to resign from their employment were made by force of circumstances not attributable to their own fault," and "it was not their fault that they were left out from among those workers who were considered for employment by the foreign employer." Likewise, the NLRC held that respondents' "decision to go home to the Philippines was justified in view of the evident breach of contract" by petitioner, as "it clearly appeared that upon their arrival at the jobsite, there was no employer on hand." Clearly, both labor tribunals correctly concluded, as affirmed by the Court of Appeals, that they were forced to resign and to pre-terminate their employment contracts in view of petitioner's breach of their provisions. Undoubtedly, the termination of respondents' services is without just or valid cause. Section 10 of RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act, provides: "SECTION 10. Money Claims.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. Verily, as correctly held by the Court of Appeals, respondents who were unjustly dismissed from work are actually entitled to an amount representing their three (3) months salary considering that their employment contract has a term of exactly one (1) year; plus a full refund of their placement fee, with no ceiling, with interest at 12% per annum. In Olarte vs. Nayona, we ordered petitioner Olarte to pay respondent Nayona, an illegally dismissed overseas contract worker, an amount corresponding to her 3 months salary and to reimburse her placement fee of P23,000.00, with legal interest of 12% per annum.

People vs Capt. Gasacao (2005) G.R. 168449 Facts: Appellant was the Crewing Manager of Great Eastern Shipping Agency Inc., a licensed local manning agency, while his nephew and co-accused, Jose Gasacao, was the President. As the crewing manager, appellant's duties included receiving job applications, interviewing the applicants and informing them of the agency's requirement of payment of performance or cash bond prior to deployment. On August 4, 2000, appellant and Jose Gasacao were charged with Large Scale Illegal Recruitment defined under Section 6, paragraphs (a), (l) and (m) of Republic Act (RA) No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, and penalized under Section 7 (b) of the same law, before the RTC of Quezon City.

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Only the appellant was arrested while Jose Gasacao remained at large. When arraigned, appellant pleaded not guilty to the offense charged. Thereafter, trial on the merits ensued. On March 5, 2001, the RTC of Quezon City, Branch 218, rendered its Joint Decision convicting appellant of Large Scale Illegal Recruitment in Crim. Case No. Q-00-94240 and acquitting him of the charge in Crim. Case No. Q-00-94241. Conformably with our pronouncement in People v. Mateo, 6 which modified pertinent provisions of the Rules of Court insofar as they provide for direct appeals from the RTC to the Supreme Court in cases where the penalty imposed is death, reclusion perpetua or life imprisonment, as in this case, as well as this Court's Resolution dated September 19, 1995, we resolved on February 2, 2005 to transfer the case to the Court of Appeals for appropriate action and disposition. Issue: WON an error attended the trial court's findings, as affirmed by the Court of Appeals, that appellant was guilty beyond reasonable doubt of the crime of large scale illegal recruitment. Held: ILLEGAL RECRUITMENT Sec. 6. DEFINITIONS. For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting,

contracting, transporting, utilizing, hiring, procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, that such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any persons, whether a non-licensee, non-holder, licensee or holder of authority. (a) To charge or accept directly or indirectly any amount greater than the specified in the schedule of allowable

fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (l) Failure to actually deploy without valid reason as determined by the Department of Labor and

Employment; and (m) Failure to reimburse expenses incurred by the workers in connection with his documentation and

processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered as offense involving economic sabotage. Illegal recruitment is deemed committed by a syndicate carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. REPUBLIC ACT NO. 8042 (THE MIGRANT WORKERS AND OVERSEAS FILIPINO ACT OF 1995); LICENSE DIFFERENTIATED FROM AUTHORITY - A license is a document issued by the Department of Labor and Employment (DOLE) authorizing a person or entity to operate a private employment agency, while an authority is a document issued by the DOLE authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. However, it appears that even licensees or holders of authority can be held liable for illegal recruitment should they commit any of the above-enumerated acts. Ma. Cecelia Timbal LlB 2 Rm 402

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Thus, it is inconsequential that appellant committed large scale illegal recruitment while Great Eastern Shipping Agency, Inc. was holding a valid authority. We thus find that the court below committed no reversible error in not appreciating that the manning agency was a holder of a valid authority when appellant recruited the private complainants. There is no merit in appellant's contention that he could not be held liable for illegal recruitment since he was a mere employee of the manning agency, pursuant to Section 6 of RA No. 8042 which provides: The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable. ILLEGAL RECRUITMENT IN LARGE SCALE, CREWING MANAGER OF A SHIPPING AGENCY PROMISED THE COMPLAINANTS THAT THEY WILL BE DEPLOYED ABROAD AFTER THEY HAVE PAID THE CASH BOND Contrary to appellant's claim, he is not a mere employee of the manning agency but the crewing manager. As such, he receives job applications, interviews applicants and informs them of the agency's requirement of payment of performance or cash bond prior to the applicant's deployment. As the crewing manager, he was at the forefront of the company's recruitment activities. The testimonies of the private complainants clearly established that appellant is not a mere employee of Great Eastern Shipping Agency Inc. As the crewing manager, it was appellant who made representations with the private complainants that he can secure overseas employment for them upon payment of the cash bond. It is well settled that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression that he had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be employed. 10 Appellant's act of promising the private complainants that they will be deployed abroad within three months after they have paid the cash bond clearly shows that he is engaged in illegal recruitment. AN EMPLOYEE OF A COMPANY OR CORPORATION ENGAGED THEREIN MAY BE HELD LIABLE AS PRINCIPAL TOGETHER WITH HIS EMPLOYER. The trial court's appreciation of the complainants' testimonies deserves the highest respect since it was in a better position to assess their credibility. Even assuming that appellant was a mere employee, such fact is not a shield against his conviction for large scale illegal recruitment. In the case of People vs. Cabais, we have held that an employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with the employer, if it is shown that he actively and consciously participated in the recruitment process. Clearly, the acts of appellant vis--vis the private complainants, either as the crewing manager of Great Eastern Shipping Agency Inc. or as a mere employee of the same, constitute acts of large scale illegal recruitment which should not be countenanced.

We find no reason to deviate from the findings of the trial court that appellant is guilty beyond reasonable doubt of large scale illegal recruitment. It was established that he promised overseas employment to five applicants, herein private complainants. He interviewed and required them to complete and submit documents purportedly needed for their employment. Although he informed them that it is optional, he collected cash bonds and promised their deployment notwithstanding the proscription against its collection under Section 60 of the Omnibus Rules and Regulations Implementing R.A. No. 8042 13 which state that:

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SEC. 60. Prohibition on Bonds and Deposits. In no case shall an employment agency require any bond or cash deposit from the worker to guarantee performance under the contract or his/her repatriation.

Acua vs CA (2006) G.R. 159832 Facts: Petitioners are Filipino overseas workers deployed by private respondent Join International Corporation (JIC), a licensed recruitment agency, to its principal, 3D Pre-Color Plastic, Inc., (3D) in Taiwan, Republic of China, under a uniformly-worded employment contract for a period of two years. Herein private respondent Elizabeth Alaon is the president of Join International Corporation. Sometime in September 1999, petitioners filed with private respondents applications for employment abroad. After their papers were processed, petitioners claimed they signed a uniformly-worded employment contract with private respondents which stipulated that they were to work as machine operators with a monthly salary of NT$15,840.00, exclusive of overtime, for a period of two years. On December 9, 1999, with 18 other contract workers they left for Taiwan. Upon arriving at the job site, a factory owned by 3D, they were made to sign another contract which stated that their salary was only NT$11,840.00. They were likewise informed that the dormitory which would serve as their living quarters was still under construction. They were requested to temporarily bear with the inconvenience but were assured that their dormitory would be completed in a short time. Petitioners alleged that they were brought to a "small room with a cement floor so dirty and smelling with foul odor". Forty women were jampacked in the room and each person was given a pillow. Since the ladies' comfort room was out of order, they had to ask permission to use the men's comfort room. Petitioners claim they were made to work twelve hours a day, from 8:00 p.m. to 8:00 a.m. The petitioners averred that on December 16, 1999, due to unbearable working conditions, they were constrained to inform management that they were leaving. They booked a flight home, at their own expense. Before they left, they were made to sign a written waiver. In addition, petitioners were not paid any salary for work rendered on December 11-15, 1999. Immediately upon arrival in the Philippines, petitioners went to private respondents' office, narrated what happened, and demanded the return of their placement fees and plane fare. Private respondents refused. On December 28, 1999, private respondents offered a settlement. Petitioner Mendez received P15,080. The next day, petitioners Acua and Ramones went back and received P13,640 10 and P16,200, respectively. They claim they signed a waiver, otherwise they would not be refunded. On January 14, 2000, petitioners Acua and Mendez invoking Republic Act No. 8042 filed a complaint for illegal dismissal and non-payment/underpayment of salaries or wages, overtime pay, refund of transportation fare, payment of salaries/wages for 3 months, moral and exemplary damages, and refund of placement fee before the National Labor Relations Commission (NLRC).

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Issue: Whether or not petitioners were illegally dismissed under Rep. Act No. 8042, thus entitling them to benefits plus damages.

Held: No illegal dismissal. As we have held previously, constructive dismissal covers the involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. In this case, the appellate court found that petitioners did not deny that the accommodations were not as homely as expected. In the petitioners' memorandum, they admitted that they were told by the principal, upon their arrival, that the dormitory was still under construction and were requested to bear with the temporary inconvenience and the dormitory would soon be finished. We likewise note that petitioners did not refute private respondents' assertion that they had deployed approximately sixty other workers to their principal, and to the best of their knowledge, no other worker assigned to the same principal has resigned, much less, filed a case for illegal dismissal. To our mind these cited circumstances do not reflect malice by private respondents nor do they show the principal's intention to subject petitioners to unhealthy accommodations. Under these facts, we cannot rule that there was constructive dismissal. Overtime Pay.Private respondents also claim that petitioners were not entitled to overtime pay, since they had offered no proof that they actually rendered overtime work. Petitioners, on the other hand, say that they could not show any documentary proof since their employment records were all in the custody of the principal employer. It was sufficient, they claim, that they alleged the same with particularity. It is a time-honored rule that in controversies between a worker and his employer, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing should be resolved in the worker's favor. The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. Accordingly, we rule that private respondents are solidarily liable with the foreign principal for the overtime pay claims of petitioners. Moral and exemplary damages.On the award of moral and exemplary damages, we hold that such award lacks legal basis. Moral and exemplary damages are recoverable only where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence, for the law always presumes good faith. Petitioners allege they suffered humiliation, sleepless nights and mental anguish, thinking how they would pay the money they borrowed for their placement fees. Even so, they failed to prove bad faith, fraud or ill motive on the part of private respondents. Moral damages cannot be awarded. Without the award of moral damages, there can be no award of exemplary damages, nor attorney's fees. Quitclaims are valid.Quitclaims executed by the employees are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the workers' legal rights, considering the economic disadvantage of the employee and the inevitable pressure upon him by financial necessity. Nonetheless, the so-called "economic difficulties and financial crises" allegedly confronting the employee is not an acceptable ground to annul the compromise agreement unless it is accompanied by a gross disparity between the actual claim and the amount of the settlement.

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A perusal of the records reveals that petitioners were not in any way deceived, coerced or intimidated into signing a quitclaim waiver in the amounts of P13,640, P15,080 and P16,200 respectively. Nor was there a disparity between the amount of the quitclaim and the amount actually due the petitioners. According to the Bangko Sentral Treasury Department, the prevailing exchange rates on December 1999 was NT$1 to P1.268805. Hence, after conversion to Philippine pesos, the amount of the quitclaim paid to petitioners was actually higher than the amount due them.

Asian International Manpower Services vs CA (2006) G.R. 169652 Facts: Proxy Maid Services Centre (Proxy), a Hong Kong based recruitment agency hired her through AIMS, a recruitment entity in the Philippines. On February 10, 2000, she signed an employment contract to work as a domestic helper of Low See Ting who later cancelled the contract sometime in March 2000. Nevertheless, Lacerna heeded AIMS's advice to proceed to Hong Kong on the assurance that she will be provided with an employment abroad. Upon arrival at Proxy's office on April 1, 2000, Lacerna was fetched by her employer, Tan Kmin Shwe Lin Charmain (Charmain). However, the latter dismissed her in a Notification dated May 2, 2000 citing as reason the "difficulty in communication." On May 20, 2000, Proxy transferred Lacerna to Tam Ching-yee, Donna. On June 30, 2000 she was dismissed by Donna without stating the reason for her termination. Neither did Proxy explain why she was dismissed. On July 1, 2000, Lacerna agreed to take a three-day trial period with another employer, Daisy Lee. However, before she could sign her contract with the latter, the Hong Kong government denied her request for change of employer and advised her to submit a fresh application with her country of origin. Following the denial of her work permit, Lacerna returned to the Philippines on July 13, 2000 but was informed by AIMS that Daisy Lee is no longer interested in hiring her. Lacerna demanded the return of her placement fee but was denied, hence, she filed the instant illegal dismissal case.AIMS, on the other hand, alleged that Lacerna resigned after working for five days as a domestic helper of Low See Ting from April 1, 2000 to April 5, 2000, as evidenced by her resignation letter. Proxy paid her wages and fare for a return ticket to the Philippines but she refused to be repatriated. Thereafter, with the assistance of Proxy, she was hired in the household of Charmain. Unfortunately, the latter dismissed Lacerna on the ground of difficulty in communication. On May 8, 2000, the Hong Kong Immigration Department granted her an extension of time to stay in Hong Kong with a warning that the same is her last chance to stay in the country. When Lacerna requested another extension, the same was denied and she was directed to leave Hong Kong. In her Reply, Lacerna insisted that her first employer was Charmain because she never worked for Low See Ting, who as early as March 2000, cancelled the contract before she flew to Hong Kong. She added that the signature appearing in the resignation letter and receipt of payment for the period April 1 to 5, 2000 is not her handwriting.

Issue: Was Lacerna illegally dismissed? If yes, may AIMS be held liable for the monetary claims of Lacerna Held: On both issues, the Court rules in the affirmative.

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There is no dispute that the last employer of Lacerna was Donna and not Daisy Lee because the Hong Kong government directed her repatriation before she could sign her contract with the latter. In dismissing her, Donna gave no reason for her termination. Neither did Proxy explain the ground for her dismissal. And where there is no showing of a clear, valid, and legal cause for the termination, the law considers the matter, a case of illegal dismissal. In termination cases involving Filipino workers recruited for overseas employment, the burden of proving just or authorized cause for termination rests with the foreign based employer/principal and the local based entity which recruited the worker both being solidarily liable for liabilities arising from the illegal dismissal of the worker. In this case, the Court of Appeals correctly declared Lacerna's termination illegal since no reason was given to justify her termination. AIMS argued that it cannot be held liable for the monetary claims of Lacerna because its contract was limited only to Lacerna's employment with Low See Ting. When she resigned as domestic helper of the latter, the contract was allegedly extinguished making AIMS no longer privy to the subsequent employment contract entered into by Proxy and Lacerna. However, the records of the Immigration Department of Hong Kong belie the contention of AIMS that Lacerna was employed by Low See Ting. The Immigration Department noted that the application of Lacerna was her second request for change of employer. She filed the first application after her contract was pre-terminated on May 4, 2000. This refers to the pre-termination by Charmain in the Notification of Cancellation of Employment Contract dated May 2, 2000. However, the prospective employer subject of said first application backed out, hence, Lacerna submitted a second application for change of employer which was granted with a warning that the same will be her last chance to stay in Hong Kong. Said second application landed her a job in the household of Donna on May 20, 2000. When the latter dismissed Lacerna on June 30, 2000, she applied for the third time to change employer but was denied by the Immigration Department which directed her to leave Hong Kong. The Hong Kong Immigration Department gave Lacerna only two chances to change employer. The subject of the first was the prospective employer who backed out, and the second was Donna. If we follow the version of AIMS, then the sequence of her employment would have been that with: (1) Low See Ting, (2) Charmain, (3) prospective employer who backed out, and (4) Donna. However Lacerna's employment with Low See Ting is not supported by the records of the Immigration Department. If Low See Ting was the first employer, then Lacerna's two chances to change employer would have ended on her prospective employer who backed out and would not have enabled her to work for Charmain and Donna. Clearly, the version of AIMS does not jibe with the official records of the Hong Kong government. Hence, between the alleged Lacerna's resignation letter to Low See Ting and the letters of the Hong Kong Immigration Department showing that Lacerna could not have been employed by her, credence must be given to the said official records, especially so that AIMS never assailed their authenticity. Moreover, even granting that Lacerna truly resigned as domestic helper of Low See Ting, the liability of AIMS was not extinguished. The contract of Lacerna as approved by the Philippine Overseas Employment Administration (POEA) reveals that Proxy was her designated principal employer; the agreed salary was HK$3,670.00 a month; and the contract duration was for two years. Since AIMS was the local agency which recruited Lacerna for Proxy, it is solidarily liable with the latter for liabilities arising from her illegal dismissal. To detach itself from the liability of Proxy, AIMS must show by clear and convincing evidence that its contract is limited to Lacerna's employment by Low See Ting.

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However, aside from its bare allegation, AIMS presented no proof to corroborate its claim. On the contrary, it appears that in transferring Lacerna from one employer to another, Proxy did not demand a new placement fee from Lacerna. This only shows that Proxy's conduct was in accordance with the original contract executed with AIMS and not on an entirely new and separate agreement entered into in Hong Kong. This interpretation is in accord with the rule that all doubts in the construction of labor contracts should be resolved in favor of the working class. The Constitution mandates the protection of labor and the sympathetic concern of the State for the workers conformably to the social justice policy. Verily, to absolve AIMS from liability based on its unsubstantiated claim that it is not privy to the subsequent employment provided by Proxy for Lacerna would be to undermine the avowed policy of the State. The joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. Thus, Section 10 of R.A. No. 8042, provides: SEC. 10. Money Claims. he liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less The illegal dismissal of Lacerna entitles her to the full reimbursement of placement fee with interest at twelve percent (12%) per annum, plus salaries for the unexpired portion of her employment contract or for three months for every year of the unexpired term, whichever is less. Thus, the Court of Appeals was correct in ordering AIMS to pay HK$11,010.00 corresponding to three months of her salary or its equivalent in the Philippine Peso at the time of payment, plus placement fee of P18,0000.00. No moral and exemplary damages.The Court of Appeals, however, erred in awarding moral and exemplary damages inasmuch as Lacerna failed to prove that AIMS and Proxy are guilty of bad faith. While it is true that they were not able to justify Lacerna's dismissal, the same does not automatically amount to bad faith. Moral and exemplary damages cannot be based solely upon the premise that the employer dismissed the employee without cause or due process. The termination must be attended with bad faith, or fraud, or was oppressive to labor or done in a manner contrary to morals, good customs or public policy and that social humiliation, wounded feelings, or grave anxiety resulted therefrom. Similarly, exemplary damages are recoverable only when the dismissal was effected in a wanton, oppressive or malevolent manner. To merit the award of these damages, additional facts showing bad faith are necessary but Lacerna failed to plead and prove the same in this case. Hence, the awards of moral and exemplary damages should be deleted.

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The award of attorney's fees is sustained.In actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum of ten percent (10%) of the total monetary award by way of attorney's fees is justified under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. There need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly and that the employee was forced to file a case, as in the instant case.

Sim vs. NLRC (2007) G.R. 157376 Facts: Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor Arbiter, alleging that she was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. Eventually, she was promoted to Manager position, until September 1999, when she received a letter from Remegio David the Senior Officer, European Head of PCIBank, and Managing Director of PCIB-Europe 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.On September 3, 2001, the Labor Arbiter rendered its Decision dismissing the case for want of jurisdiction and/or lack of merit. On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's Decision and dismissed petitioner's appeal for lack of merit. Without filing a motion for reconsideration with the NLRC, petitioner went to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the Rules of Court. In a Resolution dated October 29, 2002, the CA dismissed the petition due to petitioner's non-filing of a motion for reconsideration with the NLRC Issues and Rulings: I. Whether or not labor relations system in the Philippines has extra-territorial jurisdiction. The Court notes, however, a palpable error in the Labor Arbiter's disposition of the case, which was affirmed by the NLRC, with regard to the issue on jurisdiction. It was wrong for the Labor Arbiter to rule that "labor relations system in the Philippines has no extra-territorial jurisdiction." Article 217 of the Labor Code provides for the jurisdiction of the Labor Arbiter and the National Labor Relations Commission, viz.: ART. 217. Jurisdiction of Labor Arbiters and the Commission.

(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. 2. Unfair labor practice cases; Termination disputes; Ma. Cecelia Timbal LlB 2 Rm 402

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3.

If accompanied with a claim for reinstatement, those cases that workers may file involving wage, 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 the employer-employee

relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of

strikes and lockouts; and 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 of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

Moreover, Section 10 of Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, provides: SECTION 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the

National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages. Also, Section 62 of the Omnibus Rules and Regulations Implementing R.A. No. 8042 provides that the Labor Arbiters of the NLRC shall have the original and exclusive jurisdiction to hear and decide all claims arising out of employeremployee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages, subject to the rules and procedures of the NLRC. Under these provisions, it is clear that labor arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations, including termination disputes involving all workers, among whom are overseas Filipino workers. In Philippine National Bank v. Cabansag, the Court pronounced: . . Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws "which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country." In any event, since the CA did not commit any error in dismissing the petition before it for failure to file a prior motion for reconsideration with the NLRC, and considering that the Labor Arbiter and the NLRC's factual findings as regards the validity of petitioner's dismissal are accorded great weight and respect and even finality when the same are supported by substantial evidence, the Court finds no compelling reason to relax the rule on the filing of a motion for reconsideration prior to the filing of a petition for certiorari. Ma. Cecelia Timbal LlB 2 Rm 402

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II. Whether or not a prior motion for reconsideration is indispensable for the filing of a petition for certiorari under Rule 65 of the Rules of Court with the CA. Under Rule 65, the remedy of filing a special civil action for certiorari is available only when there is no appeal; or any plain, speedy, and adequate remedy in the ordinary course of law. A "plain" and "adequate remedy" is a motion for reconsideration of the assailed order or resolution, the filing of which is an indispensable condition to the filing of a special civil action for certiorari. This is to give the lower court the opportunity to correct itself. There are, of course, exceptions to the foregoing rule, to wit: (a) (b) where the order is a patent nullity, as where the court a quo has no jurisdiction; where the questions raised in the certiorari proceedings have been duly raised and passed upon by the

lower court, or are the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice

the interests of the Government or of the petitioner or the subject matter of the action is perishable; (d) (e) (f) where, under the circumstances, a motion for reconsideration would be useless; where petitioner was deprived of due process and there is extreme urgency for relief; where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial

court is improbable; (g) (h) (i) where the proceedings in the lower court are a nullity for lack of due process; where the proceeding was ex parte or in which the petitioner had no opportunity to object; and where the issue raised is one purely of law or public interest is involved.

Petitioner, however, failed to qualify her case as among the few exceptions. In fact, the Court notes that the petition filed before the CA failed to allege any reason why a motion for reconsideration was dispensed with by petitioner. It was only in her motion for reconsideration of the CA's resolution of dismissal and in the petition filed in this case that petitioner justified her non-filing of a motion for reconsideration. It must be emphasized that a writ of certiorari is a prerogative writ, never demandable as a matter of right, never issued except in the exercise of judicial discretion. Hence, he who seeks a writ of certiorari must apply for it only in the manner and strictly in accordance with the provisions of the law and the Rules. Petitioner may not arrogate to himself the determination of whether a motion for reconsideration is necessary or not. To dispense with the requirement of filing a motion for reconsideration, petitioner must show a concrete, compelling, and valid reason for doing so, which petitioner failed to do. Thus, the Court of Appeals correctly dismissed the petition. Petitioner also contends that the issue at bench is purely a question of law, hence, an exception to the rule. A reading of the petition filed with the CA shows otherwise. The issues raised in this case are mixed questions of fact and law. There is a question of fact when doubt or difference arises as to the truth or falsehood of the alleged facts, and there is a question of law where the doubt or difference arises as to what the law is on a certain state of facts. Petitioner, aside from questioning the ruling of the NLRC sustaining the Labor Arbiter's view that it does not have any jurisdiction over the case, also questions the NLRC's ruling affirming the Labor Arbiter's conclusion that she was

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validly dismissed by respondent. The legality of petitioner's dismissal hinges on the question of whether there was an employer-employee relationship, which was denied by respondent; and, if in the affirmative, whether petitioner, indeed, committed a breach of trust and confidence justifying her dismissal. These are mixed questions of fact and law and, as such, do not fall within the exception from the filing of a motion for reconsideration. Consequently, the CA was not in error when it dismissed the petition. More so since petitioner failed to show any error on the part of the Labor Arbiter and the NLRC in ruling that she was dismissed for cause. The rule is that the Court is bound by the findings of facts of the Labor Arbiter or the NLRC, unless it is shown that grave abuse of discretion or lack or excess of jurisdiction has been committed by said quasi-judicial bodies. The Court will not deviate from said doctrine without any clear showing that the findings of the Labor Arbiter, as affirmed by the NLRC, are bereft of sufficient substantiation. 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.

Bahia Shipping Services Inc., vs Chua (2008) G.R. 162195 Facts: Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow, England to board the said sea vessel where he will be assigned to work. On February 15, 1997, the private respondent reported for his working station one and one-half hours late. On February 17, 1997, the master of the vessel served to the private respondent an official warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the said dismissal notice. On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary claims. The private respondent alleged that he was paid only US$300.00 per month as monthly salary for five (5) months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed that he was underpaid in the amount of US$110.00 per month for that same period of five (5) months. He further asserted that his salaries were also deducted US$20.00 per month by the petitioner for alleged union dues. Issue: WON respondent is entitled to overtime pay which was incorporated in his award for the unexpired portion of the contract despite the fact that he did not render overtime work.

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Held: The inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the computation of his salaries for the entire unexpired period of his contract has no factual or legal basis and the same should have been disallowed. Petitioner contends that there is no factual or legal basis for the inclusion of said amount because, after respondent's repatriation, he could not have rendered any overtime work. This time, petitioner's contention is well-taken. The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission, where the NLRC was questioned for awarding to an illegally dismissed overseas worker fixed overtime pay equivalent to the unexpired portion of the latter's contract. In resolving the question, the Court, citing Cagampan v. National Labor Relations Commission, held that although an overseas employment contract may guarantee the right to overtime pay, entitlement to such benefit must first be established, otherwise the same cannot be allowed.

Masangcay vs Trans-Global Maritime Agency Inc., (2008) G.R. 172800 Facts: Ventnor is a foreign company based in Liberia and engaged in maritime commerce. It is represented in the Philippines by its manning agent, and co-respondent herein, Trans-Global, a corporation organized and existing under Philippine laws. Petitioner Marciano Masangcay was hired by Ventnor, through its manning agent, TransGlobal, as an oiler on M/T Eastern Jewel, an oil tanker. While on board M/T Eastern Jewel, Masangcay noticed a reddish discoloration of his urine upon urination. This happened several times and later became associated with bouts of left lower abdominal pain radiating to the loin area. Masangcay was brought to the Fujairah Hospital, United Arab Emirates, because of lower abdominal pain and left loin pain with difficulty in urinating. Better removal of the right pelvi-ureteric calculus was the recommended treatment but Masangcay refused surgical intervention and insisted on being repatriated back to the Philippines instead. Upon his arrival in Manila, Masangcay was immediately referred to Trans-Globals designated physician. Masangcay was hospitalized at the Makati Medical Center for treatment. The removal of the non-functioning right kidney was advised but Masangcay refused. Masangcay was then referred to Dr. Reynaldo C. de la Cruz of the National Kidney and Transplant Institute (NKTI) for a second opinion. An operation was made and proved successful. Dr. dela Cruz pronounced that Masangcay was fit to resume work as all his laboratory examinations showed normal results. Accordingly, Trans-Globals designated physician, declared Masangcay fit to go back to work after a regular medical examination. Trans-Global, in behalf of Ventnor, paid Masangcay his full 120 days Sick Leave Pay as well as all his medical and hospital expenses and professional fees of his attending physicians. Masangcay was asked to report back to the office of Trans-Global for deployment line-up. When Masangcay reported to the premises of Trans-Global, however, he was informed by the Port Captain that he can no longer be deployed due to negative reports about him coming from its principal, Ventnor. Masangcay instituted a complaint against Trans-Global and Ventnor, including Trans-Globals President, Michael Estaniel, before the National Labor Relations Commission (NLRC) for the payment of disability benefit, damages and attorneys fees. Masangcay alleged that his illness was contracted during the term of his Contract of Employment. Labor Arbiter found Masangcays complaint meritorious and ordered Trans -Global, Ventnor, and Estaniel to pay Masangcay for disability benefit. On appeal to the NLRC, the Commission affirmed the decision of the labor arbiter. The Court of Appeals granted the petition for certiorari of TransGlobal and Ventnor. It nullified and set aside the challenged Resolutions of the NLRC for having been issued in grave abuse of discretion amounting to lack or excess of jurisdiction. Hence, this petition for review on certiorari under Rule 45 of the Revised Rules of Court. Issue: WON Masangcay is entitled to disability benefits on account of his present condition. Ma. Cecelia Timbal LlB 2 Rm 402

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Held: We rule in the negative. Under Sec. 20(b), paragraph 6, of the 2000 POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels: permanent total or partial disability suffered by a seafarer during the term of his contract must be caused by work-related illness or injury. To be entitled to compensation and benefits under said provision, it is not sufficient to establish that the seafarers illness or injury has rendered him permanently or partially disabled, but it must also be show n that there is a causal connection between the seafarers illness or injury and the work for which he had been contracted for. Accordingly, in order to hold Trans-Global and Ventnor liable for payment of his claims, Masangcay must prove that he is suffering from permanent total or partial disability due to a work-related illness occurring during the term of his contract. Proof that he not only acquired or contracted his illness during the term of his employment contract is clearly not enough; Masangcay must also present evidence that such infirmity was work-related, or at the very least aggravated by the conditions of the work for which he was contracted for. The burden is clearly upon Masangcay to present substantial evidence, or such relevant evidence which a reasonable mind might accept as adequate to justify a conclusion, showing a reasonable connection that the nature of his employment or working conditions between the conditions of his work and his illness; or that the risk of contracting the same was increased by his working conditions. This, he did not do. Masangcay does not even assert that his illness is work-related and/or was, at the minimum, aggravated by his working conditions at the M/T Eastern Jewel. There is no substantiation that the progression of his ailment was brought about largely by the conditions of his job as an oiler. His medical history and/or records prior to his deployment as an oiler in M/T Eastern Jewel were neither presented nor alluded to in order to demonstrate that the working conditions on board said vessel increased the risk of contracting renal failure, chronic or otherwise. But even assuming that Masangcay is suffering from chronic renal failure, it still does not entitle him to compensation and benefits for a permanent disability. Chronic renal failure, is neither listed as a disability under Sec. 32 of the 2000 POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels; nor an occupational disease under Sec. 32-A thereof. But other than Masangcays bare avowal of entitlement just because an illness became manifest during his contract of employment, there is nothing on record to substantiate the same and would have justified an award of compensation on top of the aid or assistance already extended to him by Trans-Global and Ventnor. The dispute could have easily been resolved had the parties stayed true to the provisions of Sec. 20(b), paragraph 3 of the 2000 POEA Amended Standard Terms and Conditions: If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctors decision shall be final and binding on both parties. Without the opinion of a third doctor, we are constrained to make a ruling based on the evidences submitted by the parties and made part of the records of this case, which included the medical certifications of their respective physicians. Masangcay makes no allegation, much less presents no proof, that the illness was caused or aggravated by his employment. The evidence on record is totally bare of essential facts on how he contracted or developed such disease and on how and why his working conditions increased the risk of contracting the same.

Magsaysay Maritime Corp., et al., vs Velasquez, et al., (2008) G.R. 179802 Facts: Respondent Jaime M. Velasquez was hired by petitioner Magsaysay Maritime Corporation as second cook for its foreign principal, co-petitioner ODF Jell ASA. While on duty as second cook on board the vessel M/T Bow Favour, respondent suffered high fever and was unable to work. He took fever relieving medicine but his condition worsened. By the fourth day, his body temperature reached 40.9C. Respondent was brought to a hospital in Singapore where he was confined. Thereafter, he was repatriated to the Philippines. Respondent alleged that upon his repatriation, he was not confined to St. Lukes Medical Center as he expected. He claimed that he was compelled Ma. Cecelia Timbal LlB 2 Rm 402

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to seek medical treatment from an independent doctor. He consulted a certain Dr. Efren Vicaldo who diagnosed him to be suffering from staphylococcal bacteremia, multiple metastatic abcesses, pleural effusion and hypertension and declared his disability as Impediment Grade 1 (120%). Dr. Vic aldo further concluded that respondent was unfit to resume work as seaman in any capacity. Hence, respondent filed a claim for disability benefits, illness allowance/ reimbursement of medical expenses, damages and attorneys fees but petitioners refused to pay. The Labor Arbiter rendered a decision in favor of respondent. The NLRC rendered a decision reversing that of the Labor Arbiter and dismissed respondents complaint for lack of merit. CA set aside the decision of the NLRC and reinstated that of the Labor Arbiter. Issue: WON the CA committed reversible error when it upheld the findings of respondents private physician rather than the findings of the company-designated physician. Held: CA committed reversible error in ignoring the medical assessment of the company-designated physician. The POEA Contract is clear in its provisions when it provided who should determine the disability grading or fitness to work of seafarers. The POEA contract recognizes only the disability grading provided by the company-designated physicians. Section 20 B.3 of the POEA clearly illustrate that respondents disability can only be assessed by the company-designated physician. If the companydesignated physician declares him fit to work, then the seaman is bound by such declaration. The parties are both bound by the provisions of the POEA Contract which declares that the degree of disability or fitness to work of a seafarer should be assessed by the company-designated physician. Jurisprudence is replete with pronouncements that it is the company-designated physicians findings which should form the basis of any disability claim of the seafarer. In this particular case, respondent refused to accept the assessment made by the companydesignated physician that he is fit to work. It is beyond cavil that it is the company-designated physician who is entrusted with the task of assessing the seamans disability. However, when the seamans private physician disagrees with the assessment of the company-designated physician, as here, a third doctors opinion may be availed of in determining his disability. This however was not resorted to by the parties. As such, the credibility of the findings of company-designated doctors was properly evaluated by the NLRC. The company-designated physician cleared respondent for work resumption upon finding that his infection has subsided after successful medication. We agree with the NLRC that the doctor more qualified to assess the disability grade of the respondent seaman is the doctor who regularly monitored and treated him. The company-designated physician possessed personal knowledge of the actual condition of respondent. Since the company-designated physician in this case deemed the respondent as fit to work, then such declaration should be given credence, considering the amount of time and effort the company doctor gave to monitoring and treating respondents condition. It is undisputed that the recommendation of Dr. Vicaldo was based on a single medical report which outlined the alleged findings and medical history of respondent despite the fact that Dr. Vicaldo treated or examined respondent only once. As between the findings of the company-designated physician (Dr. Alegre) and the physician appointed by respondent (Dr. Vicaldo), the former deserves to be given greater evidentiary weight.

Serrano vs Gallant Maritime Services et al., (2009) G.R. 167614 Facts: Antonio M. Serrano was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following Ma. Cecelia Timbal LlB 2 Rm 402

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terms and conditions: Duration of contract Position Basic monthly salary Hours of work Overtime Vacation leave with pay 12 months Chief Officer US$1,400.00 48.0 hours per week US$700.00 per month 7.00 days per month On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of MSI that he would be made Chief Officer by the end of April 1998. MSI did not deliver on their promise to make petitioner Chief Officer. Hence, Soriano refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998. Sorianos employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days. He filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73 as well moral and exemplary damages and attorneys fees. He got a favourable decision with the Labor Arbiter in the amount of US$ 8,770.00. In awarding Soriano a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's *b+asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month. MSI appealed to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed. Soriano also appealed to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts. In a Decision dated June 15, 2000, the NLRC modified the LA Decision, ordering MSI to pay Soriano, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following: 1. 2. 3. Three (3) months salary $1,400 x 3 Salary differential 45.00 10% Attorneys fees424.50 US$4,200.00 US$4,245.00 TOTAL US$4,669.50 The NLRC corrected the LA's computation of the lump-sum salary awarded to Soriano by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay. Soriano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause. The NLRC denied the motion. Issue: WON Serrano is entitled to his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days. Held: Yes, Soriano is entitled to his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month. In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment. The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. Ma. Cecelia Timbal LlB 2 Rm 402

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People vs Domingo (2009) G.R. 181475 Facts: In or about the month of November 1999 to January 20, 2000, in the Municipality of Malolos, province of Bulacan, Philippines, Domingo, being a non-licensee or non-holder of authority from the Department of Labor and Employment to recruit and/or place workers under local or overseas employment, did then and there willfully and feloniously, with false pretenses, undertake illegal recruitment, placement or deployment of Wilson A. Manzo, and 22 other individuals. This offense involved economic sabotage, as it was committed in large scale. The Informations for 23 counts of Estafa, all of which were similarly worded but varying with respect to the name of each complainant and the amount which each purportedly gave to Domingo. That in or about the month of November, 1999 to January, 2000, in the municipality of Malolos, province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, by means of deceit, false pretenses and fraudulent manifestations, and with intent of gain, did then and there willfully, unlawfully and feloniously defraud one [Wilson A. Manzo] by then and there falsely representing that he has the power and capacity to recruit and employ persons in Saipan and could facilitate the necessary papers in connection therewith if given the necessary amount, and by means of deceit of similar import, when in truth and in fact, as the accused knew fully well his representation was false and fraudulent and designed to inveigle [Wilson A. Manzo] to give, as in fact the latter gave and delivered the amount of [P14,000.00] to him, which the accused misappropriated to himself, to the damage and prejudice of Wilson A. Manzo in the said amount of [P14,000.00]. Rogelio Cambay: Domingo recruited him for a painting job in Marianas Island for which he paid him the amount of P15,000 in two installments P2,500 during his medical examination at Newton Clinic in Makati City, and the balance of P12,500 before the scheduled departure on January 25, 2000. On his scheduled departure, appellant did not show up at their meeting place in Malolos, Bulacan, hence, the around one hundred people who waited for him organized a search party to look for him in Zambales. Appellant was arrested on February 25, 2000 at the Balintawak tollgate. Verification with the Department of Labor and Employment showed that appellant was not a licensed recruiter. Florentino Ondra: He was recruited by Domingo for employment as laborer in Saipan, for which he gave P14,700 representing expenses for passporting, NBI clearance, and medical examination. Dionisio Aguilar: In September, 1999, he met Domingo thru a friend whereupon he was interviewed, tested for a hotel job, and scheduled for medical examination. He gave P30,000 to Domingo inside the latters car on November, 1999 after his medical examination. While he was twice scheduled for departure, it did not materialize. Ma. Leah Vivas: After meeting Domingo thru Eddie Simbayan on October 19, 1999, she applied for a job as a domestic helper in Saipan, for which she paid appellant P10,000, but like the other complainants, she was never deployed. Simeon Cabigao: He was recruited by Domingo in September, 1999 for employment as carpenter in Saipan with a guaranteed salary of $375 per month. For the promised employment, he paid Domingo P3,000 for medical fee, and an additional P9,000, supposedly to bribe the examining physician because, per information of Domingo, he (Cabigao) was found to have an ailment. He was scheduled for departure on February 23, 2000, but the same never took place. He was among those who looked for appellant in Zambales. Cabigao later recanted this testimony, per his affidavit dated March 3, 2003. Testifying anew, this time for the defense, he averred that the one who actually recruited him and his co-complainants and received their money was Danilo Gimeno (Gimeno), and that they only agreed among themselves to file a case against appellant because Gimeno was nowhere to be found. Domingos Argument: Domingo, denying all the accusations against him, claimed as follows: He was a driver hired by the real recruiter, Gimeno, whom he met inside the Victory Liner Bus bound for Manila in September, 2000. It was Gimeno Ma. Cecelia Timbal LlB 2 Rm 402

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who undertakes recruitment activities in Dakila, Malolos, Bulacan at the residence of Eddie Simbayan, and that the other cases for illegal recruitment filed against him before other courts have all been dismissed. Domingo likewise presented as witnesses Enrico Espiritu and Roberto Castillo who corroborated his claim that it was Gimeno who actually recruited them, and that the filing of the complaint against appellant was a desperate attempt on their part to get even because Gimeno could not be located. Issue: Whether or not Domingo is guilty of Illegal Recruitment despite that there is no evidence showing that he actually received money from complainants. Held: Y es, Domingo is guilty of Illegal Recruitment. The term recruitment and placement is defined under Article 13(b) of the Labor Code of the Philippines as follows: (b) Recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. On the other hand, Article 38, paragraph (a) of the Labor Code, as amended, under which the accused stands charged, provides: Art. 38. Illegal Recruitment. - (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law enforcement officer may initiate complaints under this Article. (b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. From the foregoing provisions, it is clear that any recruitment activities to be undertaken by nonlicensee or nonholder of authority shall be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. To prove illegal recruitment in large scale, the prosecution must prove three essential elements, to wit: (1) the person charged undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) he/she did not have the license or the authority to lawfully engage in the recruitment and placement of workers; and (3) he/she committed the prohibited practice against three or more persons individually or as a group. No receipt or document in which appellant acknowledged receipt of money for the promised jobs was adduced in evidence does not free him of liability. For even if at the time appellant was promising employment no cash was given to him, he is still considered as having been engaged in recruitment activities, since Article 13(b) of the Labor Code states that the act of recruitment may be for profit or not. It suffices that appellant promised or offered employment for a fee to the complaining witnesses to warrant his conviction for illegal recruitment.

Great Southern Maritime Services Corp vs Surigao (2009) G.R. 183646 Facts: On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter and Promotion, Inc.[2] (Becmen) to serve as assistant nurse in Al-Birk Hospital in the Kingdom of Saudi Arabia (KSA), for a contract duration of three years, with a corresponding salary of US$247.00 per month. Over a year later, she died allegedly of Ma. Cecelia Timbal LlB 2 Rm 402

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poisoning. Jasmins body was repatriated to Manila on September 3, 1998. The following day, the City Health Officer of Cabanatuan City conducted an autopsy and the resulting medical report indicated that Jasmin died under violent circumstances, and not poisoning as originally found by the KSA examining physician. On March 11, 1999, Jasmins remains were exhumed and examined by the National Bureau of Investigation (NBI). The toxicology report of the NBI, however, tested negative for non-volatile, metallic poison and insecticides On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its principal in the KSA, Rajab & Silsilah Company (Rajab), claiming death and insurance benefits, as well as moral and exemplary damages for Jasmins death. In their complaint, the Cuaresmas claim that Jasmins death was work -related, having occurred at the employers premises that under Jasmins contract with Becmen, she is entitled to iqama insurance coverage; that Jasmin is entitled to compensatory damages in the amount of US$103,740.00, which is the sum total of her monthly salary of US$247.00 per month under her employment contract, multiplied by 35 years (or the remaining years of her productive life had death not supervened at age 25, assuming that she lived and would have retired at age 60). In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a prior unsuccessful suicide attempt sometime in March or April 1998 and relying on the medical report of the examining physician of the Al-Birk Hospital. They likewise deny liability because the Cuaresmas already recovered death and other benefits totaling P130,000.00 from the OWWA. They insist that the Cuaresmas are not entitled to iqama insurance because this refers to the issuance not insurance of iqama, or residency/work permit required in the KSA. On February 28, 2001, the Labor Arbiter rendered a Decision dismissing the complaint for lack of merit. On appeal, the National Labor Relations Commission (Commission) reversed the decision of the Labor Arbiter. Relying on the findings of the City Health Officer of Cabanatuan City and the NBI as contained in their autopsy and toxicology report, respectively, the Commission, via its November 22, 2002 Resolution declared that, based on substantial evidence adduced, Jasmin was the victim of compensable work-connected criminal aggression. The appellate court affirmed the NLRCs findings that Jasmins death was compensable, the same having occurred at the dormitory, which was contr actually provided by the employer. Thus her death should be considered to have occurred within the employers premises, arising out of and in the course of her employment. Issue: Whether the Cuaresmas are entitled to monetary claims, by way of benefits and damages, for the death of their daughter Jasmin. Held: Yes, they are. Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and Promotion, Inc., and their corporate directors and officers are found jointly and solidarily liable The Court cannot subscribe to the idea that Jasmin committed suicide while halfway into her employment contract. It is beyond human comprehension that a 25-year old Filipina, in the prime of her life and working abroad with a chance at making a decent living with a high-paying job which she could not find in her own country, would simply commit suicide for no compelling reason. Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and Promotion, Inc They have placed their own financial and corporate interests above their moral and social obligations, and chose to secure and insulate themselves from the perceived responsibility of having to answer for and indemnify Jasmins heirs for her death. Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and Overseas Filipinos Act of 1995, [22] the State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general, and Filipino migrant workers, in particular. The State shall provide adequate and timely social, economic and legal services to Filipino migrant workers. The rights and interest of distressed overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and safeguarded. Becmen and White Falcon, as licensed local recruitment agencies, miserably failed to abide by the provisions of R.A. 8042. Recruitment agencies are expected to extend assistance to their deployed OFWs, especially those in distress. Instead, they abandoned Jasmins case and allowed it to remain unsolved to further their interests and avoid anticipated liability which parents or relatives of Jasmin would certainly exact from them. They willfully Ma. Cecelia Timbal LlB 2 Rm 402

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refused to protect and tend to the welfare of the deceased Jasmin, treating her case as just one of those unsolved crimes that is not worth wasting their time and resources on. The evidence does not even show that Becmen and Rajab lifted a finger to provide legal representation and seek an investigation of Jasmins case. Worst of all, they unnecessarily trampled upon the person and dignity of Jasmin by standing pat on the argument that Jasmin committed suicide, which is a grave accusation given its un-Christian nature. Clearly, Rajab, Becmen and White Falcons acts and omissions are against public policy because they undermine and subvert the interest and general welfare of our OFWs abroad, who are entitled to full protection under the law. They set an awful example of how foreign employers and recruitment agencies should treat and act with respect to their distressed employees and workers abroad. Their shabby and callous treatment of Jasmins case; their uncaring attitude; their unjustified failure and refusal to assist in the determination of the true circumstances surrounding her mysterious death, and instead finding satisfaction in the unreasonable insistence that she committed suicide just so they can conveniently avoid pecuniary liability; placing their own corporate interests above of the welfare of their employees all these are contrary to morals, good customs and public policy, and constitute taking advantage of the poor employee and her familys ignorance, helplessness, indigence and lack of power and resources to seek the truth and obtain justice for the death of a loved one. Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers.

21. PNOC-ENERGY DEVELOPMENT CORPORATION vs. NLRC 222 SCRA 831

Facts: In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and Construction Department, at Tongonan Geothermal Project, Ormoc City, Manuel S. Pineda decided to run for councilor of the Municipality of Kananga, Leyte, in the local elections scheduled in January, 1988, and filed the corresponding certificate of candidacy for the position. Objection to Pinedas being a candidate while retaining his job in the PNOC-EDC was shortly thereafter registered by Mayor Arturo Cornejos of Kananga, Leyte.

Section 66 of the Election Code provides among others that officers and employees of GOCCs are considered as ipso facto resigned upon the filing of their certificate of candidacy.

It was the argument of Pineda that PNOC-EDC was not created through a special law, it is not covered by the Civil Service Law and, therefore, not contemplated under Section 66 of the Election Code.

Issue: Whether or not an employee in a government- owned or controlled corporation without an original charter falls within the scope of Section 66 of the Omnibus Election Code.

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Held: Yes. If a corporations capital stock is owned by the Government, or it is operated and managed by officers charged with the mission of fulfilling the public objectives for which it has been organized, it is a government-owned or controlled corporation even if organized under the Corporation Code and not under a special statute. Employees thereof, even if not covered by the Civil Service but by the Labor Code, are nonetheless employees in government-owned or controlled corporation, and come within the letter of Section 66 of the Omnibus Election Code, declaring them ipso facto resigned from their office upon the filing of their certificate of candidacy.

21. PNOC-Energy Development Corp. vs. NLRC

FACTS

Petition for certiorari to set aside resolution

Danilo Mercado employed by PNOC EDC on 1979 From clerk to shipping clerk at cebu office transferred to dumaguete, negros oriental 1984

6/30/85 dismissed on 1985

due to serious act of dishonesty committed: shingles 1,680 = 1000 rubber stamps 28.66 80.00 discount given by supplier 70.00 = not repaved

7/23/85 complaint for illegal dismissal

March 1986 after both parties submitted their position papers labor arbiter ruled in favor of Mercado NLRC dismissed appeal for lack of merit ISSUES

whether or not matters of employment affecting PNOC-EDC are within labor and NLRC jurisdiction.

PET ____ that the decision was rendered when the 1973 consti was in effect. Which states that gout owned ___ are within civil service law.1 Supplanted by the new constitution. Thus, PNOC EDC being incorporated under gen. corp. law is subj. to labor code Even if the 1973 was still in effect NLRC still has jurisdiction, bec. It is 1987 consti that is in place at time of the decision.

assuming the affirmative, whether or not NLRC is justified with its order. ground of dishonesty = without basis denial of __ process = without merit both submitted position papers

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court ruled that agencies which acquired expertise accorded respect and finality. Courts do not review suffiency of evi. But is limited to issues of jurisdiction or grave abuse of discretion.

DISPO: Petition denied. NLRC resolution affirmed

30. (Emmanuel S. Hugo, et.al. vs. Light Rail Transit Authority, RESPONDENT Light Rail Transit Authority (LRTA) entered into an agreement with Metro Transit Organization, Inc. (Metro) for the management and operation of its Metro Manila Light Rail Transit System. Metro hired its own employees, including petitioners. In their complaint for illegal dismissal and unfair labor practice against Metro, petitioners impleaded the LRTA. Can LRTA be held liable to the employees of Metro?

Ruling: No. Employees of petitioner Metro cannot be considered as employees of petitioner LRTA. The employees hired by Metro are covered by the Labor Code and are under the jurisdiction of the Department of Labor and Employment, whereas the employees of petitioner LRTA, a government-owned and controlled corporation with an original charter, are covered by civil service rules. Herein private respondent workers cannot have the best of two worlds, e.g., be considered government employees of petitioner LRTA, yet allowed to strike as private employees under our labor laws. In the instant case, petitioner Metro, formerly Meralco Transit Organization, Inc., was originally owned by the Manila Electric Company and registered with the Securities and Exchange Commission more than a decade before the labor dispute. It then entered into a 10-year agreement with petitioner LRTA in 1984. And, even if petitioner LRTA eventually purchased Metro in 1989, both parties maintained their separate and distinct juridical personality and allowed the agreement to proceed. In 1990, this court, in Light Rail Transit Authority v. Commission on Audit (G.R. No. 88365, Jan. 9, 1990), even upheld the validity of the agreement. Consequently, the agreement was extended beyond its 10-year period. In 1995, Metros separate juridical identity was again recognized when it entered into a collective bargaining agreement with the workers union. All these years, Metros distinct corporate personality continued quiescently, separate and apart from the juridical personality of petitioner LRTA. In sum, petitioner LRTA cannot be held liable to the employees of petitioner Metro. GSIS vs Jean Raoet The deceased Henry Zarate was a native of Pangasinan who joined the Bureau of Fire Protection as a fireman on June 1, 1978. He was promoted to the rank of Fireman First Class, Fire Corporal and, finally, Senior Fire Officer on July 1, 1992. Five years later, on June 15, 1997, while he was assigned at the Pinagkaisahan Fire Sub-Station in Cubao, Quezon City, he met a traffic accident that cost him his life. As found by the ECC, Zarate went to Rosario, La Union on June 15, which was a Sunday, to visit his ailing mother. In order to report to his station the next day, Monday, he headed back to Metro Manila on the same day, June 15, aboard a Philippine Rabbit bus with plate number CVE-786. At around 2:45 P.M., at Kilometer 80, North Expressway, Cacutud, Angeles City, Pampanga, the bus he was riding on collided with a Swagman Travel Shuttle bus. He sustained severe injuries and was rushed to the Angeles University Foundation. He was pronounced dead on arrival. Zarates demise was recorded in the sub-stations log book in the following morning of June 16. The entry stated that SFO2 H. Zarate met a vehicular accident while on off-duty status. A subsequent investigation conducted by the Inspectorate Section of the Bureau confirmed that although off-duty, he was on his way back to Metro Manila from his mothers residence at La Union when the accident occurred. It was acknowledged that Zarate had the permission of his superior to take the trip to La Union on condition that he returned the next day. He was fated to meet his end on the same day. While his mother pleaded to him to stay a little longer, he insisted on returning to be on time for duty on Monday. Had he heeded the advice of his mother, he would still be alive today.[3 Henrys wife, Felicitas, filed a claim for death benefits with the GSIS, under Presidential Decree No. 626. The GSIS denied the claim by ruling as follows: The death of the late Henry Zarate did not arise out of nor was it in the course of his employment. Records also disclosed, that the accident occurred while the subject employee was on off-duty status[.][4] Ma. Cecelia Timbal LlB 2 Rm 402

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Felicitas appealed the GSIS ruling to the ECC. In its decision dated October 22, 2002,*5+ the ECC dismissed Felicitas appeal on the ground that Henrys death was indeed not work-related. Said the ECC: To be compensable, an injury must have resulted from an accident arising out of and in the course of employment. It must be shown that it must be sustained within the scope of employment while an employee was performing an act reasonably necessary or incidental thereto or while following the order of his superior. Indeed, the standard of work-connection must be satisfied even by one who invokes the 24-hour duty doctrine.[6] It reasoned out that Henry had gone to La Union to visit his ailing mother and was on his way back to Manila when he figured in the accident that killed him. To the ECC, It is clear that the accident transpired while he was not in the actual performance of his occupation as Fireman x x x the circumstances in the present case do not call for the application of the 24-hour duty doctrine because the deceased was neither at his assigned workplace nor in pursuit of orders of his superior.*7+ Felicitas next brought her case on appeal to the CA pursuant to Rule 43 of the Rules of Court. The CA, in its assailed decision[8] of October 12, 2005, reversed the ECC ruling. It maintained that there was a reasonable work connection in Henrys death and that it is the policy of the law to extend state insurance benefits to as many qualified employees as possible. The ECC challenges the CA decision in this petition, and submits the following: Issue The Honorable Court of Appeals committed a reversible error in granting the respondents claim for death benefits under P.D. No. 626, as amended, disregarding the fact that the cause of the death of the respondents late husband, SFO2 Henry Zar ate, did not arise out of and in the course of employment.[9] The Courts Ruling We dismiss the petition for lack of merit and, accordingly, affirm the CAs decision. We note that at the time of his death, Henry was a Senior Fire Officer in Quezon City and had occupied this position for five years. A firemans work is essentially to prevent and suppress all destructive fires on buildings, houses and other structure s, land transportation vehicles and equipment.*10+ Henrys position as Senior Fire Officer necessarily included duties more difficult than those of an ordinary fireman. Henrys place of work was the Pinagkaisahan Fire Substation in Cubao, Quezon City, located just five minutes away from the bustling heart of Quezon City - the Araneta Center, the Gateway Mall, the Ali Mall, and the intersection of the Light Rail Transit System (LRT) and the Metro Rail Transit System (MRT). There are several high-rise commercial buildings, a public school, a market, and bus stations in the immediate vicinity. Thousands of commuters get off at the MRT/LRT intersection during the morning and afternoon rush hours. In case of a fire or an accident, the responses required would be more complicated and more challenging than what one might expect in a smaller city or rural municipality. A Senior Fire Officer knows the extent of the responsibilities of this position, i.e., that he should be at peak condition when he reports for duty and be ready to efficiently respond as dictated by his duties. We expect no less from Henry who bothered to secure the permission of his superior officer to visit his mother, and who rushed back on the very same day to return to his base. Henrys mother lived in Rosario, La Union whose approximate road distance from Quezon City is 220 kilometers. Given this distance, the travel time from Quezon City to Rosario, La Union, by public land transport, is at least five hours. It is not disputed that Henry visited his mother because she was then ill. Likewise, it is not also disputed that he did not simply leave Quezon City for his visit; he asked for his superiors permission, which was given on condition that he returned the ne xt day.*11+ Hence, on that fateful Sunday, June 15, 1997, Henry had his superiors authority to travel and knew that he ha d to report fresh the following day. Instead of opting to travel to Quezon City on the very same day he was to report for work, Henry returned on the very day of his visit so he could properly report on Monday. In doing this, he did not heed his mother s plea to stay a little longer. These were the facts that the CA considered and positively appreciated. In the assailed decision, the CA appropriately took note of our rulings on the payment of compensation on returning to and from work situations. Notably, the CA took note of Valeriano v. ECC,[12] where we stated that if it can proven that at the time of injury, the employee was acting within the scope of his employment and performing an act reasonably necessary in his work, his injury is compensable. Valeriano was a fire truck driver who was on his way home, after having dinner with a friend in a restaurant, when the vehicle they were riding figured in a head-on collision, resulting in his death. His widow was denied death benefits because Valeriano was coming from a private dinner on his way home and no immediate relationship to work was established.

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The CA also considered GSIS v. CA,*13+ a case where a policemans widow was denied death benefits because at the time of his death, the policeman was ferrying passengers for a fee. We did not apply the 24-hour duty doctrine that the ECC cited in its consideration of Henrys case, as this is applicable to policemen only when death is caused by circumstances that are basical ly police service in character. In this cited case, ferrying passengers for a fee was foreign to the duties that a policeman regularly performs. The CA cited and relied on our ruling in Vano v. GSIS[14] because of the similarity of the obtaining factual situations. Vano was a letter carrier who died as a result of a motorcycle accident while he was on his way from his hometown in Bohol to Tagbilaran City where he worked. The Court found that Vanos death was compensable as an employment accident because Vano was then on his way to work. In Henrys case, the CA granted death benefits on the reasoning that Henry lost his life while traveling from the home of his mother which he had been allowed to visit (and which was no less a home to him) and was on his way back to Quezon City, in compliance with the timeline his superior gave him. We fully agree with the CAs finding: Henry should already be deemed en route to the performance of his duty when his accidental death occurred. He was on his way back to Manila in order to be on time and be ready for work the next day as Senior Fire Officer of the Pinagkaisahan Fire Substation in Cubao. He was traveling with his superiors permission and was complying with the condition that he return the next day. Under these facts, Henry was in the course of complying with his superiors order when he met his fatal accident. To be sure, he was not in an actual firefighting or accident situation when he died, but returning to work as instructed by his superior is no less equivalent to compensable performance of duty under Section 1, Rule III of the ECC Rules. In so ruling, we are mindful that Presidential Decree No. 626 on employees compensation is a legislation aimed at furthering the Labor Codes benevolent policy of affording protection to labor.*15+ Consistent with the laws intent, we must give the law on employee compensation a liberal reading, to the point of ruling in favor of labor and of the grant of employee compensation even in marginal situations for as long as a reasonable work connection may be found.[16] This stance is justified no less by Article 4 of the Labor Code which decrees that all doubts in the implementation and interpretation of the provisions of the Labor Code shall be resolved in favor of the employee. WHEREFORE, premises considered, we hereby DENY the petition for review on certiorari, and, accordingly, AFFIRM the decision of the Court of Appeals dated October 12, 2005 in CA-G.R. SP No. 73993. No costs. SO ORDERED. 32. ARCO Metal Products vs SAMARM-NAFLU Facts: Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioners rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually rendered in a year, which is less than a full twelve (12) months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits to seven (7) employees who had not served for the full 12 months. According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code.

Thus, they filed a complaint before the National Conciliation and Mediation Board (NCMB).

Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, whether or not the prorated payment of the said benefits constitute diminution of benefits under Article 100 of the Labor Code.

Ruling: Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to "protect the rights of workers and promote their welfare and to afford labor full protection. Said mandate in turn is the basis of Article 4 of the Labor Code which states that all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor.

Jurisprudence is replete with cases which recognize the right of employees to benefits which were voluntarily given by the employer and which ripened into company practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al. where Ma. Cecelia Timbal LlB 2 Rm 402

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an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was favorable to the employees though not conforming to law had thus ripened into a practice and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the employers act of including non-basic benefits in the computation of the 13th month pay was a voluntary act and had ripened into a company practice which cannot be peremptorily withdrawn.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice must be exercised in order to constitute voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error, supported only by an affidavit of its manufacturing group head. Hence, petition was denied 33. PENAFLOR vs Outdoor Clothing

PETITIONER Manalo Peaflor was hired as probationary HRD Manager of respondent Outdoor Clothing on Sept. 2, 1999. On March 13, 2000, more than six months thereafter, he learned that respondents president, Nathaniel Syfu, appointed Edwin Buenaobra to his position. Claiming he was discriminated against at work, Peaflor tendered an irrevocable resignation effective March 15, 2000. Subsequently, he filed a complaint for illegal dismissal, alleging he had been constructively dismissed. Did the complaint prosper? Ruling: Yes. While the letter states that Peaflors resignation was irrevocable, it does not necessarily signify that it was also volunta rily executed. Precisely because of the attendant hostile and discriminatory working environment, Peaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee. The gauge for constructive dismissal is whether a reasonable person in the employees position would feel compelled to give up his employment under the prevailing circumstances. With the appointment of Buenaobra to the position he then still occupied, Peaflor felt that he was being eased out and this perception made him decide to leave the company. The fact of filing a resignation letter alone does not shift the burden of proving that the employees dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco, G.R. No. 177414, Nov. 14, 2008, 571 SCRA 226, we ruled that should the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. To our mind, Outdoor Clothing did not discharge this burden by belatedly presenting the three memoranda it relied on. If these memoranda were authentic, they would have shown that Peaflors resignation preceded the appointment of Buenaobra. Thus, they would be evidence supporting the claim of voluntariness of Peaflors resignation and should have been presented early. Any lawyer or layman by simple logic can be expected to know this. Outdoor Clothing, however, raised them only before the NLRC when they had lost the case before the labor arbiter and now attributed the failure to its former counsel. (Manolo A. Peaflor vs. Outdoor Clothing Manufacturing Corporation, et. al., G.R. No. 177114, April 13, 2010).

34. HILARIO S. RAMIREZ VS. COURT OF APPEALS FACTS: Respondent Mario Valcueba filed a Complaint for illegal dismissal and nonpayment of wage differential, 13th month pay differential, holiday pay, premium pay for holidays and rest days, and service incentive leaves with claims for moral and exemplary damages and attorneys fees, against Hilario Ramirez. Valcueba claimed that Ramirez hired him as mechanic and was paid per day from 1999 to 2006. On Feb. 27, 2006, Valcueba was advised not to return to work unless he would agree to work on a pakyaw basis. On the other hand, Ramirez contended that Valcueba fails to obey the formers lawful order when he had an emergency call and requested Valcueba to report to Calawisan Station to repair a taxi unit of Ramirez since the mechanic Ma. Cecelia Timbal LlB 2 Rm 402

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assigned in the said station was absent. Ramirez insisted that he did not terminate the complainant, it was the latter who abandoned his job following his absence the following day after the emergency call without any leave of absence. The Labor Arbiter rendered a decision finding Ramirez not guilty of illegal dismissal and awarded complainant for 13th month pay and wage differential for a total of P45, 825.98 and the reinstatement of complainant. Ramirez filed a memorandum of appeal with urgent motion to reduce bond before the NLRC. For failure to post a reasonable amount and to offer meritorious grounds, NLRC dismissed his appeal. He went to the Court of Appeals. The Court of Appeals dismissed the Petition outright for failure of Ramirez to properly verify his petition and to state material dates. Hence, this petition. ISSUE: Whether or not Ramirez has complied with the requirements to perfect his appeal. HELD: Under Rule VI of the New Rules of Procedure of NLRC which explicitly reaffirms the jurisdictional principle in Art. 223 of the Labor Code, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. Clearly, the filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer jurisdiction upon the NLRC. Non-compliance with the requirement renders the decision of the Labor Arbiter final and executory. While the bond may be reduced upon motion by the employer, this is subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant; otherwise, the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal. The NLRC was justified in denying the motion for there was no meritorious grounds offered by the appellant and the P10, 000.00 bond posted by the latter is not a reasonable amount in relation to the monetary award of P45, 825.98. Ramirezs failure to verify and state material dates as required under the rules warranted the outright dismissal of his petition before the Court of Appeals. In an actions filed under Rule 65, the petition shall further indicate the material dates showing when notice of the judgment or final order or resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and when notice of the denial thereof was received. Failure to comply shall be a ground for dismissal. Hence, the Supreme Court finds no sufficient justification to set aside the NLRC and Court of Appeals resolutions. Thus, the decision of the Labor Arbiter is already final and executory and binding upon this Court. 35. OLISA vs ESCARIO Conformably with the long honored principle of a fair days wage for a fair days labor, employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike. The petitioners were among the regular employees of respondent Pinakamasarap Corporation (PINA), a corporation engaged in manufacturing and selling food seasoning. They were members of petitioner Malayang Samahan ng mga Manggagawa sa Balanced Foods (Union). At 8:30 in the morning of March 13, 1993, all the officers and some 200 members of the Union walked out of PINAs premises and proceeded to the barangay office to show support for Juanito Caete, an officer of the Union charged with oral defamation by Aurora Manor, PINAs personnel manager, and Yolanda Fabella, Manors secretary.*3+ It appears that the proceedings in the barangay resulted in a settlement, and the officers and members of the Union all returned to work thereafter. As a result of the walkout, PINA preventively suspended all officers of the Union because of the March 13, 1993 incident. PINA terminated the officers of the Union after a month. On April 14, 1993, PINA filed a complaint for unfair labor practice (ULP) and damages. The complaint was assigned to then Labor Arbiter Raul Aquino, who ruled in his decision dated July 13, 1994 that the March 13, 1993 incident was an illegal walkout constituting ULP; and that all the Unions officers, except Caete, had thereby lost their employment.*4+ On April 28, 1993, the Union filed a notice of strike, claiming that PINA was guilty of union busting through the constructive dismissal of its officers.[5] On May 9, 1993, the Union held a strike vote, at which a majority of 190 members of the Union voted to strike.[6] The strike was held in the afternoon of June 15, 1993.[7] PINA retaliated by charging the petitioners with ULP and abandonment of work, stating that they had violated provisions on strike of the collective bargaining agreement (CBA), such as: (a) sabotage by the insertion of foreign matter in the bottling of company products; (b) decreased production output by slowdown; (c) serious misconduct, and willful disobedience and insubordination to the orders of the Management and its representatives; (d) disruption of the work place by invading the premises and perpetrating commotion and disorder, and by causing fear and apprehension; (e) abandonment of work since Ma. 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June 28, 1993 despite notices to return to work individually sent to them; and (f) picketing within the company premises on June 15, 1993 that effectively barred with the use of threat and intimidation the ingress and egress of PINAs officials, employees, suppliers, and customers. [8] On September 30, 1994, the Third Division of the National Labor Relations Commission (NLRC) issued a temporary restraining order (TRO), enjoining the Unions officers and members to cease and desist from barricading and obstructing the entrance to and exit from PINAs premises, to refrain from committing any and all forms of violence, and to remove all forms of obstructions such as streamers, placards, or human barricade.[9] On November 29, 1994, the NLRC granted the writ of preliminary injunction.[10] On August 18, 1998, Labor Arbiter Jose G. de Vera (LA) rendered a decision, to wit: WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered declaring the subject strike to be illegal. The complainants prayer for decertification of the respondent union being outside of the jurisdiction of this Arbitration Branch may not be given due course. And finally, the claims for moral and exemplary damages for want of factual basis are dismissed. SO ORDERED. On appeal, the NLRC sustained the finding that the strike was illegal, but reversed the LAs ruling that there was abandonment, viz: However, we disagree with the conclusion that respondents union members should be considered to have abandoned their employment. Under Article 264 of the Labor Code, as amended, the union officers who knowingly participate in the illegal strike may be declared to have lost their employment status. However, mere participation of a union member in the illegal strike does not mean loss of employment status unless he participates in the commission of illegal acts during the strike. While it is true that complainant thru individual memorandum directed the respondents to return to work (pp. 1031-1112, Records) there is no showing that respondents deliberately refused to return to work. A worker who joins a strike does so precisely to assert or improve the terms and conditions of his work. If his purpose is to abandon his work, he would not go to the trouble of joining a strike (BLTB v. NLRC, 212 SCRA 794). WHEREFORE, premises considered, the Decision appealed from is hereby MODIFIED in that complainant company is directed to reinstate respondents named in the complaint to their former positions but without backwages. In the event that reinstatement is not feasible complainant company is directed to pay respondents separation pay at one (1/2) half month per year of service. SO ORDERED.[12] Following the denial of their motion for reconsideration, the petitioners assailed the NLRCs decision through a petition for certiorari in the Court of Appeals (CA), claiming that the NLRC gravely abused its discretion in not awarding backwages pursuant to Article 279 of the Labor Code, and in not declaring their strike as a good faith strike. On August 18, 2003, the CA affirmed the NLRC.*13+ In denying the petitioners claim for full backwages, the CA applied the third paragraph of Article 264(a) instead of Article 279 of the Labor Code, explaining that the only instance under Article 264 when a dismissed employee would be reinstated with full backwages was when he was dismissed by reason of an illegal lockout; that Article 264 was silent on the award of backwages to employees participating in a lawful strike; and that a reinstatement with full backwages would be granted only when the dismissal of the petitioners was not done in accordance with Article 282 (dismissals with just causes) and Article 283 (dismissals with authorized causes) of the Labor Code. The CA disposed thus:[14] WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit and the assailed 29 November 2001 Decision of respondent Commission in NLRC NRC CA No. 009701-95 is hereby AFFIRMED in toto. No costs. SO ORDERED.[15] On October 13, 2003, the CA denied the petitioners motion for reconsideration.*16+ Hence, this appeal via petition for review on certiorari.

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Issue The petitioners posit that they are entitled to full backwages from the date of dismissal until the date of actual reinstatement due to their not being found to have abandoned their jobs. They insist that the CA decided the question in a manner contrary to law and jurisprudence. Ruling We sustain the CA, but modify the decision on the amount of the backwages in order to accord with equity and jurisprudence. Third Paragraph of Article 264 (a), Labor Code, is Applicable The petitioners contend that they are entitled to full backwages by virtue of their reinstatement, and submit that applicable to their situation is Article 279, not the third paragraph of Article 264(a), both of the Labor Code. We do not agree with the petitioners. Article 279 provides: Article 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. By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly done, that is, the employer dismisses the employee without observing due process, either substantive or procedural. Substantive due process requires the attendance of any of the just or authorized causes for terminating an employee as provided under Article 278 (termination by employer), or Article 283 (closure of establishment and reduction of personnel), or Article 284 (disease as ground for termination), all of the Labor Code; while procedural due process demands compliance with the twin-notice requirement.[17] In contrast, the third paragraph of Article 264(a) states: Art. 264. Prohibited activities. (a) xxx Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status; Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. xxx Contemplating two causes for the dismissal of an employee, that is: (a) unlawful lockout; and (b) participation in an illegal strike, the third paragraph of Article 264(a) authorizes the award of full backwages only when the termination of employment is a consequence of an unlawful lockout. On the consequences of an illegal strike, the provision distinguishes between a union officer and a union member participating in an illegal strike. A union officer who knowingly participates in an illegal strike is deemed to have lost his employment status, but a union member who is merely instigated or induced to participate in the illegal strike is more benignly treated. Part of the explanation for the benign consideration for the union member is the policy of reinstating rank-and-file workers who are misled into supporting illegal strikes, absent any finding that such workers committed illegal acts during the period of the illegal strikes.[18] The petitioners were terminated for joining a strike that was later declared to be illegal. The NLRC ordered their reinstatement or, in lieu of reinstatement, the payment of their separation pay, because they were mere rank-and-file workers whom the Unions officers had misled into joining the illegal strike. They were not unjustly dismissed from work. Based on the text and intent of the two aforequoted provisions of the Labor Code, therefore, it is plain that Article 264(a) is the applicable one. II Petitioners not entitled to backwages despite their reinstatement: A fair days wage for a fair days labor Ma. Cecelia Timbal LlB 2 Rm 402

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The petitioners argue that the finding of no abandonment equated to a finding of illegal dismissal in their favor. Hence, they were entitled to full backwages. The petitioners argument cannot be sustained. The petitioners participation in the illegal strike was precisely what prompted PINA to file a complaint to declare them, as striking employees, to have lost their employment status. However, the NLRC ultimately ordered their reinstatement after finding that they had not abandoned their work by joining the illegal strike. They were thus entitled only to reinstatement, regardless of whether or not the strike was the consequence of the employers ULP,*19+ considering that a strike was not a renunciation of the employment relation.[20] As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment.[21] The grant of backwages to him is in furtherance and effectuation of the public objectives of the Labor Code, and is in the nature of a command to the employer to make a public reparation for his illegal dismissal of the employee in violation of the Labor Code.[22] That backwages are not granted to employees participating in an illegal strike simply accords with the reality that they do not render work for the employer during the period of the illegal strike.[23] According to G&S Transport Corporation v. Infante:[24] With respect to backwages, the principle of a fair days wage for a fair days labor remains as the basic factor in determining the award thereof. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed or otherwise illegally prevented from working. xxx In Philippine Marine Officers Guild v. Compaia Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees Union, the Court stressed that for this exception to apply, it is required that the strike be legal, a situation that does not obtain in the case at bar. (emphasis supplied) The petitioners herein do not deny their participation in the June 15, 1993 strike. As such, they did not suffer any loss of earnings during their absence from work. Their reinstatement sans backwages is in order, to conform to the policy of a fair days wage for a fair days labor. Under the principle of a fair days wage for a fair days labor, the petitioners were not entitled to the wa ges during the period of the strike (even if the strike might be legal), because they performed no work during the strike. Verily, it was neither fair nor just that the dismissed employees should litigate against their employer on the latters time.*25+ Thus, the Court deleted the award of backwages and held that the striking workers were entitled only to reinstatement in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees Union,[26] considering that the striking employees did not render work for the employer during the strike. III Appropriate Amount for Separation Pay Is One Month per Year of Service The petitioners were ordered reinstated because they were union members merely instigated or induced to participate in the illegal strike. By joining the strike, they did not renounce their employment relation with PINA but remained as its employees. The absence from an order of reinstatement of an alternative relief should the employer or a supervening event not within the control of the employee prevent reinstatement negates the very purpose of the order. The judgment favorable to the employee is thereby reduced to a mere paper victory, for it is all too easy for the employer to simply refuse to have the employee back. To safeguard the spirit of social justice that the Court has advocated in favor of the working man, therefore, the right to reinstatement is to be considered renounced or waived only when the employee unjustifiably or unreasonably refuses to return to work upon being so ordered or after the employer has offered to reinstate him.[27] However, separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, like: (a) when reinstatement can no longer be effected in view of the passage of a long period of time or because of the realities of the situation; (b) reinstatement is inimical to the employers interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced by the workers continued employment; (f) facts that make execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee.[28] Here, PINA manifested that the reinstatement of the petitioners would not be feasible because: (a) it would inflict disruption and oppression upon the employer; (b) petitioners *had+ stayed away for more than 15 years; (c) its machines had

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depreciated and had been replaced with newer, better ones; and (d) it now sold goods through independent distributors, thereby abolishing the positions related to sales and distribution.[29] Under the circumstances, the grant of separation pay in lieu of reinstatement of the petitioners was proper. It is not disputable that the grant of separation pay or some other financial assistance to an employee is based on equity, which has been defined as justice outside law, or as being ethical rather than jural and as belonging to the sphere of morals than of law.[30] This Court has granted separation pay as a measure of social justice even when an employee has been validly dismissed, as long as the dismissal has not been due to serious misconduct or reflective of personal integrity or morality.[31] What is the appropriate amount for separation pay? In G & S Transport,[32] the Court awarded separation pay equivalent to one month salary per year of service considering that 17 years had passed from the time when the striking employees were refused reinstatement. In Association of Independent Unions in the Philippines v. NLRC,[33] the Court allowed separation pay equivalent to one month salary per year of service considering that eight years had elapsed since the employees had staged their illegal strike. Here, we note that this case has dragged for almost 17 years from the time of the illegal strike. Bearing in mind PINAs manifestation that the positions that the petitioners used to hold had ceased to exist for various reasons, we hold that separation pay equivalent to one month per year of service in lieu of reinstatement fully aligns with the aforecited rulings of the Court on the matter. WHEREFORE, we affirm the decision dated August 18, 2003 of the Court of Appeals, subject to the modification to the effect that in lieu of reinstatement the petitioners are granted backwages equivalent of one month for every year of service SO ORDERED. 36. Phil Telephone and Telegraph vs NLRC PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman specifically as Supernumerary Project Worker, for a fixed period from November 21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went on maternity leave. She was again invited for employment as replacement of Erlina F. Dizon who went on leave on 2 periods, from June 10, 1991 to July 1, 1991 and July 19, 1991 to August 8, 1991. On September 2, 1991, de Guzman was again asked to join PT&T as a probationary employee where probationary period will cover 150 days. She indicated in the portion of the job application form under civil status that she was single although she had contracted marriage a few months earlier. When petitioner learned later about the marriage, its branch supervisor, Delia M. Oficial, sent de Guzman a memorandum requiring her to explain the discrepancy. Included in the memorandum, was a reminder about the companys policy of not accepting married women for employment. She was dismissed from the company effective January 29, 1992. Labor Arbiter handed down decision on November 23, 1993 declaring that petitioner illegally dismissed De Guzman, who had already gained the status of a regular employee. Furthermore, it was apparent that she had been discriminated on account of her having contracted marriage in violation of company policies. ISSUE: Whether the alleged concealment of civil status can be grounds to terminate the services of an employee. HELD; Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits discrimination merely by reason of marriage of a female employee. It is recognized that company is free to regulate manpower and employment from hiring to firing, according to their discretion and best business judgment, except in those cases of unlawful discrimination or those provided by law. PT&Ts policy of not accepting or disqualifying from work any woman worker who contracts marriage is afoul of the right against discrimination provided to all women workers by our labor laws and by our Constitution. The record discloses clearly that de Guzmans ties with PT&T were dissolved principally because of the companys policy that married women are not qualified for employment in the company, and not merely because of her supposed acts of dishonesty. The government abhors any stipulation or policy in the nature adopted by PT&T. As stated in the labor code: ART. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage.

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The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment and it likewise is contrary to good morals and public policy, depriving a woman of her freedom to choose her status, a privilege that is inherent in an individual as an intangible and inalienable right. The kind of policy followed by PT&T strikes at the very essence, ideals and purpose of marriage as an inviolable social institution and ultimately, family as the foundation of the nation. Such policy must be prohibited in all its indirect, disguised or dissembled forms as discriminatory conduct derogatory of the laws of the land not only for order but also imperatively required. 36. Philippine Telegraph and Telephone Company vs. NLRC Grace De Guzman (PET) Employed by REP. as a reliever for a fix period ( 1990 1991) For Several times was to be reliever on the same basis Sept. 2, 1991, asked again as a probationary EE fro 150 days Filled Out farn as single and civil status throughly got married on may 1991 Upon knowledge a marriage, resp. sent a memorandum reminding her of no marriage policy. (for women). Replied she was unaware. Jan 1992, dismissed. Filed complaint of illegal dismissal on NATL labor relations commission in baguio city.

At preliminary conference, de Guzman admitted failed remittance. Promi LABOR NLRC Guilty of illegal dismissal; Ground of dismissal insufficient and discrimination Affirmed with MADI, Suspended for 3 months for her acts of dishonesty; Motion for reco denied.

RULINGS:

state recognizes rule of women in nation-building and ensure equality bet men and women corrective labor and social laws leads to art. 136 of labor code prohibits discri by reason marriage of a female EE. petitioner outright violation of labor laws and consti against discri dismissal due to concealment of status remittance and not bec. of marriage matter of remittance deemed settled in the promi made made clear in the memo Gained regular status when performed activities necessary and essential to the usual made and business 3 month sus. Would be unfair to return without sanction ( back wage minus 3 months) contends verbal agreement. Terminate once married the variables is sex, without makes it discri and unlawful why not woman all women - irrelevant assaults good morals, policy and freedom of women and strikes at the very essence of marriage, its having and purpose Ma. Cecelia Timbal LlB 2 Rm 402

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DISPO: PET Dismissed: Double cost against petitioner

37. BAGUIO vs NLRC Baguio Country Club vs NLRCPetitioner Baguio Country Club Corporation (corporation) is a recreational establishmentcertified by the ministry of labor and employment as an entertainment-service establishment.Private respondent Jimmy Calamba was employed by corporation on a day to day basis invarious capacities as laborer and diswasher for a period of ten months. Calamba was hired againas a gardener and rehired as such when he was dismissed by the petitioner corporation.Calamba filed a complaint against petitioner corporation with the ministry of labor (DOLE) for unfair labor practice, illegal dismissal and nonpayment of 13th month pay. The executive labor arbiter ruled in favor of Calamba, declaring the latter as a regular employee and orderingpetitioner corporation to reinstate Calamba to the position of gardener without loss of seniorityand with full backwages, benefits and privileges from the time of his dismissal up to thereinstatement including 13th month pay.Petitioner corporation filed an appeal to the NLRC contending that Calamba was a contractualemployee whose employment was for a fixed and specific period as set forth and evidenced byCalambas contracts of employment. However, the NLRC dismissed the appeal for lack of merit.The latter argued that Calamba having rendered services as laborer, gardener,and dishwasher for more than one year, was a regular employee at the time his employment was terminated.Hence, this petition.Issue: whether or not Calamba is a regular employee at the time his employment was terminated.Ruling: YESThe court held that an employment shall be deemed to be regular where the employee has beenengaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year,even if the performance is not continuous or merely intermittent, the law deems the repeated andcontinuing need for its performance as sufficient evidence of the necessity if not indespensabilityof that activity to the business. Hence, the employment is also considered regular, but ony withrespect to such activity and while such activity exists.In the case at bar, the records reveal that Calamba was repeatedly re-hired to perform tasksranging from dishwasing and gardening, aside from performing maintenace work. Such repeatedrehiring and the continuing need for his service are sufficient evidence of the necessity andindespensability of his service to the petitioners business or trade.Owing to Calambas length of service with the petitioners corporation, he bacame a regular employee, by operation of law, one year after he was employed 38. DBP vs NLRC On November 14, 1986, the private respondents filed with the Provincial Extension Office of the Department of Labor and Employment (DOLE) in Daet, Camarines Norte seventeen individual complaints against RHI for unpaid wages and separation pay. These complaints were thereafter endorsed to the Regional Arbitration Branch (Branch V of Legaspi City) of the National Labor Relations Commission (NLRC) since the petitioners had already been terminated from employment. In its position paper dated March 1987, RHI alleged that it had ceased to operate in 1983 due to the government ban against tree-cutting. It further alleged that in May 24, 1981, its sawmill was totally burned resulting in enormous losses and that due to its financial setbacks, RHI failed to pay its loan with the DBP. RHI contended that since DBP foreclosed its mortgaged assets on September 24, l985, then any adjudication of monetary claims in favor of its former employees must be satisfied against DBP. On April 29, 1987, the private respondents filed a motion to implead DBP. On July 13, 1987, DBP filed its opposition to said motion. On October 28, 1988, Executive Labor Arbiter Gelacio Rivera rendered a joint decision on the complaints, the relevant and dispositive portions of which read: To say that workers of bankrupt or insolvent employers must first file an insolvency or bankruptcy proceeding against the latter before their unpaid workers may be satisfied will cause additional burden, unnecessary expenses, unwanted hardship which are conditions not so intended under the Social Justice policy of the State. . . . . . . . To require petitioners to file insolvency proceedings against RHI and later file against DBP their claims is to prolong the agony of petitioners. To give a technical and legal meaning to the words of Art. 110 is to subvert the rights of the petitioners. We hold therefore that as against the contention of respondent DBP, Art. 4 of the Labor Code is the answer. The social justice clause of the Constitution is our guide. xxx xxx xxx WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioners and adversely against respondent Republic Hardwood, Inc. and Development Bank of the Philippines, ordering the latter to jointly and severally pay petitioners Ma. Cecelia Timbal LlB 2 Rm 402

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the amount of P59,610.00 as separation pay within ten (10) days upon receipt of this Decision through this Regional Arbitration Branch. Further, respondents are ordered to pay the amount of P308.00 as deposit fee pursuant to PD 1177 under Budget Circular No. 304 and Secs. 4 and 8 of Batas Pambansa Blg. 230. (Rollo, pp. 38, 40-41) DBP appealed to the NLRC which rendered a decision on April 15, 1991 affirming the labor arbiters judgment. DBP filed a motion for reconsideration which was likewise dismissed by the NLRC on May 17, 1991. Hence, this petition for certiorari. The petitioner alleges that the NLRC committed grave abuse of discretion in issuing the assailed decision dated April 15, 1991 and its resolution of May 17, 1991 and raises the following issues: 1. Whether or not the Joint Decision of Executive Labor Arbiter Gelacio L. Rivera is violative of procedural due process on the part of DBP; 2. Whether or not the complainant-private respondents are entitled to separation pay; 3. Whether or not there was retroactive application of Executive Order No. 81 in this case; 4. Whether or not Executive Labor Arbiter Gelacio L. Rivera and the NLRC correctly applied Article 110 of the Labor Code in this case; and 5. Whether or not there is a basis for the NLRC (Labor Arbiter Rivera) to order the payment of deposit fee. (Rollo, pp. 17-18) DBP asserts that it was deprived of due process since there was no formal order impleading it in the complaints against RHI. Moreover, DBP points out, the cases were never set for hearing thus depriving it of the opportunity to peruse the documentary evidence of the complainants and to confront the complainants witnesses. Additionally, DBP was not given an opportunity to present its own evidence. There is no merit to this contention of DBP. Denial of due process means the total lack of opportunity to be heard. There is no denial of due process where a party is given an opportunity to be heard and to present his case. The petitioner in this case filed an opposition to the motion to implead it as a party defendant. It likewise filed a motion for reconsideration of the labor arbiters decision. Thereafter, DBP filed an appeal with the NLRC and, later on, a motion for reconsideration of the NLRC decision. The petitioner, thus, was given ample opportunity to present its case. It was not denied due process. There is no merit to DBPs contention that the workers are not entitled to separation pay. Despite the enormous losses incurr ed by RHI due to the fire that gutted the sawmill in 1981 and despite the logging ban in 1983, the uncontroverted claims for separation pay show that most of the private respondents still worked up to the end of 1985 (See Rollo, p. 39). RHI would still have continued its business had not the petitioner foreclosed all of its assets and properties on September 24, 1985. Thus, the closure of RHIs business was not primarily brought about by serious business losses. Such closure was a consequence of DBPs foreclosure of RHIs assets. We therefore apply Article 283 which provides: . . . in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. . . . However, because of the petitioners assertion that the labor arbiter and respondent NLRC incorrectly applied the provisions of Article 110 of the Labor Code, we are constrained to grant the petition forcertiorari. Article 110, prior to its amendment by Republic Act No. 6715, reads: Art. 110. Worker preference in case of bankruptcy. ? In the event of bankruptcy or liquidation of an employers business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision of law to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. Section 10, Rule VIII, Book III of the Implementing Rules and Regulations of the Labor Code states: Sec. 10. Payment of wages in case of bankruptcy. ? Unpaid wages earned by the employees before the declaration of bankruptcy or judicial liquidation of the employers business shall be given first preference and shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. In Republic v. Peralta, 150 SCRA 37 (1987), the Court held that the term wages includes separation pay. But the Court declared:

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Article 110 of the Labor Code, in determining the reach of its terms, cannot be viewed in isolation. Rather, Article 110 must be read in relation to the provisions of the Civil Code concerning the classification, concurrence and preference of credits, which provisions find particular application in insolvency proceedings where the claims of all creditors, preferred or non-preferred, may be adjudicated in a binding manner. We have repeatedly stressed that before the workers preference provided by Article 110 may be invoked, there must first be a declaration of bankruptcy or a judicial liquidation of the employers business. (See DBP v. Minister of Labor, 195 SCRA 463 [1991]; DBP v. NLRC, 186 SCRA 841 [1990]; DBP v. NLRC, 183 SCRA 328 [1990]; DBP v. Secretary of Labor, 179 SCRA 630 [1989]; DBP v. Santos, 171 SCRA 138 [1989]; Republic v. Peralta, supra). In DBP v. Santos, supra, the Court discussed the import of Article 110 and Section 10 of Rule VIII, Book III and stated: It is quite clear from the provisions that a declaration of bankruptcy or a judicial liquidation must be present before the workers preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order. xxx xxx xxx Moreover, the reason behind the necessity for a judicial proceeding or a proceeding in rem before the concurrence and preference of credits may be applied was explained by this Court in the case of Philippines Savings Bank v. Lantin (124 SCRA 476 [1983]). We said: The proceedings in the court below do not partake of the nature of the insolvency proceedings or settlement of a decedents estate. The action filed by Ramos was only to collect the unpaid cost of the construction of the duplex apartment. It is far from being a general liquidation of the estate of the Tabligan spouses. Insolvency proceedings and settlement of a decedents estate are both proceedings in rem which are binding against the whole world. All persons having interest in the subject matter involved, whether they were notified or not, are equally bound. Consequently, a liquidation of similar import or other equivalent general liquidation must also necessarily be a proceeding in rem so that all interested persons whether known to the parties or not may be bound by such proceeding. In the case at bar, although the lower court found that there were no known creditors other than the plaintiff and the defendant herein, this can not be conclusive. It will not bar other creditors in the event they show up and present their claims against the petitioner bank, claiming that they also have preferred liens against the property involved. Consequently, Transfer Certificate of Title No. 101864 issued in favor of the bank which is supposed to be indefeasible would remain constantly unstable and questionable. Such could not have been the intention of Article 2243 of the Civil Code although it considers claims and credits under Article 2242 as statutory liens. Neither does the De Barreto case . . . . The claims of all creditors whether preferred or non-preferred, the identification of the preferred ones and the totality of the employers asset should be brought into the picture. There can then be an authoritative, fair, and binding adjudication instead of the piece meal settlement which would result from the questioned decision in this case. (At pp. 144-145). The NLRC, therefore, committed grave abuse of discretion when it affirmed the labor arbiters ruling that the workers preference espoused in Article 110 may be applied even in the absence of a declaration of bankruptcy or a liquidation order. We must also emphasize that DBPs lien on RHIs mortgaged assets, being a mortgage credit, is a special preferred credit under Article 2242 of the Civil Code while the workers preference is an ordinary preferred credit under Article 2244. Thus, in DBP v. NLRC, (supra) it was held: 4. A distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvents assets. It is a right to a first preference in the discharge of the funds of the judgment debtor. In the words of Republic v. Peralta, supra. Article 110 of the Labor Code does not purport to create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any particular property owned by their employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred claims established under Articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered Article 2241, number 6: claims for laborers wages, on the goods manufactured or the work done; or by Article 2242, number 3: claims of laborers and other workers engaged in the Ma. Cecelia Timbal LlB 2 Rm 402

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construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals and other works. To the extent that claims for unpaid wages fall outside the scope of Article 2241, number 6 and 2242, number 3, they would come within the ambit of the category of ordinary preferred credits under Article 2244. 5. The DBP anchors its claim on a mortgage credit. A mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable against the whole world. It is a lien on an identified immovable property, which a preference is not. A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article 110, when not falling within Article 2241 (6) and Article 2242 (3) of the Civil Code and not attached to any specific property, is an ordinary preferred credit although its impact is to move it from second priority to first priority in the order of preference established by Article 2244 of the Civil Code (Republic v. Peralta, supra). Clearly, even if DBP and the private respondents assert their preferred credits in a judicial proceeding, the formers claim must first be satisfied. Article 110 of the Labor Code has been amended by R.A. No. 6715 and now reads: Art. 110. Worker preference in case of bankruptcy. ? In the event of bankruptcy or liquidation of an employers business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages, and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid. (Emphasis ours.) We ruled in DBP v. NLRC, supra, that the amendment expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. Hence, under the new law, even mortgage credits are subordinate to workers claims. In this connection, respondent NLRC ruled: Lastly, while we are cognizant of the pronouncement of the Supreme Court with respect to Art. 110 and while we hold in respect said pronouncements, we are of the earnest view that considering that Art. 110 has been amended by RA 6715, complainants preference over government claims and other creditors be adhered to. (Rollo, p. 65) R.A. No. 6715, however, took effect only on March 21, 1989. The amendment cannot therefore be retroactively applied to, nor can it affect, the mortgage credit which was secured by the petitioner several years prior to its effectivity. This was our pronouncement in DBP v. NLRC, supra: 6. Even if Article 110 and its Implementing Rule, as amended, should be interpreted to mean absolute preference, the same should be given only prospective effect in line with the cardinal rule that laws shall have no retroactive effect, unless the contrary is provided (Article 4, Civil Code). Thereby, any infringement on the constitutional guarantee on non-impairment of the obligation of contracts (Section 10, Article III, 1987 Constitution) is also avoided. In point of fact, DBPs mortgage credit antedated by several years the amendatory law, RA No. 6715. To give Article 110 retroactive effect would be to wipe out the mortgage in DBPs favor and expose it to a risk which it sought to protect itself against by requiring a collateral in the form of real property. The public respondent, therefore, committed grave abuse of discretion when it retroactively applied the amendment introduced by R.A. No. 6715 to the case at bar. With the foregoing discussion, we no longer find it necessary to discuss the two other issues raised by the petitioner. WHEREFORE, the petition is hereby GRANTED. The assailed decision of public respondent National Labor Relations Commission dated April 15, 1991 and its resolution dated May 17, 1991 are SET ASIDE. The temporary restraining order issued by the Court on July 29, 1991 is made PERMANENT. 39. NERI vs NLRC Respondents are sued by two employees of Building Care Corporation, which provides janitorial and other specific services to various firms, to compel Far Bast Bank and Trust Company to recognize them as its regular employees and be paid the same wages which its employees receive. Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor Arbiter ruled that BCC was only job contracting and that consequently its employees were not employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this Ma. Cecelia Timbal LlB 2 Rm 402

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factual finding was affirmed by respondent National Labor Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist before us that BCC is engaged in "labor-only" contracting hence, they conclude, they are employees of respondent FEBTC. Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired by, respondent BCC, a corporation engaged in providing technical, maintenance, engineering, housekeeping, security and other specific services to its clientele. They were assigned to work in the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980, respectively, Neri an radio/telex operator and Cabelin as janitor, before being promoted to messenger on 1 April 1989. On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service. On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit. Respondent BCC was considered an independent contractor because it proved it had substantial capital. Thus, petitioners were held to be regular employees of 2 BCC, not FEBTC. The dismissal was appealed to NLRC which on 28 September 1990 affirmed the decision on appeal. On 22 3 October 1990, NLRC denied reconsideration of its affirmance, prompting petitioners to seek redress from this Court. Petitioners vehemently contend that BCC in engaged in "labor-only" contracting because it failed to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of its business. Moreover, petitioners argue that they perform duties which are directly related to the 4 principal business or operation of FEBTC. If the definition of "labor-only" contracting is to be read in conjunction with job 5 contracting, then the only logical conclusion is that BCC is a "labor only" contractor. Consequently, they must be deemed employees of respondent bank by operation of law since BCC is merely an agent of FEBTC following the doctrine laid down 6 in Philippine Bank of Communications v. National Labor Relations Commission where we ruled that 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; hence, FEBTC should be considered the employer of petitioners who are deemed its employees through its agent, "labor-only" contractor BCC. We cannot sustain the petition. Respondent BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. The Labor Arbiter and the NLRC both determined that BCC 7 had a capital stock of P1 million fully subscribed and paid for. BCC is therefore a highly capitalized venture and cannot be deemed engaged in "labor-only" contracting. It is well-settled that there is "labor-only" contracting where: (a) 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, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the 8 employer. Article 106 of the Labor Code defines "labor-only" contracting thus Art. 106. Contractor or subcontractor. . . . . 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 by such persons are performing activities which are directly related to the principal business of such employer . . . . (emphasis supplied). Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial capital. While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or". If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction "and" should have been used. But, having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank. Be that as it may, the Court has already taken judicial notice of the general practice adopted in several government and private 9 institutions and industries of hiring independent contractors to perform special services. These services range from 10 11 janitorial, security and even technical or other specific services such as those performed by petitioners Neri and Cabelin. 12 While these services may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer.
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In fact, the status of BCC as an independent contractor was previously confirmed by this Court in Associated Labor Unions-TUCP 13 v. National Labor Relations Commission, where we held thus The public respondent ruled that the complainants are not employees of the bank but of the company contracted to serve the bank. Building Care Corporation is a big firm which services, among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc. It is a qualified independent contractor. The public respondent correctly ruled against petitioner's contentions . . . . (Emphasis supplied). Even assuming ex argumenti that petitioners were performing activities directly related to the principal business of the bank, under the "right of control" test they must still be considered employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end-result of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the desired end-result was achieved. It did not, however, tell Neri 14 how the radio/telex machine should be operated. In the Shipside case, we ruled . . . . If in the course of private respondents' work (referring to the workers), SHIPSIDE occasionally issued instructions to them, that alone does not in the least detract from the fact that only STEVEDORES is the employer of the private respondents, for in legal contemplation, such instructions carry no more weight than mere requests, the privity of contract being between SHIPSIDE and STEVEDORES . . . . Besides, petitioners do not deny that they were selected and hired by BCC before being assigned to work in the Cagayan de Oro Branch of FFBTC. BCC likewise acknowledges that petitioners are its employees. The record is replete with evidence disclosing that BCC maintained supervision and control over petitioners through its Housekeeping and Special Services Division: petitioners reported for work wearing the prescribed uniform of BCC; leaves 15 of absence were filed directly with BCC; and, salaries were drawn only from BCC. As a matter of fact, Neri even secured a certification from BCC on 16 May 1986 that she was employed by the latter. On the other hand, on 24 May 1988, Cabelin filed a complaint for underpayment of wages, non-integration of salary adjustments 16 mandated by Wage Orders Nos. 5 & 6 and R.A. 6640 as well as for illegal deduction against BCC alone which was provisionally 17 dismissed on 19 August 1988 upon Cabelin's manifestation that his money claim was negligible. More importantly, under the terms and conditions of the contract, it was BCC alone which had the power to reassign petitioners. Their deployment to FEBTC was not subject to the bank's acceptance. Cabelin was promoted to messenger because the FEBTC branch manager promised BCC that two (2) additional janitors would be hired from the company if the promotion 18 was to be effected. Furthermore, BCC was to be paid in lump sum unlike in the situation in Philippine Bank of 19 Communications where the contractor, CESI, was to be paid at a daily rate on a per person basis. And, the contract therein stipulated that the CESI was merely to provide manpower that would render temporary services. In the case at bar, Neri and Cabelin were to perform specific special services. Consequently, petitioners cannot be held to be employees of FEBTC as BCC "carries an independent business" and undertaken the performance of its contract with various clients according to its "own 20 manner and method, free from the control and supervision" of its principals in all matters "except as to the results thereof." Indeed, the facts in Philippine Bank of Communications do not square with those of the instant case. Therein, the Court ruled that CESI was a "labor-only" contractor because upholding the contract between the contractor and the bank would in effect permit employers to avoid the necessity of hiring regular or permanent employees and would enable them to keep their employees indefinitely on a temporary or casual basis, thus denying them security of tenure in their jobs. This of course violates the Labor Code. BCC has not committed any violation. Also, the former case was for illegal dismissal; this case, on the other hand, is for conversion of employment status so that petitioners can receive the same salary being given to regular employees of FEBTC. But, as herein determined, petitioners are not regular employees of FEBTC but of BCC. At any rate, the finding that BCC in a qualified independent contractor precludes us from applying the Philippine Bank of Communications doctrine to the instant petition. The determination of employer-employee relationship involves factual findings. Absent any grave abuse of discretion, and we find none in the case before us, we are bound by the findings of the Labor Arbiter as affirmed by respondent NLRC. IN VIEW OF THE FOREGOING, the Petition for Certiorari is DISMISSED. SO ORDERED.
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40. Dumlao vs. De Guzman

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FACTS: Petitioner: LVN PICTURES INC. AND SAMPAGUITA Respondent: Philippine Musician Guild

* Petition for review by certiorari of an order of the court of industrial relations certifying the guild as the SOLE and exclusive bargaining agency of all the musicians working with said companies, including premiere productions. PETS: contends that they have no musicians as employees and that. The musical numbers of the films are furnished by independent contractors. Court of industrial relation: sustained said theory motion for reconsideration denied by court and bank. ISSUES whether or not petition for certification cannot be entertained when existence of employer employee relationship between the parties is contested. not supported by any authority or legal provision so long as, after due hearing the parties are found to bear such relationship, it is proper to pass upon the merits for certifaication. whether or not certification is improper in the present case bec. A.) the petition does not alleged and no evidence was presented that the allege musicians. Employees of the respondent constitute a proper bargaining unit. B.) and that the said musicians-EES represent a majority of the other numerous employees of the film companies. absence of express allegation is not fatal in certification as it is not a litigation in its common term, but merely an investigation as to ascertain the desires of the employees as to the matter of their representation it is alleged in the petition that the guild is a duly registered labor organization and 96% of the musicians playing for the musical recordings for film companies member of the guild. More over, court of industrial relations has a wide discretion to determine upon an appropriate bargaining unit. And such decision has almost complete finality, unless action s arbitrary or capricious.

MAIN ISSUE whether or not the musicias in question re employee of the film companies. The relation BET. The business of the petitioners and musicians are not casual. As the work of the musicians is an integral part of the entire motion picture. The ____ for employer employee relationship is where the person for whom the services are performed reserves a right to control not only the end but also the means to be used in reaching such end. It may exist not withstanding the intervention of an alleged independent contractor who may hire and fire its workers.

DISPO

Order appealed affirmed Cost against petitioners.

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- Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from that moment the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. An employment contract, like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract and (c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal, International Shipping Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a 3-month contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is the service to be rendered by Agustin and Minimo on board the vessel while the cause of the contract is the monthly compensation they expect to receive. These terms were embodied in the Contract of Employment which was executed by the parties. The agreement upon the terms of the contract was manifested by the consent freely given by both parties through their signatures in the contract. Neither parties disavow the consent they both voluntarily gave. Thus, there is a perfected contract of employment. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R. No. 179469, February 15, 2012.

FACTORS:

42. Rosario Brothers Inc. vs. Ople

FACTS:

Petitioner: Rosario Bros Inc. Respondents: tailors, pressers, stit__chers and similar workers Some worked since 1969 until separation 1928.

Sept 1977 Respondent filed complaint for 13 pay and emergency allowance with dept. of labor ( now ministry ) Dec. 1977 Labor arbiter dismissed complaint upon finding that complaints are not EES. Jan 1978 Respondent were dismissed respondent filed for illegal dismissal with ministry of labor NCRC Affirmed decision of labor arbiter and dismissed complaint. Minister of labor upon appeal reversed NCRC decision: complaints are EES Petitioner-respondent-to pay 13 month pay and emergency allowances. Thereafter, respondent filed for issuance of writ of execution of the decision of minister of labor which was granted and partially implemented. Labor arbiter issued an order to compute the balance of priv. respondents. Ma. Cecelia Timbal LlB 2 Rm 402
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March 4, 1980. a report was submitted pursuant thereto Thereafter, a writ of execution was issued for the satisfaction of the said amount. Hence, petition for certiorari, praying, among the others, to annul and set aside the decision of minister of labor and to dismiss the claims of the priv. respondents.

ISSUES: Whether or not petition was filed too late. the decision of minister of labor has already become final decision has already been partially implemented

[Merits: Devoid of merit]

whether or not there exist an employer- employee rel. elements to determine its existence: Selection and engagement of the EE. hiring is the done by PET, through the master cutter payment wages received weekly salaries on piece-work basis power dismissal violation of memoranda ground of dismissal Jan 2, 1998 resps were dismissed power to control employees conduct required to work mon sat worked on job orders observer cleanliness subj. to quality control Were allowed to register with GSIS as employees of petitioner Findings of administrative agencies which have acquired expertise bec. Their jurisdiction are confined to specific matters are generally accorded respect and finality.

DISPO

PET. Dismissed for lack of merit

43. CONSULTA vs CA Case Digest [G.R. No. 145443. March 18, 2005] RAQUEL P. CONSULTA, petitioner, vs. COURT OF APPEALS, PAMANA PHILIPPINES, INC., RAZUL Z. REQUESTO, and ALETA TOLENTINO, respondents.

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FACTS: Consulta was Managing Associate of Pamana. On 1987 she was issued a certification authorizing her to negotiate for and in behalf of PAMANA with the Federation of Filipino Civilian Employees Association. Consulta was able to secure an account with FFCEA in behalf of PAMANA. However, Consulta claimed that PAMANA did not pay her commission for the PPCEA account and filed a complaint for unpaid wages or commission.

ISSUE: Whether or not Consulta was an employee of PAMANA.

HELD: The SC held that Pamana was an independent agent and not an employee.

The power of control in the four fold test is missing. The manner in which Consulta was to pursue her tasked activities was not subject to the control of PAMANA. Consulta failed to show that she worked definite hours. The amount of time, the methods and means, the management and maintenance of her sales division were left to her sound judgment.

Finally, Pamana paid Consulta not for labor she performed but only for the results of her labor. Without results, Consultas labor was her own burden and loss. Her right to compensation, or to commission, depended on the tangible results of her work - whether she brought in paying recruits.

The fact that the appointment required Consulta to solicit business exclusively for Pamana did not mean Pamana exercised control over the means and methods of Consultas work as the term control is understood in labor jurisprudence. Neither did it make Consulta an employee of Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being connected with any other company, for as long as the business or company did not compete with Pamanas business. The exclusivity clause was a reasonable restriction to prevent similar acts prejudicial to Pamanas business interest. Article 1306 of the Civil Code provides that *t+he contracting parties may establish such stipulation, clauses, terms and conditions as they may deem convenient, provided that they are not contrary to law, morals, good customs, public order, or public policy.

There being no employer-employee relationship between Pamana and Consulta, the Labor Arbiter and the NLRC had no jurisdiction to entertain and rule on Consultas money claim. Consultas remedy is to file an ordinary civil action to litiga te her claim

Petition is dismissed.

44. *Existence of employer-employee relationship essential to the exercise of the right of self-organization for purposes of collective bargaining Besa v. Trajano (G.R. No. 72409 December 29, 1986) Facts: January, 1985, private respondent Kaisahan ng Mangagawang Pilipino, a legitimate labor union duly registered with the Ministry of Labor and Employment, iled a Petition for Certification Election in the National Labor Relations Division of the National Capital Region. Petitioner opposed it alleging that 1. There is no employer-employee relationship between Besa's and the petitioners-signatories to the petition; 2. The subject of the present petition had previously been decided by the defunct Court of Industrial Relations, and is therefore barred under the principle of res judicata; 3. The petition fails to comply with the mandatory formal requirements under Sec. 2, Book V, of the Omnibus Rules Implementing the Labor Code; and 4. This Hon. Commission has no jurisdiction over the subject matter and parties to the petition.

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Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, the Med-Arbiter on June 27, 1985, issued an order declaring that there was an employer-employee relationship between the parties and directed that an election be conducted. Petitioner appealed the order to the Director of BLR, but it was dismissed. Thus the Petition of the Union (KAMPIL) before the Med-Arbiter for the holding of the certification election was granted. Issue: Whether or not there is employer-employee relationship between Besa and the petitioner-signatories to the petition. Ruling: No. The records of the case reveal that an employer-employee relationship does not exist between the 17 shoeshiners and petitioner. The shoe shiner is distinct from a piece worker because while the latter is paid for work accomplished, he does not, however, contribute anything to the capital of the employer other than his service. It is the employer of the piece worker who pays his wages, while the shoe shiner in this instance is paid directly by his customer. The piece worker is paid for work accomplished without regard or concern to the profit as derived by his employer, but in the case of the shoe shiners, the proceeds derived from the trade are always divided share and share alike with respondent BESA. The shoe shiner can take his share of the proceeds everyday if he wanted to or weekly as is the practice of qqqBesas The employer of the piece worker supervises and controls his work, but in the case of the shoe shiner, respondent BESA does not exercise any degree of control or supervision over their person and their work. All these are not obtaining in the case of a piece worker as he is in fact an employee in contemplation of law, distinct from the shoe shiner. Entitlement of the minimum requirements of the law particularly on wages and allowances presupposes the existence of employer-employee relationship which is determined by the concurrence of the following conditions: 1. right to hire; 2. payment of wages; 3. right to fire; and 4. control and supervision. The most important condition to be considered is the exercise of control and supervision over the employees. these shoe shiners are not employees of the company, but are partners instead. This is due to the fact that the owner/manager does not exercise control and supervision over the shoe shiners. That the shiners have their own customers from whom they charge the fee and divide the proceeds equally with the owner, which make the owner categorized them as on purely commission basis. 45. Brotherhood Labor Unity Movement of the Phil. v. Zamora

Facts: The petitioners are workers who have been employed at the San Miguel Parola Glass Factory as pahinantes or kargadors for almost seven years. They worked exclusively at the SMC plant, never having been assigned to other companies or departments of San Miguel Corp, even when the volume of work was at its minimum. Their work was neither regular nor continuous, depending on the volume of bottles to be loaded and unloaded, as well as the business activity of the company. However, work exceeded the eight-hour day and sometimes, necessitated work on Sundays and holidays. -for this, they were neither paid overtime nor compensation. Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor Unity Movement (BLUM). They wanted to be paid to overtime and holiday pay. They pressed the SMC management to hear their grievances. BLUM filed a notice of strike with the Bureau of Labor Relations in connection with the dismissal of some of its members. San Miguel refused to bargain with the union alleging that the workers are not their employees but the employees of an independent labor contracting firm, Guaranteed Labor Contractor. The workers were then dismissed from their jobs and denied entrance to the glass factory despite their regularly reporting for work. A complaint was filed for illegal dismissal and unfair labor practices.

Issue: Whether or not there was employer-employee (ER-EE)relationship between the workers and San Miguel Corp.

Held: YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was used by the Supreme Court. These are: Ma. Cecelia Timbal LlB 2 Rm 402

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The selection and engagement of the employee Payment of wages Power of dismissal

Control Test- the employers power to control the employee with respect to the means and methods by which work is to be accomplished In the case, the records fail to show that San Miguel entered into mere oral agreements of employment with the workers. Considering the length of time that the petitioners have worked with the company, there is justification to conclude that they were engaged to perform activities necessary in the usual business or trade. Despite past shutdowns of the glass plant, the workers promptly returned to their jobs. The term of the petitioners employment appears indefinite and the continuity and habituality of the petitioners work bolsters the claim of an employee status. As for the payment of the workers wages, the contention that the independent contractors were paid a lump sum representing only the salaries the workers where entitled to have no merit. The amount paid by San Miguel to the contracting firm is no business expense or capital outlay of the latter. What the contractor receives is a percentage from the total earnings of all the workers plus an additional amount from the earnings of each individual worker. The power of dismissal by the employer was evident when the petitioners had already been refused entry to the premises. It is apparent that the closure of the warehouse was a ploy to get rid of the petitioners, who were then agitating the company for reforms and benefits. The inter-office memoranda submitted in evidence prove the companys control over the workers. That San Miguel has the power to recommend penalties or dismissal is the strongest indication of the companys right of control over the workers as direct employer.

*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.

Alipio Ruga, et. al. vs. NLRC, et. al Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie! Employee-Employer Relationship G.R. No. L-72654-61 January 22, 1990 ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE GUZMAN, respondents Facts: Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen. For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise, they received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum income of P350.00 per week while the assistant engineer, second fisherman, and fisherman-winchman received a minimum income of P260.00 per week.

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On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was a countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3, 1983. During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel to resume their work on the same day, September 11, 1983. On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay, emergency cost of living allowance and service incentive pay, with the then Ministry (now Department) of Labor and Employment, Regional Arbitration Branch No. V, Legaspi City, Albay. They uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new job. Issue: Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-operator, De Guzman Fishing Enterprises. Ruling: Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or abused its discretion when it added facts not contained in the records when it stated that the pilot-crew members do not receive compensation from the boat-owners except their share in the catch produced by their own efforts; that public respondent ignored the evidence of petitioners that private respondent controlled the fishing operations; that public respondent did not take into account established jurisprudence that the relationship between the fishing boat operators and their crew is one of direct employer and employee. We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the following (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 with respect to the means and methods by which the work is to be accomplished. 8 The employment relation arises from contract of hire, express or implied. 9 In the absence of hiring, no actual employer-employee relation could exist. From the four (4) elements mentioned, we have generally relied on the so-called right-of-control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. The petition is GRANTED. The questioned resolution of the National Labor Relations Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits under the law. No pronouncement as to costs.

47. FULL CASE PARADISE SAUNA, MASSAGE CORPORATION and JUANITO UY, plaintiff-appellee, vs. ALEJANDRO NG AND THE INTERMEDIATE APPELLATE COURT, defendants-appellants. Augusto J. Salas for plaintiff-appellee. Armado Marcelo for defendant-appellant.

GUTIERREZ, JR., J.: Ma. Cecelia Timbal LlB 2 Rm 402

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Whether or not the contract between the petitioners and the private respondent is a lease or a management contract is the issue in this petition for review. The petitioners assail the decision of the then Intermediate Appellate Court in AC-G.R. CV No. 65264 which affirmed in toto the judgment of the Court of First Instance of Manila, Branch XII declaring the said contract as one of lease. The disputed letter-contract signed by petitioner Juanito Uy in his capacity as President of the petitioner corporation reads: Mr. Alejandro Ng No. 8-A Boston Street Quezon City Dear Mr. Ng, By authority of the Board of Directors, you are hereby appointed to MANAGE and ADMINISTER the PARADISE SAUNA and MASSAGE CORPORATION effective January 1, 1976, under a commission basis over and above the amount of EIGHT THOUSAND PESOS (P8,000.00) which should be remitted to us not later than the first five (5) days of each month starting January 1, 1976. In addition, you are to fulfill the following terms and conditions: 1. You are to remit the amount of Sixteen Thousand Pesos (Pl6,000.00) immediately after accepting this appointment as a guarantee bond for the faithful performance of your duties and responsibilities. However, this amount shall be returned to you after the duration of your appointment which will be up to September 30, 1979. Otherwise, it will be forfeited if you do not comply with all your duties and responsibilities. 2. Further, all government licenses, permits, utilities and services in the premises such as water, gas, electricity, telephone, additional air conditioning units and the installation and repairs thereof and all other repairs therein during your management shall be for your account; 3. The sole control and management of the premises shall belong to you and you are not responsible to Anybody nor to Any Board of Directors except to me alone; 4. You are empowered to make any renovation, repairs and improvements but expenses shall be for your account as well as to change or add personnels therein; 5. Please take all good care of all the equipment and facilities presently existing therein and see to it that they are always in good working condition; Otherwise, the. loss and damage on any of this equipment and facilities shall be borne by you; 6. In case, however, that you will not be in a position to continue Managing and Administering the business profitably due to any Government Rules, Decree or Regulations or Force Majeure this appointment shall be suspended for a period of 3 months for the purpose of determining whether or not you can still continue managing the same. Hoping that you find the same satisfactory and good luck. (Sgd) JUANITO A. UY President/Director (Rollo, P. 35) This case arose from the petitioners' act of allegedly terminating the respondent's appointment as manager-administrator as a result of his alleged failure to comply with the terms and conditions of his appointment. The termination took effect on January 15,1977. Private respondent Ng, on January 21, 1977 filed with the Court of First Instance of Manila, Branch XII, a case for specific performance and damages with prayer for a writ of preliminary mandatory injunction and attorney's fees against the petitioner. The case was docketed as Civil Case No. 106511. On January 28, 1977, the private respondent amended his complaint to one for breach of contract with damages with the same prayer for a writ of preliminary injunction and attorney's fees. The amended complaint alleged, among others, that on December 30, 1975, the petitioners agreed to lease in favor of the private respondent their business called "Paradise Sauna and Massage Corporation" located at E. Rodriguez, Sr. Avenue, Quezon City and that they entered into a contract whereby the latter shall have full control and management of the said business effective January 1, 1976 until September 30,1979; that as lessee of the said business with full and sole control thereof, private respondent's principal obligation consists of only paying the petitioners the sum of eight thousand pesos (P8,000.00 ) not later than the first five (5) days of each month as rentals and remitting to the latter the sum of sixteen thousand pesos ( P16,000.00 ) as guarantee bond; that as such lessee, the private respondent assumed control and management of the petitioner's business on January 1, 1976, hired and paid personnel to beef up its operations and tried Ma. Cecelia Timbal LlB 2 Rm 402

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religiously to comply with his obligations like paying for his account all government licenses, permits, utilities and services in the premises such as water, gas, electricity and telephone; that the private respondent paid all the monthly rentals due the petitioners until December 1976; that the petitioner refused to accept the rental for January 1977 and asked the private respondent to vacate and leave the premises instead thereby terminating his services and forfeiting his guarantee bond of sixteen thousand pesos ( P16,000.00 ); that on January 16, 1977, the petitioners, assisted by Metrocom soldiers, entered the private respondent's office and through intimidations, forcibly ejected him from the premises, assumed full control and supervision of the business and put another person in his place who immediately took possession of all cash sales for the day; that the private respondent returned to the business premises the following day but he was refused entry and there was a notice to all the employees in front of the premises signed by the petitioners to the effect that the private respondent's services had been terminated and that another person had been appointed to take his place; that for having breached their contract, the private respondent suffered damages in the amount of not less than P100,000.00 representing unrealized profits from the operation of the business, forfeiture of the guarantee bond and value of his personal properties placed in the business which the petitioners appropriated to themselves; that the private respondent shall prove further actual damages in the course of the trial resulting from the petitioners' failure to reinstate the former immediately; and that the private respondent is entitled to moral damages in the amount of P50,000.00 and attorney's fees in the amount of P30,000.00. In their answer, the petitioners counter-alleged, among others, that the petitioner corporation is the operator of the sauna bath and massage establishment in question, that petitioner Uy was the former manager and administrator of the said establishment which was then fully equipped and staffed with more than thirty (30) personnel consisting of hospitality attendants and boy-helpers; that the petitioner corporation is paying P4,000.00 as lease rentals for the premises occupied by it, that in his capacity as President-Director of the petitioner corporation and in his desire to expand the operations of the same, petitioner Uy relinquished his position as manager-administrator of the said establishment in favor of the private respondent as evidenced by the letter dated December 30, 1975 addressed to the latter; that private respondent's appointment as manageradministrator was terminated on January 15, 1977 for violations of the terms and conditions of his appointment, namely, failure to pay water and electric bills, failure to pay the salaries of the employees of the petitioner corporation, failure to supply the provisions necessary for the conduct of the petitioners' sauna and massage business like lotion, towels and blankets, failure to perform efficiently as manager-administrator of the petitioner corporation by managing the Rajah Sauna Bath in Ermita, Manila simultaneously with his management of the petitioner corporation and by inducing the petitioners' customers to patronize the said Rajah Sauna Bath instead of the petitioner corporation. After trial, the lower court, on December 23, 1978 rendered judgment in favor of the private respondent with the following dispositive portion: IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court hereby renders judgment: (a) declaring the letter-contract, Exhibit A, as a contract of lease covering the paradise sauna bath and massage clinic, and not a contract of employment ; (b) directing defendants to forthwith return the management and operation of the paradise sauna bath and massage clinic to the plaintiff, so that plaintiff can operate and manage the same for the unexpired term of the lease of Two (2) Years, Eight (8) Months and Fifteen (15) days; (c) declaring the forfeiture by defendants of the plaintiffs deposit of P16,000.00 as null and void and declaring it as subsisting for the purpose of which it was put up by plaintiff, if Exhibit A is made to continue, as decreed in par. (b) hereof, otherwise, if or for any reason Exhibit A can not continue to be in force, directing defendants to jointly and severally pay to plaintiff the said sum of P16,000.00; (d) directing the defendants to account for and return to the plaintiff all the articles listed in Exhibit R, consisting of pages 1, 2 and 3, or in default thereof, to jointly and severally pay to the plaintiff in the following manner and in the following amount, as far as it is practicable, to wit: (1) P4,650.00 for the cost of two television (sic) and the refrigerator, with an allowance of 30% for depreciation costs, with interest thereon at the legal rate from date of this decision until it is fully paid; (2) P11,540.30 Cost price of certain items listed in page l of Exhibit R as recited elsewhere in the body of this decision, with interest thereon at the legal rate from the date of this decision until it is fully paid; (e) directing the defendants to account for and to return to the plaintiff one rice cooker, one gas lantern, one medicine cabinet with assorted medicines, one Akai Tape Recorder, Sixteen glass tumblers, five coffee cups, four intercom, two telephone hands (sic), one Video, one color vibrator, eight drawerlocks, one electric fan with stand, one steel cabinet with lock, 40 pieces nameplates with pictures, 30 cans Acaho, and two speakers with cabinet, all of which are listed on page 1 of Exhibit R, and in default of such delivery, directing defendants to pay jointly and severally the reasonable value thereof taking into consideration Ma. 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the present costs of such items, with allowances of at least thirty per cent for their depreciation costs, with interests thereon at 6% per annum from date of this decision until it is fully paid; (f) directing defendants to account for and return to plaintiffs all the articles listed in page 2 of Exhibit R, or in default thereof, directing defendants to pay jointly and severally to plaintiff the sum of P l,313.42, with interest thereon at 6% per annum from the date of this decision, until it is fully paid; (g) directing the defendants to account for and return to plaintiff all of Items 1 to 17 listed on page 2 of Exh. R, or in default thereof, to pay jointly and severally the plaintiff the sum of P2,968.03, with interest thereon of 6% per annum from date of this decision until it is fully paid; (h) directing the defendants to account for and return to plaintiff all of the last six items listed on page 2 of Exhibit R, or in default thereof, to pay jointly and severally the plaintiff the total costs of P7,999.55, with an allowance of 30% for their depreciation costs, and with interest thereon at 6% per annum until it is fully paid; (i) directing the defendants to account for and return to plaintiff all the articles listed on page 3 of Exhibit R, or in default thereof, to jointly and severally pay to the plaintiff the cost price of P1,313.43, with interest thereon at the legal rate from date of this decision until it is fully paid; (j) directing the defendants to pay jointly and severally to the plaintiff the sums of P50,000.00 as moral damages and P50,000 as exemplary damages; (k) directing the plaintiff to pay defendants the sum of P28,572.45, with legal interest thereon from date of this decision until it is fully paid. This sum shall be set off and made to reduce plaintiffs entitlement as awarded by this Court; (l) dismissing all other claims which the parties have against each other for lack of merit; Costs against defendants. (Pp. 111 to 114, Record on Appeal). (At pp. 24-27, Rollo) On appeal, the then Intermediate Appellate Court, on November 29, 1983, affirmed in toto the decision of the trial court. The subsequent motion for reconsideration by the petitioners was denied. Hence, this petition which presents three main arguments. Firstly, the petitioners contend that the respondent Court sanctioned a legal error made by the trial court which is the reformation of Exhibit A from a management contract to a lease contract contrary to Art. 1367 of the New Civil Code. In support of their contention, they averred that when respondent Ng filed an action for specific performance then for breach of contract later, he should have been presumed to have admitted the due execution and contents of the letter-contract marked as Exhibit A whereby he was appointed as manager-administrator of the petitioner corporation and he should never have been allowed to deny the contents thereof for purposes of reforming the said instrument. Article 1367 of the Civil Code states that: Art. 1367When one of the parties has brought an action to enforce the instrument, he cannot subsequently ask for its reformation. The above quoted provision of law invoked by the petitioners cannot apply to respondent Ng's case. When Ng amended his original complaint for specific performance which calls for an enforcement of Exhibit A to one for breach of contract, he did so as a matter of right since no responsive pleading had been filed yet by the petitioners. The original complaint was filed on January 21, 1977 and was amended on January 28, 1977. The answer of the petitioners to the original complaint was filed only on February 4, 1977. Under Section 2, Rule 10 of the Revised Rules of Court, "a party may amend his pleading once as a matter of course at any time before a responsive pleading is served . . . ." When a pleading is amended, the original one is deemed abandoned. Hence, the amended pleading replaces the original one which no longer forms part of the record and the trial of the case is made on the basis of the amended pleading only (see Ruymann and Farris v. Director of Lands et al., 34 Phil. 428 [1916]). In the case at bar, respondent Ng, in his amended complaint brought an action for breach of contract not to enforce his rights as manager-administrator but as lessee of the petitioner corporation. In the course of the trial, parol evidence was introduced to prove that the contract in question was not a management contract as it appeared on its face but a lease contract. Rule 130, Sec. 7 of the Revised Rules of Court provides that: Sec. 7. Evidence of written agreements. When the terms of an agreement have been reduced to writing, it is to be considered as containing all such terms, and, therefore, there can be, between the parties and their successors-in-interest, no evidence of the terms of the agreement other than the contents of the writing, except in the following cases: (a) Where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is put in issue by the pleadings; Ma. Cecelia Timbal LlB 2 Rm 402

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(b) When there is an intrinsic ambiguity in the writing. The term "agreement" includes wills. (Emphasis supplied) In the instant case, the failure of a contract to express the true intent and agreement of the parties is raised. The fact that the allegations of respondent Ng with respect to his rights as lessee of the petitioner corporation were made on the basis of' Exhibit A which was marked as Annex "A" in the amended complaint meets the procedural requirement that said failure be put in issue by the pleadings. In ruling that the subject contract is a lease contract and not a management contract, we adopt the findings of fact made by the trial court and affirmed by the respondent court. The claim of the petitioners that respondent Ng is their manager-administrator is untenable since it fails to pass the control test pertinent to the existence of an employer-employee relationship. The control test asks whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the said work is to be accomplished (Social Security System v. Court of Appeals, 156 SCRA 383 [1987]). Such control by the petitioners over respondent Ng is lacking. Exhibit A is in the nature of a lease contract under Art. 1643 of the Civil Code which states that: Art. 1643. In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than ninety-nine (99) years shall be valid. We find no reason to disturb the findings of the two courts below that the disputed contract is a lease contract. The reasons given are: (1) The respondent paid the petitioners a fixed P8,000.00 monthly even when the business suffers a loss. The P8,000.00 was paid at the start of the month with no attention paid to operating expenses, profits, and losses. (2) The monthly receipts received by the petitioners from Alejandro Ng state that they were given for rentals from January to October 1976. The receipts for November and December substitute the word "commission" for "rental". The respondent explained the change by stating that petitioner Uy changed the receipt as he realized that subleasing the premises to Ng was a violation of the contract with the owner and the latter might discover the violation. The receipts were prepared by the petitioners but signed in the presence of the respondent when payment was made. (3) The respondent was responsible for all licenses, permits, utilities and services, including the installation and repair of all equipment such as airconditioning units. He had sole control and management and did not report to anybody. Anent the argument that the respondent Court, in holding petitioner Uy severally liable with the petitioner corporation, departed from the rule that a stockholder or officer of a corporation has a personality distinct from the corporation, we hold that the corporate entity theory cannot apply in the instant case where it is being invoked as a cloak or shield for illegality. (see Tan Boon Bee & Co., Inc. v. Judge Jarencio, 163 SCRA 205 [1988]), There is proof obtaining in the case at bar as to the real nature of Exhibit A. Thus, being a party to a simulated contract of management, petitioner Uy cannot be permitted to escape liability under the said contract by using the corporate entity theory. This is one instance when the veil of corporate entity has to be pierced to avoid injustice and inequity. Lastly, the petitioners argue that the respondent Court's award of moral and exemplary damages was contrary to law as there was no showing of bad faith. In this case, the petitioners' manner of barring respondent Ng from his place of business with the use of Metrocom soldiers instead of availing of the proper legal action constituted bad faith as contemplated by law considering that the petitioners were aware of the real nature of the contract in question. The amount of P8,000.00 given monthly to the petitioners was received as "rentals" and not as "commissions." Only the later receipts indicated that the P8,000.00 was for payment of "commission" and respondent Ng explained that the change in the phraseology of the receipts was due to the fact that petitioner Uy wanted them to be so written since subleasing would constitute a violation of the latter's contract with the owner of the business premises. Moral damages are recoverable in cases of breach of contract where the defendant acted fraudulently or in bad faith (Art. 2220, New Civil Code). Exemplary damages, as well may be awarded in contracts if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner (Art. 2232, New Civil Code). We feel, however, that the amount of moral and exemplary damages may be reduced considering the circumstances of the case. Mr. Uy was unhappy about the continued life of the lease arrangement and Mr. Ng was aware of this. In some instances, rental payments were not made promptly at the start of the month. Three checks initially bounced. Damage to the central airconditioning system and other equipment was not repaired. Mr. Ng also operated another massage and sauna parlorThe Rajah Sauna Bath in Ermitaand Mr. Uy was convinced that personnel and customers of Paradise Sauna were being enticed by Ma. Cecelia Timbal LlB 2 Rm 402

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the respondent to the other place thus eroding the goodwill and patronage of the complaining establishment. All of these, however, mitigate but do not justify the acts accompanying the termination of the contract. WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is DISMISSED. The judgment appealed from is AFFIRMED with the MODIFICATION that the award of moral and exemplary damages is hereby reduced to a total of P20,000. The term of the lease having expired, the order to return the massage clinic to the private respondent is DELETED. SO ORDERED.

LABOR CASE DIGEST TERMINATION - JUST CAUSE Serious Misconduct Maribago Resort vs. Dual, July 20, 2010 G.R. No. 180660 July 20, 2010 Facts: On January 5, 2005, a group of Japanese guests and their companions dined at Maribago Beach Resorts Poolbar/Restaurant. Captain waiter Alvin Hiyas took their dinner orders comprising of 6 sets of lamb and 6 sets of fish. As per company procedure, Hiyas forwarded one copy of the order slip to the kitchen and another copy to Nito Dual. Pursuant to the order slip, fourteen (14) sets of dinner were prepared by the chef. Hiyas and waiter Genaro Mission, Jr. served 12 set dinners to the guests, and another 2 sets to their guides free of charge (total of 14 sets of dinner). After consuming their dinner, the guests paid the amount indicated in their bill and thereafter left in a hurry. The receipt show that only P3,036.00 was remitted by cashier Dual corresponding to 6 sets of dinner. A discrepancy was found between the order slip and the receipt issued which prompted petitioner Maribago to ask for an explanation from Dual and the waiters why they should not be penalized. Clarificatory hearings were made and it was found out that the guests gave P10,500.00 to Mission as payment for the bill of P10,100.00. It was discovered later that only P3,036.00 was entered by Dual in the cash register. The rest of the payment was missing. The original transaction receipt for P10,100.00 was likewise missing and in its place, only a transaction receipt for P3.036.00 was registered. Upon verification, it was also found out that the order slip was tampered by Alcoseba to make it appear that only six (6) set dinners were ordered. Respondent Dual was found guilty of dishonesty for his fabricated statements and for asking one of the waiters (Mission) to corroborate his allegations. He was terminated for dishonesty based on his admission that he altered the order slip. Dual then filed a complaint for illegal dismissal. The Labor Arbiter found that respondents termination was without valid cause and ruled that respondent is entitled to separation pay. The NLRC set aside the Labor Arbiters decision and dismissed the complaint. The Court of Appeals however reversed the decision and resolution of the NLRC. Finding no sufficient valid cause to justify respondents dismissal, the Court of Appeals ordered petitioner to pay respondent full backwages and separation pay. Thus a petition for review under Rule 45 was filed in the SC. ISSUE: Whether or not respondent was illegally dismissed.
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HELD: No. Petitioners evidence proved that respondent is guilty of dishonesty and of stealing money entrusted to him as cashier. Instead of reporting P10,100.00 as payment by the guests for their dinner, respondent cashier only reported P3,036.00 as shown by the receipt which he admitted to have issued. Respondents acts constitute serious misconduct which is a just cause for termination under the law. Theft committed by an employee is a valid reason for his dismissal by the employer. Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property, petitioners income in this case, are a different matter.

Nagkakaisang Lakas ng Mangagawa sa Keihin v. Keihin Phils Corp., GR No. 171115, August 9, 2010 DEL CASTILLO, J.: Petitioner Helen Valenzuela (Helen) was a production associate in respondent Keihin Philippines Corporation (Keihin), a company engaged in the production of intake manifold and throttle body used in motor vehicles manufactured by Honda. It is a standard operating procedure of Keihin to subject all its employees to reasonable search before they leave the company premises. On September 5, 2003, while Helen was about to leave the company premises, she saw a packing tape near her work area and placed it inside her bag because it would be useful in her transfer of residence. When the lady guard on duty inspected Helens bag, she found the packing tape inside her bag. The guard confiscated it and submitted an incident report dated September 5, 2003 to the Guard-in-Charge, who, in turn, submitted a memorandum regarding the incident to the Human Resources and Administration Department on the same date. The following day, or on September 6, 2003, respondent company issued a show cause notice to Helen accusing her of violating F.2 of the companys Code of Conduct, which says, "Any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associates property. Penalty: D (dismissal)." Helens supervisor, called her to his office and directed her to explain in writing why no disciplinary action should be taken against her. Helen, in her explanation, admitted the offense and even manifested that she would accept whatever penalty would be imposed upon her. She, however, did not reckon that respondent company would terminate her services for her admitted offense. On September 26, 2003, Helen received a notice of disciplinary action informing her that Keihin has decided to terminate her services. On October 15, 2003, petitioners filed a complaint against respondent for illegal dismissal, non-payment of 13th month pay, with a prayer for reinstatement and payment of full backwages, as well as moral and exemplary damages. Petitioners alleged that Helens act of taking the packing tape did not constitute serious misconduct, because the same was done with no malicious intent. Keihin, on the other hand, maintained that Helen was guilty of serious misconduct because there was a deliberate act of stealing from the company.

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The Labor Arbiter rendered his Decision dismissing the complaint of illegal dismissal. He brushed aside petitioners argument that the penalty imposed on Helen was disproportionate to the offense committed, and held that she indeed committed a serious violation of the companys policies amounting to serious misconduct. The Labor Arbiter further held that Keihin observed the requirements of procedural due process in implementing the dismissal of Helen. He ruled that the following circumstances showed that the company observed the requirements of procedural due process: a) there was a show cause letter informing Helen of the charge of theft and requiring her to submit an explanation; b) there was an administrative hearing giving her an opportunity to be heard; and c) the respondent company furnished her with notice of termination stating the facts of her dismissal, the offense for which she was found guilty, and the grounds for her dismissal.20 On appeal, the NLRC dismissed the appeal of the petitioners and affirmed in toto the Decision of the Labor Arbiter. It held that petitioners admitted in their Position Paper that Helen took the packing tape strewn on the floor near her production line within the company premises. By the strength of petitioners admission, the NLRC held that theft is a valid reason for Helens dismissal. However, in a Resolution dated November 2, 2005, the CA dismissed the petition outright for not having been filed by an indispensable party in interest under Section 2, Rule 3 of the Rules of Court. ISSUE: 1. Whether, in taking the packing tape for her own personal use, Helen committed serious misconduct, which is a just cause for her dismissal from service. (substantive aspect of the case) 2. Whether the petition of petitioners is out rightly dismissible for not having been filed by an indispensable party in interest (procedural aspect of the case) HELD: 1. Yes. Article 282 of the Labor Code enumerates the just causes for termination. Misconduct is defined as "the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment." For serious misconduct to justify dismissal under the law, "(a) it must be serious, (b) must relate to the performance of the employees duties; and (c) must show that the employee has become unfit to continue working for the employer." In the case at bar, Helen took the packing tape with the thought that she could use it for her own personal purposes. When Helen was asked to explain in writing why she took the tape, she stated, "Kumuha po ako ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay." In other words, by her own admission, there was intent on her part to benefit herself when she attempted to bring home the packing tape in question. It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both respondent companys property and personal belongings of other employees. In order to address this issue of losses, respondent company issued two memoranda implementing an intensive inspection procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the companys Code of Conduct. Despite these reminders, Helen took the packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was
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not just an error of judgment on the part of Helen, but a deliberate act of theft of company property. The petitioners also argue that the penalty of dismissal is too harsh and disproportionate to the offense committed since the value of the thing taken is very minimal. Petitioners cite the case of Caltex Refinery Employees Association v. National Labor Relations Commission where Arnelio M. Clarete (Clarete) was found to have willfully breached the trust and confidence reposed in him by taking a bottle of lighter fluid. In said case, we refrained from imposing the supreme penalty of dismissal since the employee had no violations "in his eight years of service and the value of the lighter fluid is very minimal compared to his salary. After a closer study of both cases, we are convinced that the case of Caltex is different from the case at hand. Although both Clarete and Helen had no prior violations, the former had a clean record of eight years with his employer. On the other hand, Helen was not even on her second year of service with Keihin when the incident of theft occurred. And what further distinguishes the instant case from Caltex is that respondent company was dealing with several cases of theft, vandalism, and loss of company and employees property when the incident involving Helen transpired. Regarding the requirement of procedural due process in dismissal of employees, petitioners argue that the first notice failed to explain the charge being leveled against Helen. According to the petitioners, the notice was vague and lacked sufficient definitiveness. 2. It is clear that petitioners failed to include the name of the dismissed employee Helen Valenzuela in the caption of their petition for certiorari filed with the CA as well as in the body of the said petition. Instead, they only indicated the name of the labor union Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA) as the party acting on behalf of Helen. As a result, the CA rightly dismissed the petition based on a formal defect. Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final determination can be had of an action shall be joined as plaintiffs or defendants." If there is a failure to implead an indispensable party, any judgment rendered would have no effectiveness.31 It is "precisely when an indispensable party is not before the court (that) an action should be dismissed. The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even to those present."32 The purpose of the rules on joinder of indispensable parties is a complete determination of all issues not only between the parties themselves, but also as regards other persons who may be affected by the judgment. A decision valid on its face cannot attain real finality where there is want of indispensable parties. Loss of Trust and Confidence Century Canning Corp., et. al. v. Ramil, GR No. 171630, August 8, 2010 FACTS: Petitioner Century Canning Corporation, a company engaged in canned food manufacturing, employed respondent Vicente Randy Ramil in August 1993 as technical specialist. Prior to his dismissal, his job included, among others, the preparation of the purchase requisition (PR) forms and capital expenditure (CAPEX) forms, as well as the coordination with the purchasing
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department regarding technical inquiries on needed products and services of petitioner's different departments. On 3 March, 1999, respondent prepared a CAPEX form for external fax modems and terminal server, per order of Technical Operations Manager Jaime Garcia, Jr. and endorsed it to Marivic Villanueva, Secretary of Executive Vice-President Ricardo T. Po, for the latter's signature. The CAPEX form, however, did not have the complete details and some required signatures. The following day, with the form apparently signed by Po, respondent transmitted it to Purchasing Officer Lorena Paz in Taguig Main Office. Paz processed the paper and found that some details in the CAPEX form were left blank. She also doubted the genuineness of the signature of Po, as appearing in the form. Paz then transmitted the CAPEX form to Purchasing Manager Virgie Garcia and informed her of the questionable signature of Po. Consequently, the request for the equipment was put on hold due to Po's forged signature. However, due to the urgency of purchasing badly needed equipment, respondent was ordered to make another CAPEX form, which was immediately transmitted to the Purchasing Department. Suspecting him to have committed forgery, respondent was asked to explain in writing the events surrounding the incident. He vehemently denied any participation in the alleged forgery. Respondent was, thereafter, suspended on 21 April 1999. Subsequently, he received a Notice of Termination from Armando C. Ronquillo, on 20 May 1999, for loss of trust and confidence. Respondent, on May 24, 1999, filed a Complaint for illegal dismissal, non-payment of overtime pay, separation pay, moral and exemplary damages and attorney's fees against petitioner and its officers before the Labor Arbiter (LA). LA Potenciano S. Canizares rendered a Decision dismissing the complaint for lack of merit. Aggrieved by the LA's finding, respondent appealed to the National Labor Relations Commission (NLRC). The NLRC First Division in its Decision set aside the ruling of LA Canizares. The NLRC declared respondent's dismissal to be illegal and directed petitioner to reinstate respondent with full backwages and seniority rights and privileges. It found that petitioner failed to show clear and convincing evidence that respondent was responsible for the forgery of the signature of Po in the CAPEX form. Petitioner filed a motion for reconsideration. To respondent's surprise and dismay, the NLRC reversed itself and rendered a new Decision upholding LA Canizares' dismissal of his complaint. Respondent filed a motion for reconsideration, which was denied by the NLRC. Frustrated by this turn of events, respondent filed a petition for certiorari with the Court of Appeals (CA). The CA rendered judgment in favor of respondent and reinstated the earlier decision of the NLRC. It ordered petitioner to reinstate respondent, without loss of seniority rights and privileges, and to pay respondent full backwages from the time his employment was terminated up to the time of the finality of its decision. The CA, likewise, remanded the case to the LA for the computation of backwages of the respondent. Hence, this petition for review on certiorari.
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ISSUE: Whether or not respondent was validly dismissed.

RULING: Yes. Petitioner's main allegation is that there are factual and legal grounds constituting substantial proof that respondent was clearly involved in the forgery of the CAPEX form. Petitioner insists that the mere existence of a basis for believing that respondent employee has breached the trust and confidence of his employer suffices for his dismissal. Finally, petitioner maintains that aside from respondent's involvement in the forgery of the CAPEX form, his past violations of company rules and regulations are more than sufficient grounds to justify his termination from employment. However, the record of the case is bereft of evidence that would clearly establish Ramil's involvement in the forgery. They did not even submit any affidavit of witness or present any during the hearing to substantiate their claim against Ramil. Respondent alleged in his position paper that after preparing the CAPEX form on 3 March 1999, he endorsed it to Marivic Villanueva for the signature of the Executive Vice-President Ricardo T. Po. The next day, respondent received the CAPEX form containing the signature of Po. Petitioner never controverted these allegations in the proceedings before the NLRC and the CA despite its opportunity to do so. Petitioner's belated allegations in its reply filed before this Court that Marivic Villanueva denied having seen the CAPEX form cannot be given credit. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage. When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change the same on appeal, because to permit him to do so would be unfair to the adverse party. Thus, if respondent retrieved the form on March 4, 1999 with the signature of Po, it can be correctly inferred that he is not the forger. Had the CAPEX form been returned to respondent without Po's signature, Villanueva or any officer of the petitioner's company could have readily noticed the lack of signature, and could have easily attested that the form was unsigned when it was released to respondent. Furthermore, while employers are allowed a wider latitude of discretion in terminating the services of employees who perform functions which by their nature require the employers' full trust and confidence and the mere existence of basis for believing that the employee has
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breached the trust of the employer is sufficient, this does not mean that the said basis may be arbitrary and unfounded. The right of an employer to dismiss an employee on the ground that it has lost its trust and confidence in him must not be exercised arbitrarily and without just cause. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established, but proof beyond reasonable doubt is not necessary. It must rest on substantial grounds and not on the employers arbitrariness, whim, caprice or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. G.R. No. 164640 June 13, 2008 CYNTHIA GANA, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, ABOITIZ HAULERS, INC., and CARL ** WOZNIAK, respondents. AUSTRIA-MARTINEZ, J.: FACTS: On December 1, 1996, Cynthia Gana (petitioner) commenced her employment as marketing manager of Total Distribution and Logistics System, Inc. (TDLSI), another sister company of Aboitiz Transport, Aboitiz Container and Aboitiz Haullers, respondent company. As marketing manager, petitioner received a monthly salary of P20,000.00 plus a monthly allowance of P15,000.00; and she availed herself of the company car plan. On August 15, 1997, petitioner was transferred from TDLSI to respondent company retaining the same position as marketing manager. On April 21, 1998, petitioner was required by private respondent Carl Wozniak (Wozniak), the Senior Vice-President and General Manager of Aboitiz Haulers, to explain in writing why she should not be penalized for having violated company rules on offenses against company interest. Wozniak directed her to appear in an investigation to be conducted by the company and defend herself with respect to the electronic mails (e-mails) she sent to an official of Trans-America, divulging various confidential information about the business operations and transactions of Aboitiz Container which are detrimental to the said company. On April 24, 1998, petitioner, through her counsel, sent a letter to Wozniak denying the charges against her. In a letter dated May 22, 1998, Wozniak informed petitioner that her explanations during the investigation with respect to the charges leveled against her were found to be unacceptable; that she was found guilty of Betrayal of Confidential Information which constitutes sufficient reason for the company to lose the high degree of trust and confidence which it reposed upon her as its manager; and that as a result, her employment with respondent company has been terminated. Petitioner then filed a Complaint for illegal dismissal with the National Labor Relations Commission (NLRC) in Quezon City. On June 14, 1999, the Labor Arbiter (LA) rendered a Decision finding respondent company guilty of illegally dismissing petitioner. On appeal, the NLRC set aside the Decision of the LA. Petitioner filed a Motion for Reconsideration but the same was denied by the NLRC in its Order promulgated on May 3,
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2002. Petitioner then filed a petition for certiorari with the CA questioning the Decision and Order of the NLRC.On April 30, 2004, the CA promulgated its presently assailed Decision dismissing the petition for certiorari and affirming the questioned Decision and Order of the NLRC. Petitioner filed a Motion for Reconsideration but it was denied by the CA in its Resolution dated July 26, 2004. ISSUE: Whether Petitioner is illegally dismissed. HELD: HELD: NO. Petitioner relies on the conclusion of the LA that there is no sufficient evidence to justify petitioner's termination from employment on the ground of loss of trust and confidence. However, evidence shows otherwise. The LA cited private respondent's letter terminating petitioner from her employment to prove that respondent company failed to show sufficient evidence to establish the charges against petitioner. Contrary to the conclusion of the LA, it is very clear in the said letter that respondent company enumerated the facts and circumstances upon which petitioner's termination was based. Pertinent portions of the letter are as follows: Last April 22, 1998, an investigation was conducted in order to give you the chance to present your side of matters that were contained in the letter to explain dated April 21, 1998 that was sent to you and which you received last April 21, 1998 also. During the said investigation, it was established that: a) You sent email messages/reports to Leslie Leow of Transamerica last March 9, 1998 and March 25, 1998 regarding the company's internal problems with the truckers, depot and special permit to load (spl) and the rates charge[d] by ACSI to its customers. b) You sent again email message last April 16, 1998 to Leslie Leow concerning the complaints of Mr. Carmelo Garcia regarding the company's poor services which puts the company's credibility to deliver good service in question. c) You have literally provided Transamerica information about the inefficiencies and inflexibility of the company in catering to the needs of the customer. d) The Officers of the company only learned of the complaints of Mr. Carmelo Garcia because of your email messages to Transamerica. e) You declared that your loyalty is to Transamerica and not to your employer, AHI. The settled rule is that the mere existence of a basis for believing that a managerial employee has breached the trust of the employer justifies dismissal. Petitioner does not deny having sent the subject e-mails to Trans-America. The Court finds no error in the conclusion of the CA that petitioner's intention in sending these e-mails was to inform Trans-America of the supposed inefficiency in the operations of respondent company as well as the company's poor services to its clients. These pieces of information necessarily diminish the credibility of respondent company and besmirch its reputation. In fact, TransAmerica wrote Wozniak expressing its disappointment in the services that the Aboitiz companies were rendering. Hence, respondent company cannot be faulted for having lost its trust and confidence in petitioner and in refusing to retain her as its employee considering that her continued employment is patently inimical to respondent company's interest. The law, in protecting the rights of labor, authorizes neither oppression nor self-destruction of an employer company which itself is possessed of rights that must be entitled to recognition and respect.
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Santos vs. Shing Hung Plastics Co., Inc., Sept. 29, 2008 MICHAEL V. SANTOS, Petitioner,- versus -SHING HUNG PLASTICS, CO., INC. and NATIONAL LABOR RELATIONS COMMISSION, Respondents. Facts: Respondent Shing Hung Plastics Co., Inc. hired Michael V. Santos (petitioner) as administrative assistant whose responsibilities included purchasing equipment and supplies of the corporation. He was, by Memorandum, asked to explain within 24 hours why, in the purchase of silkscreen and paint thinner from JPN, Inc., only acknowledgment receipts, instead of official receipts, were received and recorded by the corporations accounting department. Petitioner explained that the purchase of the above-stated items were urgent, and the thinner was purchased from JPN Inc., instead of the corporations then supplier Alto Chemicals, because the former charged a lower price. On March 11, 2002, Chueh ordered him to rent a forklift and crane to move a 26-ton machinery of the corporation, hence, he asked the firm Bormahueco for a quotation thereof. The quotation given by Bormahueco was found to be too high by Chueh who thus ordered him to get one from another firm. Roos Industrial Construction, Inc. (Roos) quoted a lower rental rate of P28,000, hence, he, on the instruction of Chan and Chueh, asked the accounting department to issue a check for the purpose. On April 2, 2002, he was informed of the termination of his employment on account of "money involvement with suppliers like JPN and Roos etc." The corporation went on to claim as follows: Upon investigation by Chueh, it was found out that petitioner manipulated the price of purchased items and earned commissions therefrom; that petitioner had been an employee of JPN, Inc. "but was forced to resign due to some irregularities" and that petitioner refused to sign the termination letter and to receive his salary and other benefits, and had not been reporting for work since April 3, 2002. By Decision of January 30, 2004, the Labor Arbiter found petitioner to have been illegally dismissed. He thus ordered the corporation to reinstate petitioner and pay his full backwages, unpaid salary, moral and exemplary damages, and attorneys fees. On appeal, the National Labor Relations Commission (NLRC), by Resolution of August 20, 2004, found petitioners dismissal for just cause but that due process requirements were not complied with. The NLRC thus set aside the Labor Arbiters decision but awarded petitioner "one (1) month salary as indemnity, and his unpaid salary." Issue: Whether petitioner was dismissed for just cause. Held: Yes.By its evidence, the corporation duly established the acts imputed to petitioner which rendered him unworthy of the trust and confidence demanded of his position . Petitioner further claimed that JPN, Inc. sold thinner at P500 per gallon lower than the P1,500 price of the corporations usual supplier, Alto Chemicals. The corporation controverted this claim, however, by presenting a document from Alto Chemicals quoting the price of thinner at P300 per gallon.
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In administrative proceedings, the law does not require proof beyond reasonable doubt. Substantial evidence suffices. The Court finds that the corporation had established reasonable grounds-bases of its decision finding petitioner unworthy of the trust and confidence his position demands. Petitioner, at all events, argues that respondent failed to prove its claim that he is a confidential employee, hence, his tenure depended not on the trust and confidence he enjoyed from it. He advances that he is "not involved in the labor relation matter[s] in the respondent company." Petitioners position fails. For the purpose of applying the provisions of the Labor Code on who may join unions of the rank-and-file employees, jurisprudence defines "confidential employees" as those who "assist or act in a confidential capacity to persons who formulate, determine, and effectuate management policies in the field of labor relations." However, for the purpose of applying the Labor Code provision on loss of confidence as a just cause for the dismissal of an employee, jurisprudence teaches that: x x x [L]oss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employers money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and [to] the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. (Emphasis and underscoring supplied) As stated early on, petitioners duties included purchasing supplies and equipment of the corporation. Enriquez vs. BPI, February 12, 2008 Enriquez vs. BPI Feb 12, 2008 FACTS: Enriquez and Sia were the branch manager and assistant branch manager, respectively of the BPI- Bacolod Singcang Branch. Enriquez had been an employee thereon for 32 years and Sia for 29 years. On December 27,2002, their branch experienced a heavy volume of transactions owing to the fact that it was the last banking day of the year. When banking hours came to a close, teller Geraldine Descartin (Descartin) purportedly discovered that she had a cash shortage of P36,000.00. It was later admitted by a co-teller Fregil that the shortage was incurred because Descartin had temporarily borrowed the money that week to pay her financial obligations but intended to return the same on the first week of January. Teller Fregil reported the matter to Sia and Enriquez, both of whom suggested that teller Descartin fill the shortage with a loan from her family. Teller Descartin replied that her family did not have the money, she instead borrowed the amount from her in-laws. Thus, at 5:21 p.m., teller Descartin posted the unsigned withdrawal slip for the amount of P36,000.00 against the joint account of her parents-in-law. As the amount exceeded the floor limit for tellers which would require the approval of a superior officer, either Enriquez or Sia approved the transaction at 5:22 p.m. as reflected on the account
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records. Teller Descartin thereafter left the bank to secure the signature of her mother-in-law Remedios and returned at past 7:00 p.m. with the signed withdrawal slip. An investigation was made by the BPI head office and petitioners were directed to show cause to explain in writing why they should not be sanctioned for conflict of interest and breach of trust. Later on, petitioners were dismissed from employment on grounds of breach of trust and confidence and dishonesty. Hence, a complaint was filed for illegal dismissal. The Labor Arbiter rendered a decision that petitioners had been illegally dismissed ordering respondents to pay full backwages and moral and exemplary damages amounting to more than 7million pesos. On appeal, The NLRC reversed the decision but ordered respondents to give petitioners financial assistance equivalent to one-half months pay for every year of service. ISSUE: Whether or not petitioners were illegally dismissed. HELD: No. There is no denying that loss of trust and confidence is a valid ground for termination of employment. Hence, the basic requisite for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence or is routinely charged with the care and custody of the employers money or property. Moreover, the breach must be related to the performance of the employees function. Also, it must be shown that the employee is a managerial employee, since the term trust and confidence is restricted to said class of employees. The failure of petitioners to report the cash shortage of teller Descartin, even if done in good faith, nonetheless resulted in their abetting the dishonesty committed by the latter. Under the personnel policies of respondent bank, this act of petitioners justifies their dismissal even on the first offense. Even assuming the version of petitioners as the truth, the fact remains that they willfully decided against reporting the shortage that occurred. As a result, in either situation, petitioners acts have caused respondents to have a legitimate reason to lose the trust reposed in them as senior managerial employees. Their participation in the cover-up of the misconduct of teller Descartin makes them unworthy of the trust and confidence demanded by their positions. Willful Disobedience Tongko vs. The Manufacturers Life Insurance Co., Inc. November 7, 2008 G.R. No. 167622, November 07, 2008

Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife. In the Agreement, it is provided that:
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It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent. The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by 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. 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. In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongkos Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy with their earnings and would want to revert to the position of agents." And "Sales Managers are doing what the company asks them to do but, in the process, they earn less." Tongko was then terminated. Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an employer-employee relationship. The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship between the parties and deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this petition. Issue: 1. WON Tongko was an employee of Manulife 2. WON Tongko was illegally dismissed. Held: 1. Yes In the instant case, Manulife had the power of control over Tongko that would make him its employee. Several factors contribute to this conclusion.

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In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that: The Agent hereby agrees to comply with all regulations and requirements of the Company as herein provided as well as maintain a standard of knowledge and competency in the sale of the Company's products which satisfies those set by the Company and sufficiently meets the volume of new business required of Production Club membership.Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses. Among the company regulations of Manulife are the different codes of conduct such as the Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of Conduct Agreement, which demonstrate the power of control exercised by the company over Tongko. The fact that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents. Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirements controlled the means and methods by which Tongko was to achieve the company's goals. More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative duties that establishes his employment with Manulife. Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other administrative functions, leads to no other conclusion that he was an employee of Manulife. 2. Yes In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife argued that even if Tongko is considered as its employee, his employment was validly terminated on the ground of gross and habitual neglect of duties, inefficiency, as well as willful disobedience of the lawful orders of Manulife. Manulife stated: In the instant case, private respondent, despite the written reminder from Mr. De Dios refused to shape up and altogether disregarded the latter's advice resulting in his laggard performance clearly indicative of his willful disobedience of the lawful orders of his superior. As private respondent has patently failed to perform a very fundamental duty, and that is to yield obedience to all reasonable rules, orders and instructions of the Company, as well as gross failure to reach at least minimum quota, the termination of his engagement from Manulife is highly warranted and therefore, there is no illegal dismissal to speak of. It is readily evident from the above-quoted portions of Manulife's petition that it failed to cite a single iota of evidence to support its claims. Manulife did not even point out which order or rule
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that Tongko disobeyed. More importantly, Manulife did not point out the specific acts that Tongko was guilty of that would constitute gross and habitual neglect of duty or disobedience. Manulife merely cited Tongko's alleged "laggard performance," without substantiating such claim, and equated the same to disobedience and neglect of duty. Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving the validity of the termination of employment rests on the employer. Failure to discharge this evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal. The Labor Code provides that an employer may terminate the services of an employee for just cause and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an employer's dismissal of an employee, and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise. Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to identify the specific acts by which Tongko's employment was terminated much less support the same with substantial evidence. To repeat, mere conjectures cannot work to deprive employees of their means of livelihood. Thus, it must be concluded that Tongko was illegally dismissed. Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal. SOCIAL JUSTICE SOCIETY (SJS) vs. DANGEROUS DRUGS BOARD and PHILIPPINE DRUG ENFORCEMENT AGENCY (PDEA), G.R. No. 157870, 3 November 2008 VELASCO, JR., J.:

FACTS: The constitutionality of Section 36 of Republic Act No. (RA) 9165, otherwise known as the Comprehensive Dangerous Drugs Act of 2002, insofar as it requires mandatory drug testing of candidates for public office, students of secondary and tertiary schools, officers and employees of public and private offices, and persons charged before the prosecutor's office with certain offenses, among other personalities, is put in issue.
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As far as pertinent, the challenged section reads as follows: SEC. 36. Authorized Drug Testing. - Authorized drug testing shall be done by any government forensic laboratories or by any of the drug testing laboratories accredited and monitored by the DOH to safeguard the quality of the test results. The drug testing shall employ, among others, two (2) testing methods, the screening test which will determine the positive result as well as the type of drug used and the confirmatory test which will confirm a positive screening test. The following shall be subjected to undergo drug testing: (d) Officers and employees of public and private offices. - Officers and employees of public and private offices, whether domestic or overseas, shall be subjected to undergo a random drug test as contained in the company's work rules and regulations, for purposes of reducing the risk in the workplace. Any officer or employee found positive for use of dangerous drugs shall be dealt with administratively which shall be a ground for suspension or termination, subject to the provisions of Article 282 of the Labor Code and pertinent provisions of the Civil Service Law;

ISSUE: Whether or not paragraph (d) Sec. 36 of RA 9165 is unconstitutional?

RULING: Yes. The first factor to consider in the matter of reasonableness is the nature of the privacy interest upon which the drug testing, which effects a search within the meaning of Sec. 2, Art. III of the Constitution, intrudes. In this case, the office or workplace serves as the backdrop for the analysis of the privacy expectation of the employees and the reasonableness of drug testing requirement. The employees' privacy interest in an office is to a large extent circumscribed by the company's work policies, the collective bargaining agreement, if any, entered into by management and the bargaining unit, and the inherent right of the employer to maintain discipline and efficiency in the workplace. Their privacy expectation in a regulated office environment is, in fine, reduced; and a degree of impingement upon such privacy has been upheld. Sec. 36 of RA 9165 contains provisions specifically directed towards preventing a situation that would unduly embarrass the employees or place them under a humiliating experience. While every officer and employee in a private establishment is under the law deemed forewarned that he or she may be a possible subject of a drug test, nobody is really singled out in advance for drug testing. The goal is to discourage drug use by not telling in advance anyone when and who is to be tested. And as may be observed, Sec. 36(d) of RA 9165 itself prescribes what is a narrowing ingredient by providing that the employees concerned shall be subjected to "random drug test as contained in the company's work rules and regulations for purposes of reducing the risk in the work place."
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The random drug testing shall be undertaken under conditions calculated to protect as much as possible the employee's privacy and dignity. As to the mechanics of the test, the law specifies that the procedure shall employ two testing methods, i.e., the screening test and the confirmatory test, doubtless to ensure as much as possible the trustworthiness of the results. But the more important consideration lies in the fact that the test shall be conducted by trained professionals in access - controlled laboratories monitored by the Department of Health (DOH) to safeguard against results tampering and to ensure an accurate chain of custody. All told, therefore, the intrusion into the employees' privacy, under RA 9165, is accompanied by proper safeguards, particularly against embarrassing leakages of test results, and is relatively minimal. Taking into account the foregoing factors, i.e., the reduced expectation of privacy on the part of the employees, the compelling state concern likely to be met by the search, and the well defined limits set forth in the law to properly guide authorities in the conduct of the random testing, we hold that the challenged drug test requirement is, under the limited context of the case, reasonable and, ergo, constitutional.

G.R. No. 164774 April 12, 2006 STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners, vs. RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents. PUNO, J.: FACTS: Petitioner 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 while Sebastian Chua is its Managing Director. Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company. 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. 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,
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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. Respondents offer a different version of their dismissal. 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. 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. On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint for lack of merit. On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter on January 11, 2002. Respondents filed a Motion for Reconsideration but was denied by the NLRC in a Resolution dated August 8, 2002. They appealed to respondent court via Petition for Certiorari. In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the NLRC decision. On appeal to this Court, petitioners contend that the Court of Appeals erred in holding that: ISSUE: Whether the subject 1995 policy/regulation is violative of the constitutional rights towards marriage and the family of employees and of Article 136 of the Labor Code HELD: YES.These courts 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. 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
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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. 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. 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. 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. Corollarily, the issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic. 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 avers that she went back to work on December 21, 1999 but was dismissed due to her alleged immoral conduct. At first, she did not want to sign the termination papers but she was forced to tender her resignation letter in exchange for her thirteenth month pay. 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 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. 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 volunta ry, Estrellas dismissal is declared illegal.

Gross and Habitual Neglect of Duty School of the Holy Spirit of Quezon City vs. Taguiam, GR NO. 165565, July 14, 2008
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SECOND DIVISION [G.R. No. 165565, July 14, 2008] SCHOOL OF THE HOLY SPIRIT OF QUEZON CITY AND/OR SR. CRIS PINA A. TOLENTINO, S.SP.S., PETITIONERS, VS. CORAZON P. TAGUIAM, RESPONDENT. DECISION QUISUMBING, J.: Facts: Respondent Corazon P. Taguiam was the Class Adviser of Grade 5-Esmeralda of the petitioner, School of the Holy Spirit of Quezon City. On March 10, 2000, the class president, wrote a letter to the grade school principal requesting permission to hold a year-end celebration at the school grounds. The principal authorized the activity and allowed the pupils to use the swimming pool. In this connection, respondent distributed the parent's/guardian's permit forms to the pupils. Respondent admitted that Chiara Mae Federico's permit form was unsigned. Nevertheless, she concluded that Chiara Mae was allowed by her mother to join the activity since her mother personally brought her to the school with her packed lunch and swimsuit. Before the activity started, respondent warned the pupils who did not know how to swim to avoid the deeper area. However, while the pupils were swimming, two of them sneaked out. Respondent went after them to verify where they were going. Unfortunately, while respondent was away, Chiara Mae drowned. Petitioners issued a Notice of Administrative Charge to respondent for alleged gross negligence and required her to submit her written explanation. Thereafter, petitioners conducted a clarificatory hearing which respondent attended. Respondent also submitted her Affidavit of Explanation. Petitioners dismissed respondent on the ground of gross negligence resulting to loss of trust and confidence. In dismissing the complaint, the Labor Arbiter declared that respondent was validly terminated for gross neglect of duty. He opined that Chiara Mae drowned because respondent had left the pupils without any adult supervision. He also noted that the absence of adequate facilities should have alerted respondent before allowing the pupils to use the swimming pool. The Labor Arbiter further concluded that although respondent's negligence was not habitual, the same warranted her dismissal since death resulted therefrom.
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Respondent appealed to the NLRC which, however, affirmed the dismissal of the complaint. Aggrieved, respondent instituted a petition for certiorari before the Court of Appeals, which ruled in her favor. The appellate court observed that there was insufficient proof that respondent's negligence was both gross and habitual

Issue: Whether respondent's dismissal on the ground of gross negligence resulting to loss of trust and confidence was valid. Held: Under Article 282 of the Labor Code, gross and habitual neglect of duties is a valid ground for an employer to terminate an employee. Gross negligence implies a want or absence of or a failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. Our perusal of the records leads us to conclude that respondent had been grossly negligent. First , it is undisputed that Chiara Mae's permit form was unsigned. Yet, respondent allowed her to join the activity because she assumed that Chiara Mae's mother has allowed her to join it by personally bringing her to the school with her packed lunch and swimsuit. The purpose of a permit form is precisely to ensure that the parents have allowed their child to join the school activity involved. Respondent cannot simply ignore this by resorting to assumptions. Respondent admitted that she was around when Chiara Mae and her mother arrived. She could have requested the mother to sign the permit form before she left the school or at least called her up to obtain her conformity. Second, it was respondent's responsibility as Class Adviser to supervise her class in all activities sanctioned by the school. Thus, she should have coordinated with the school to ensure that proper safeguards, such as adequate first aid and sufficient adult personnel, were present during their activity. She should have been mindful of the fact that with the number of pupils involved, it would be impossible for her by herself alone to keep an eye on each one of them. As it turned out, since respondent was the only adult present, majority of the pupils were left unsupervised when she followed the two pupils who sneaked out. In the light of the odds involved, respondent should have considered that those who sneaked out could not have left the school premises since there were guards manning the gates. The guards would not have allowed them to go out in their swimsuits and without any adult accompanying them. But those who stayed at the pool were put at greater risk, when she left them unattended by an adult. Notably, respondent's negligence, although gross, was not habitual. In view of the considerable
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resultant damage, however, we are in agreement that the cause is sufficient to dismiss respondent. This is not the first time that we have departed from the requirements laid down by the law that neglect of duties must be both gross and habitual. In Philippine Airlines, Inc. v. NLRC, we ruled that Philippine Airlines (PAL) cannot be legally compelled to continue with the employment of a person admittedly guilty of gross negligence in the performance of his duties although it was his first offense. In that case, we noted that a mere delay on PAL's flight schedule due to aircraft damage entails problems like hotel accommodations for its passengers, re-booking, the possibility of law suits, and payment of special landing fees not to mention the soaring costs of replacing aircraft parts. In another case, Fuentes v. National Labor Relations Commission, we held that it would be unfair to compel Philippine Banking Corporation to continue employing its bank teller. In that case, we observed that although the teller's infraction was not habitual, a substantial amount of money was lost. The deposit slip had already been validated prior to its loss and the amount reflected thereon is already considered as current liabilities in the bank's balance sheet. Indeed, the sufficiency of the evidence as well as the resultant damage to the employer should be considered in the dismissal of the employee. In this case, the damage went as far as claiming the life of a child.

Analogous Cases John Hancock Life Insurance Corp. vs. Davis, September 3, 2008 G.R. No. 169549 September 3, 2008 FACTS: Respondent Cantre, an agency administration officer of petitioner corporation was accused of qualified theft for stealing Patricia Yusecos credit card which the latter used to purchase items in various stores in the City of Manila. The NBI identified Cantre in a security video obtained from Abensons Robinsons Place where a proposed transaction was disapproved for giving the wrong information upon verification. However, the complaint was dismissed by the prosecutor because the affidavits presented by the NBI was not properly verified. Meanwhile, petitioner placed respondent under preventive suspension and instructed her to cooperate with its ongoing investigation. Instead of doing so, however, respondent filed a complaint for illegal dismissal alleging that petitioner terminated her employment without cause. The Labor Arbiter found that the respondent committed serious misconduct thus there was a valid cause for dismissal. Respondent appealed to the NLRC which affirmed the assailed decision. The CA found that the labor arbiter and NLRC merely adopted the findings of the NBI regarding respondent's culpability. Because the affidavits of the witnesses were not verified, they did not constitute substantial evidence. The labor arbiter and NLRC should have assessed evidence independently as "unsubstantiated suspicions, accusations and conclusions of employers (did) not provide legal justification for dismissing an employee." ISSUE: Whether or not there is a valid cause for termination HELD: Yes. Article 282 of the Labor Code provides:

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Article 282. Termination by Employer. - An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobendience by the employee of the lawful orders of his employer or his representatives in connection with his work; (e) Other causes analogous to the foregoing. Misconduct involves "the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment." For misconduct to be serious and therefore a valid ground for dismissal, it must be: 1. of grave and aggravated character and not merely trivial or unimportant and 2. connected with the work of the employee. In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole and used Yuseco's credit cards. But since the theft was not committed against petitioner itself but against one of its employees, respondent's misconduct was not work-related and therefore, she could not be dismissed for serious misconduct. Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail. For an employee to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the employee. A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an employee's moral depravity. Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct.

Yrasuegui vs. PAL October 17, 2008 G.R. No. 168081, October 17, 2008 ARMANDO G. YRASUEGUI VS. PHILIPPINE AIRLINES, INC

REYES, R.T., J.: 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.
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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 company's 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 petitioner's 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. In line with company policy, he was removed from flight duty effective May 6, 1989 to July 3, 1989. He was formally requested to trim down to his ideal weight and report for weight checks on several dates. He was also told that he may avail of the services of the company physician should he wish to do so. He was advised that his case will be evaluated on July 3, 1989. On February 25, 1989, petitioner underwent weight check. It was discovered that he gained, instead of losing, weight. He was overweight at 215 pounds, which is 49 pounds beyond the limit. Consequently, his off-duty status was retained. On October 17, 1989, PAL Line Administrator Gloria Dizon personally visited petitioner at his residence to check on the progress of his effort to lose weight. Petitioner weighed 217 pounds, gaining 2 pounds from his previous weight. After the visit, petitioner made a commitment to reduce weight in a letter addressed to Cabin Crew Group Manager Augusto Barrios. 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. Petitioner failed to report for weight checks. Despite that, he was given one more month to comply with the weight requirement. As usual, he was asked to report for weight check on different dates. He was reminded that his grounding would continue pending satisfactory compliance with the weight standards. Again, petitioner failed to report for weight checks, although he was seen submitting his passport for processing at the PAL Staff Service Division. 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. Again, petitioner ignored the directive and did not report for weight checks. On June 26, 1990, petitioner was required to explain his refusal to undergo weight checks.When petitioner tipped the scale on July 30, 1990, he weighed at 212 pounds. Clearly, he was still way over his ideal weight of 166 pounds. From then on, nothing was heard from petitioner until he followed up his case requesting for
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leniency on the latter part of 1992. He weighed at 219 pounds on August 20, 1992 and 205 pounds on November 5, 1992. On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company standards on weight requirements. He was given ten (10) days from receipt of the charge within which to file his answer and submit controverting evidence. On December 7, 1992, petitioner submitted his Answer. Notably, he did not deny being overweight. What he claimed, instead, is that his violation, if any, had already been condoned by PAL since "no action has been taken by the company" regarding his case "since 1988." He also claimed that PAL discriminated against him because "the company has not been fair in treating the cabin crew members who are similarly situated." On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he was undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain his ideal weight. 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." His motion for reconsideration having been denied,petitioner filed a complaint for illegal dismissal against PAL. Labor Arbiter, NLRC and CA Dispositions On November 18, 1998, Labor Arbiter ruled that petitioner was illegally dismissed. The 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. Assuming that it did, petitioner could be transferred to other positions where his weight would not be a negative factor. Notably, other overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted instead of being disciplined. According to the NLRC, "obesity, or the tendency to gain weight uncontrollably regardless of the amount of food intake, is a disease in itself." As a consequence, there can be no intentional defiance or serious misconduct by petitioner to the lawful order of PAL for him to lose weight. Like the Labor Arbiter, the NLRC found the weight standards of PAL to be reasonable. However, it found as unnecessary the Labor Arbiter holding that petitioner was not remiss in the performance of his duties as flight steward despite being overweight. According to the NLRC, the Labor Arbiter should have limited himself to the issue of whether the failure of petitioner to attain his ideal weight constituted willful defiance of the weight standards of PAL.
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PAL moved for reconsideration to no avail. Thus, PAL elevated the matter to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. The CA reversed the NLRC. The CA opined that there was grave abuse of discretion on the part of the NLRC because it "looked at wrong and irrelevant considerations" in evaluating the evidence of the parties.

Our Ruling The obesity of petitioner is a ground for dismissal 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." True, petitioner claims that reducing weight is costing him "a lot of expenses." However, petitioner has only himself to blame. He could have easily availed the assistance of the company physician, per the advice of PAL. He chose to ignore the suggestion. In fact, he repeatedly failed to report when required to undergo weight checks, without offering a valid explanation. Thus, his fluctuating weight indicates absence of willpower rather than an illness.

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 the United States, there are a few federal and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise
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unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation of a business or enterprise. Petitioner contends that BFOQ is a statutory defense. It does not exist if there is no statute providing for it. Further, there is no existing BFOQ statute that could justify his dismissal. Both arguments must fail. First, the Constitution, the Labor Code, and RA No. 7277 or the Magna Carta for Disabled Persons contain provisions similar to BFOQ. Second, in British Columbia Public Service Employee Commission (BSPSERC) v. The British Columbia Government and Service Employee's Union (BCGSEU), this Court held that in order to justify a BFOQ, the employer must prove that (1) the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. 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." Verily, there is no merit to the argument that BFOQ cannot be applied if it has no supporting statute. Too, the Labor Arbiter, NLRC, and CA are one in holding that the weight standards of PAL are reasonable. A common carrier, from the nature of its business and for reasons of public policy, is bound to observe extraordinary diligence for the safety of the passengers it transports. It is bound to carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. The law leaves no room for mistake or oversight on the part of a common carrier. Thus, it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting obligations imposed upon it by law by virtue of being a common carrier. Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him prior to his employment. He is presumed to know the weight limit that he must maintain at all times. In fact, never did he question the authority of PAL when he was repeatedly asked to trim down his weight. Bona fides exigit ut quod convenit fiat. Good faith demands that what is agreed upon shall be done. Kung ang tao ay tapat kanyang tutuparin ang napagkasunduan. Too, the weight standards of PAL provide for separate weight limitations based on height and body frame for both male and female cabin attendants. A progressive discipline is imposed to allow non-compliant cabin attendants sufficient opportunity to meet the weight standards.
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Thus, the clear-cut rules obviate any possibility for the commission of abuse or arbitrary action on the part of PAL. Petitioner is entitled to separation pay. Be that as it may, all is not lost for petitioner. Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the language of Article 279 of the Labor Code that "[a]n 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." Luckily for petitioner, this is not an ironclad rule. Exceptionally, separation pay is granted to a legally dismissed employee as an act "social justice," or based on "equity." In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee. Here, We grant petitioner separation pay equivalent to one-half (1/2) month's pay for every year of service. It should include regular allowances which he might have been receiving. We are not blind to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also recognize that his employment with PAL lasted for more or less a decade.

Sexual Harassment Domingo vs. Rayala, February 18, 2008 MA. LOURDES T. DOMINGO v. ROGELIO I. RAYALA G.R. No. 155831, 18 February 2008 NACHURA, J.:

FACTS: On 16 November 1998, Ma. Lourdes T. Domingo, then Stenographic Reporter III at the NLRC, filed a Complaint for sexual harassment against Rayala before Department of Labor and Employment (DOLE). To support the Complaint, Domingo executed an Affidavit narrating the incidences of sexual harassment complained of. Accordingly, the following acts were committed by Rayala: holding and squeezing Domingos shoulders, running his fingers across her neck and tickling her ear, having inappropriate
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conversations with her, giving her money allegedly for school expenses with a promise of future privileges, and making statements with unmistakable sexual overtones. After the last incident, Domingo filed for leave of absence and asked to be immediately transferred. Thereafter, she filed the Complaint for sexual harassment on the basis of Administrative Order No. 250, in the Department of Labor and Employment. Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to the Office of the President (OP), Rayala being a presidential appointee. The OP, through then Executive Secretary Ronaldo Zamora, ordered Secretary Laguesma to investigate the allegations in the Complaint and create a committee for such purpose. On December 4, 1998, Secretary Laguesma constituted a Committee on Decorum and Investigation (Committee) for that purpose. Later the Committee found Rayala guilty of the offense charged and recommended the imposition of the minimum penalty provided under AO 250, which is suspension for six (6) months and one (1) day. Rayala filed a Motion for Reconsideration, which the OP denied. He then filed a Petition for Certiorari and Prohibition with Prayer for Temporary Restraining Order under Rule 65 of the Revised Rules on Civil Procedure before the Supreme Court. However, the same was dismissed for disregarding thehierarchy of courts. Another Motion for Reconsideration was filed which led to the referral of the Supreme Court of the petition to the Court of Appeals (CA) for appropriate action. The Court of Appeals dismissed the petition and held that there was sufficient evidence on record to create moral certainty that Rayala committed the acts he was charged with. Rayala filed a Petition for Review before the Supreme Court.

ISSUE: Whether or not Rayala committed sexual harassment.

RULING: Yes. That Rayala committed the acts complained of and was guilty of sexual harassment is the common factual finding of not just one, but three independent bodies: the Committee, the Office of the President and the Court of Appeals. Rayala insists, however, that his acts do not constitute sexual harassment, because Domingo did not allege in her complaint that there was a demand, request, or requirement of a sexual favor as a condition for her continued employment or for her promotion to a higher position.
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The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines work-related sexual harassment in this wise: Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work, education or training-related sexual harassment is committed by an employer, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, requests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said Act. (a) In a work-related or employment environment, sexual harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the employment, reemployment or continued employment of said individual, or in granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in a way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee; (2) or The above acts would impair the employees rights or privileges under existing labor laws;

(3) The above acts would result in an intimidating, hostile, or offensive environment for the employee. It is true that this provision calls for a demand, request or requirement of a sexual favor. But it is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical oral or written statement. It may be discerned, with equal certitude, from the acts of the offender. Holding and squeezing Domingos shoulders, running his fingers across her neck and tickling her ear, having inappropriate conversations with her, giving her money allegedly for school expenses with a promise of future privileges, and making statements with unmistakable sexual overtones all these acts of Rayala resound with deafening clarity the unspoken request for a sexual favor. Likewise, contrary to Rayalas claim, it is not essential that the demand, request or requirement be made as a condition for continued employment or for promotion to a higher position. It is enough that the respondents acts result in creating an intimidating, hostile or offensive environment for the employee. That the acts of Rayala generated an intimidating and hostile environment for Domingo is clearly shown by the common factual finding of the Investigating Committee, the OP and the CA that Domingo reported the matter to an officemate and, after the last incident, filed for a leave of absence and requested transfer to another unit.
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Redundancy AMA Computer College v. Garcia, April 14, 2008 Smart Communications vs. Astorga, January 28, 2008 DECISION NACHURA, J.: Facts: Regina M. Astorga (Astorga) was employed by respondent Smart Communications, Incorporated (SMART) on May 8, 1997 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. 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. To soften the blow of the realignment, 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. The termination of her employment prompted Astorga to file a Complaint 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 CSM G and the creation of a specialized and more technically equipped SNMI, which is a valid and legitimate exercise of management prerogative. The Labor Arbiter ordered that the dismissal of Astorga is illegal and unjust. On appeal the National Labor Relations Commission (NLRC) sustained Astorgas dismissal. Declaring the abolition of CSMG and the creation of SNMI to do the sales and marketing services for SMART as a valid organizational action. It overruled the Labor Arbiters ruling that SNMI is an in-house agency, holding that it lacked legal basis.
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Astorga filed a motion for reconsideration, but the NLRC denied it. Astorga then went to the CA via certiorari. The CA agreed with the NLRC that the reorganization undertaken by SMART resulting in the abolition of CSMG was a legitimate exercise of management prerogative. It rejected Astorgas posturing that her non-absorption into SNMI was tainted with bad faith. However, the CA found that SMART failed to comply with the mandatory one-month notice prior to the intended termination. Accordingly, the CA imposed a penalty equivalent to Astorgas one-month salary for this non-compliance. Astorga filed a motion for reconsideration, while SMART sought partial reconsideration, the CA partially granted astorgas motion while SMART was denied. Issue: Whether Astorgas dismissal based on redundancy is valid? Held: The nature of redundancy as an authorized cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v. National Labor Relations Commission,35 viz: x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to 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 the 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. The characterization of an employees services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and soundness of such characterization or decision is not subject to discretionary review provided, of course, that a violation of law or arbitrary or malicious action is not shown. It is extremely difficult to believe that SMART would enter into a joint venture agreement with NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a particular employee, such as Astorga. Moreover, Astorga never denied that SMART offered her a supervisory position in the Customer Care Department, but she refused the offer because the position carried a lower salary rank and rate. If indeed SMART simply wanted to get rid of her, it would not have offered her a position in any department in the enterprise. Astorga also states that the justification advanced by SMART is not true because there was no compelling economic reason for redundancy. But contrary to her claim, an employer is not precluded from adopting a new policy conducive to a more economical and effective management even if it is not experiencing economic reverses. Neither does the law require that the employer should suffer financial losses before he can terminate the services of the employee on the ground of redundancy. However, as aptly found by the CA, SMART failed to comply with the mandated one (1) month notice prior to termination. The record is clear that Astorga received the notice of termination only on March 16, 1998 or less than a month prior to its effectivity on April 3, 1998. Likewise,
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the Department of Labor and Employment was notified of the redundancy program only on March 6, 1998. Article 283 of the Labor Code clearly provides: 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 unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof x x x. SMARTs assertion that Astorga cannot complain of lack of notice because the organizational realignment was made known to all the employees as early as February 1998 fails to persuade. Astorgas actual knowledge of the reorganization cannot replace the formal and written notice required by the law. In the written notice, the employees are informed of the specific date of the termination, at least a month prior to the effectivity of such termination, to give them sufficient time to find other suitable employment or to make whatever arrangements are needed to cushion the impact of termination. In this case, notwithstanding Astorgas knowledge of the reorganization, she remained uncertain about the status of her employment until SMART gave her formal notice of termination. But such notice was received by Astorga barely two (2) weeks before the effective date of termination, a period very much shorter than that required by law. Be that as it may, this procedural infirmity would not render the termination of Astorgas employment illegal. The validity of termination can exist independently of the procedural infirmity of the dismissal. In DAP Corporation v. CA, we found the dismissal of the employees therein valid and for authorized cause even if the employer failed to comply with the notice requirement under Article 283 of the Labor Code. This Court upheld the dismissal, but held the employer liable for non-compliance with the procedural requirements.

Constructive Dismissal Uniwide Sales Warehouse Club vs. NLRC, February 29, 2008 G.R. No. 154503 February 29, 2008 FACTS: Amalia Kawada, a Full Assistant Store Manager received a Memorandum issued by the Store Manager Apduhan summarizing the various reported incidents signifying unsatisfactory performance on the latter's part which include the commingling of good and damaged items, sale of a voluminous quantity of damaged toys and ready-to-wear items at unreasonable prices, and failure to submit inventory reports. Another Memorandum was issued which claimed that the answers given by the private respondent were all hypothetical and did not answer directly the allegations attributed to her. Apduhan sent another Memorandum seeking from the private respondent an explanation regarding the incidents reported by Uniwide employees and security personnel for alleged irregularities committed by the private respondent such as allowing the entry of unauthorized persons inside a restricted area during
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non-office hours, falsification of or inducing another employee to falsify personnel or company records, sleeping and allowing a non-employee to sleep inside the private office, unauthorized search and bringing out of company records, purchase of damaged home furnishing items without the approval from superior, taking advantage of buying damaged items in large quantity, alteration of approval slips for the purchase of damaged items and abandonment of work. In a letter, private respondent answered the allegations made against her. On July 27, 1998, private respondent sought medical help from the company physician, Dr. Zambrano, due to complaints of dizziness. Finding private respondent to be suffering from hypertension, Dr. Zambrano advised her to take five days sick leave. Subsequently, private respondent was able to obtain from Dr. Zambrano a certificate of fitness to work, which she presented to Apduhan the following day. It turned out that Dr. Zambrano inadvertently wrote "Menia," the surname of the company nurse, in the medical certificate instead of private respondent's surname. Thereafter, private respondent claims that Apduhan shouted at her and prevented her from resuming work because she was not the person referred to in the medical certificate. After private respondent left Apduhan's office, Apduhan's assistant approached the private respondent to get the certification so that it may be photocopied. When she refused to give the certification, private respondent claims that Apduhan once again shouted at her which caused her hypertension to recur and eventually caused her to collapse. Private respondent's head hit the edge of the table before she fell down on the ground for which she suffered contusions at the back of her head. On August 2, 1998, Apduhan issued a Memorandum, advising Kawada of a hearing scheduled on August 12, 1998 and warning her that failure to appear shall constitute as waiver and the case shall be submitted for decision based on available papers and evidence. On August 3, 1998, private respondent filed a case for illegal dismissal before the Labor Arbiter (LA). On August 8, 1998, Apduhan sent a letter addressed to private respondent, which the latter received on even date, advising private respondent to report for work, as she had been absent since August 1, 1998; and warning her that upon her failure to do so, she shall be considered to have abandoned her job. On September 1, 1998, Apduhan issued a Memorandum stating that since private respondent was unable to attend the scheduled August 12, 1998 hearing, the case was evaluated on the basis of the evidence on record; and enumerating the pieces of evidence of the irregularities and violations of company rules committed by private respondent, the latter's defenses and the corresponding findings by Uniwide. Kawada was thereafter terminated from her employment on the grounds of violations of Company Rules, Abandonment of Work and loss of trust and confidence. The Labor Arbiter denied the complaint of Kawada for lack of merit while the NLRC on appeal reversed the decision of the Labor Arbiter ordering UNiwide to pay separation pay, backwages and moral and exemplary damages. According to the NLRC, private respondent was subjected to inhuman and anti-social treatment oppressive to labor. Private respondent received successive memoranda from Apduhan accusing the former of different infractions, some of which offenses complainant was informed of only a year after the alleged commission. Further, Apduhan's ill will and motive to edge private respondent out of her employ was displayed by Apduhan's stubborn refusal to allow private respondent to continue her work on the flimsy
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excuse that the medical certificate did not bear her correct surname, while Apduhan knew for a fact that the same could not have referred to another person but to private respondent. Also, the NLRC observed that private respondent was not afforded due process by petitioners because the former was not given an opportunity to a fair hearing in that the investigation was conducted after private respondent had been constructively dismissed; and that there was no point for private respondent to still attend the investigation set on August 12, 1998 after her constructive dismissal on July 31, 1998 and after she had already filed her complaint. ISSUE: Whether or not resondent was constructively dismissed. HELD: No. Case law defines constructive dismissal as a cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. 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 made to appear as if it were not. In fact, the employee who is constructively dismissed may be allowed to keep on coming to work. 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. The Court finds that private respondent's allegation of harassment is a specious statement which contains nothing but empty imputation of a fact that could hardly be given any evidentiary weight by this Court. Private respondent's bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence. The right to impose disciplinary sanctions upon an employee for just and valid cause, as well as the authority to determine the existence of said cause in accordance with the norms of due process, pertains in the first place to the employer. Precisely, petitioners gave private respondent successive memoranda so as to give the latter an opportunity to controvert the charges against her. Clearly, the memoranda are not forms of harassment, but petitioners' compliance with the requirements of due process. The July 31, 1998 confrontation where Apduhan allegedly shouted at private respondent which caused the latter's hypertension to recur and eventually caused her to collapse cannot by itself support a finding of constructive dismissal by the NLRC and the CA. Even if true, the act of Apduhan in shouting at private respondent was an isolated outburst on the part of Apduhan that did not show a clear discrimination or insensibility that would render the working condition of private respondent unbearable. On petitioners' claim of abandonment by private respondent, well-settled is the rule that to constitute abandonment of work, two elements must concur: (1) the employee must have failed to report for work or must have been absent without valid or justifiable reason, and (2) there must have been a clear intention on the part of the employee to sever the employeremployee relationship manifested by some overt act. The employer has the burden of proof to show the employee's deliberate and unjustified refusal to resume his employment without any
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intention of returning. Mere absence is not sufficient. There must be an unequivocal intent on the part of the employee to discontinue his employment. Private respondent's failure to report for work despite the August 8, 1998 letter sent by Apduhan to private respondent advising the latter to report for work is not sufficient to constitute abandonment. It is a settled rule that failure to report for work after a notice to return to work has been served does not necessarily constitute abandonment. Private respondent mistakenly believed that the successive memoranda sent to her from March 1998 to June 1998 constituted discrimination, insensibility or disdain which was tantamount to constructive dismissal. Thus, private respondent filed a case for constructive dismissal against petitioners and consequently stopped reporting for work. The Court finds that petitioners were not able to establish that private respondent deliberately refused to continue her employment without justifiable reason. To repeat, the Court will not make a drastic conclusion that private respondent chose to abandon her work on the basis of her mistaken belief that she had been constructively dismissed by Uniwide. Nonetheless, the Court agrees with the findings of the LA that the termination of private respondent was grounded on the existence of just cause under Article 282 (c) of the Labor Code or willful breach by the employee of the trust reposed on him by his employer or a duly authorized representative. Private respondent occupies a managerial position. As a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal.

Penaflor vs. Outdoor Clothing Manufacturing Corp., January 21, 2010 G.R. No. 177114 January 21, 2010 MANOLO A. PEAFLOR vs. OUTDOOR CLOTHING MANUFACTURING CORPORATION, NATHANIEL T. SYFU, President, MEDYLENE M. DEMOGENA, Finance Manager, and PAUL U. LEE, Chairman BRION, J.; Peaflor was hired on September 2, 1999 as probationary Human Resource Department (HRD) Manager of respondent Outdoor Clothing Manufacturing Corporation (Outdoor Clothing or the company). As HRD head, Peaflor was expected to (1) secure and maintain the right quality and quantity of people needed by the company; (2) maintain the harmonious relationship between the employees and management in a role that supports organizational goals and individual aspirations; and (3) represent the company in labor cases or proceedings. Two staff members were assigned to work with him to assist him in undertaking these functions. Peaflor claimed that his relationship with Outdoor Clothing went well during the first few months of his employment; he designed and created the companys Policy Manual, Personnel Handbook, Job Expectations, and Organizational Set-Up during this period. His woes began when the companys Vice President for Operations, Edgar Lee (Lee), left the company after a
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big fight between Lee and Chief Corporate Officer Nathaniel Syfu (Syfu). Because of his close association with Lee, Peaflor claimed that he was among those who bore Syfus ire. When Outdoor Clothing began undertaking its alleged downsizing program due to negative business returns, Peaflor alleged that his department had been singled out. On the pretext of retrenchment, Peaflors two staff members were dismissed, leaving him as the only member of Outdoor Clothings HRD and compelling him to perform all personnel -related work. He worked as a one-man department, carrying out all clerical, administrative and liaison work; he personally went to various government offices to process the companys papers. When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a bombing incident, the company required Peaflor to attend to her hospitalization needs; he had to work outside office premises to undertake this task. As he was acting on the companys orders, Peaflor considered himself to be on official business, but was surprised when the company deducted six days salary corresponding to the time he assisted Padilla. According to Finance Manager Medylene Demogena (Demogena), he failed to submit his trip ticket, but Peaflor belied this claim as a trip ticket was required only when a company vehicle was used and he did not use any company vehicle when he attended to his off-premises work. After Peaflor returned from his field work on March 13, 2000, his officemates informed him that while he was away, Syfu had appointed Nathaniel Buenaobra (Buenaobra) as the new HRD Manager. This information was confirmed by Syfus memorandum of March 10, 2000 to the entire office stating that Buenaobra was the concurrent HRD and Accounting Manager. Peaflor was surprised by the news; he also felt betrayed and discouraged. He tried to talk to Syfu to clarify the matter, but was unable to do so. Peaflor claimed that under these circumstances, he had no option but to resign. He submitted a letter to Syfu declaring his irrevocable resignation from his employment with Outdoor Clothing effective at the close of office hours on March 15, 2000. Peaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming that he had been constructively dismissed. He included in his complaint a prayer for reinstatement and payment of backwages, illegally deducted salaries, damages, attorneys fees, and other monetary claims. In his August 15, 2001 decision, the labor arbiter found that Peaflor had been illegally dismissed. Outdoor Clothing was consequently ordered to reinstate Peaflor to his former or to an equivalent position, and to pay him his illegally deducted salary for six days, proportionate 13th month pay, attorneys fees, moral and exemplary damages. Outdoor Clothing appealed the labor arbiters decision with the NLRC. It insisted that Peaflor had not been constructively dismissed, claiming that Peaflor tendered his resignation on March 1, 2000 because he saw no future with the corporation due to its dire financial standing. The NLRC apparently found Outdoor Clothings submitted memoranda sufficient to overturn the labor arbiters decision. It characterized Peaflors resignation as a response, not to the allegedly degrading and hostile treatment that he was subjected to by Syfu, but to Outdoor Clothings downward financial spiral. Buenaobras appointment was made only after Peaflor had submitted his resignation letter, and this was made to cover the vacancy Peaflors resignation would create. Thus, Peaflor was not eased out from his position as HRD manager. No malice likewise was present in the companys decision to dismiss Peaflors two staff members; the company simply exercised its management prerogative to address the financial
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problems it faced. Peaflor, in fact, drafted the dismissal letters of his staff members. In the absence of any illegal dismissal, no basis existed for the monetary awards the labor arbiter granted. In a decision dated December 29, 2006, the CA affirmed the NLRCs decision, stating that Peaflor failed to present sufficient evidence supporting his claim that he had been constructively dismissed. The CA ruled that Peaflors resignation was knowingly and voluntarily made.Faced with these CA actions, Peaflor filed with us the present petition for review on certiorari. THE ISSUE and THE COURTS RULING The Court finds the petition meritorious. The petition turns on the question of whether Peaflors undisputed resignation was a voluntary or a forced one, in the latter case making it a constructive dismissal equivalent to an illegal dismissal. A critical fact necessary in resolving this issue is whether Peaflor filed his letter of resignation before or after the appointment of Buenaobra as the new/concurrent HRD manager. This question also gives rise to the side issue of when Buenaobras appointment was made. If the resignation letter was submitted before Syfus appointment of Buenaobra as new HRD manager, little support exists for Peaflors allegation that he had been forced to resign due to the prevailing abusive and hostile working environment. Buenaobras appointment would then be simply intended to cover the vacancy created by Peaflors resignation. On the other hand, if the resignation letter was submitted after the appointment of Buenaobra, then factual basis exists indicating that Peaflor had been constructively dismissed as his resignation was a response to the unacceptable appointment of another person to a position he still occupied. The question of when Peaflor submitted his resignation letter arises because this letter undisputably made was undated. Despite Peaflors claim of having impressive intellectual and academic credentials, his resignation letter, for some reason, was undated. Thus, the parties have directly opposing claims on the matter. Peaflor claims that he wrote and filed the letter on the same date he made his resignation effective March 15, 2000. Outdoor Clothing, on the other hand, contends that the letter was submitted on March 1, 2000, for which reason Syfu issued a memorandum of the same date appointing Buenaobra as the concurrent HRD manager; Syfus memorandum cited Peaflors intention to resign so he could devote his time to teaching. The company further cites in support of its case Buenaobras March 3, 2000 memorandum accepting his appointment. Another piece of evidence is the Syfu memorandum of March 10, 2000, which informed the office of the appointment of Buenaobra as the concurrent Head of HRD the position that Peaflor occupied. Two other memoranda are alleged to exist, namely, the AWOL memoranda of March 6 and 11, 2000, allegedly sent to Penaflor. Several reasons arising directly from these pieces of evidence lead us to conclude that Peaflor did indeed submit his resignation letter on March, 15, 2000, i.e., on the same day that it was submitted. The circumstances and other evidence surrounding Peaflors resignation support his claim that he was practically compelled to resign from the company. Foremost among these is the memorandum of March 10, 2000 signed by Syfu informing the whole office ("To: All concerned") about the designation of Buenaobra as concurrent
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Accounting and HRD Manager. In contrast with the suspect memoranda we discussed above, this memorandum properly bore signatures acknowledging receipt and dates of receipt by at least five company officials, among them the readable signature of Demogene and one Agbayani; three of them acknowledged receipt on March 13, 2000, showing that indeed it was only on that day that the appointment of Buenaobra to the HRD position was disclosed. This evidence is fully consistent with Peaflors position that it was only in the afternoon of March 13, 2000 that he was told, informally at that, that Buenaobra had taken over his position. It explains as well why as late as March 13, 2000, Peaflor still prepared and signed a security report, and is fully consistent with his position that on that day he was still working on the excuse letter of certain sales personnel of the company. In our view, it is more consistent with human experience that Peaflor indeed learned of the appointment of Buenaobra only on March 13, 2000 and reacted to this development through his resignation letter after realizing that he would only face hostility and frustration in his working environment. Three very basic labor law principles support this conclusion and militate against the companys case. The first is the settled rule that in employee termination disputes, the employer bears the burden of proving that the employees dismissal was for just and valid cause. That Peaflor did indeed file a letter of resignation does not help the companys case as, other than the fact of resignation, the company must still prove that the employee voluntarily resigned. There can be no valid resignation where the act was made under compulsion or under circumstances approximating compulsion, such as when an employees act of handing in his resignation was a reaction to circumstances leaving him no alternative but to resign. In sum, the evidence does not support the existence of voluntariness in Peaflors resignation. Last but not the least, we have repeatedly given significance in abandonment and constructive dismissal cases to the employees reaction to the termination of his employment and have asked the question: is the complaint against the employer merely a convenient afterthought subsequent to abandonment or a voluntary resignation? We find from the records that Peaflor sought almost immediate official recourse to contest his separation from service through a complaint for illegal dismissal. This is not the act of one who voluntarily resigned; his immediate complaints characterize him as one who deeply felt that he had been wronged. Floating Status FEDERITO B. PIDO v. NATIONAL LABOR RELATIONS COMMISSION, CHERUBIM SECURITY AND GENERAL SERVICES, INC., AND ROSARIO K. BALAIS G.R. No. 169812, 23 February 2007 CARPIO MORALES, J.:

FACTS: Federito B. Pido (petitioner) was hired on October 1, 1995 by Cherubim Security and General Services, Inc. (respondent) as a security guard. He was assigned at the Ayala Museum, but was later transferred on December 1, 1995 to the Tower and Exchange Plaza of Ayala Center where he worked as a computer operator at the Console Room, responsible for observing occurrences
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that transpire inside elevators and other areas in buildings which are recorded by surveillance cameras and relayed to monitors. Like the other guards deployed by respondent at the Ayala Center, petitioner was under the operational control and supervision of the Ayala Security Force (ASF) of the Ayala Group of Companies. On January 21, 2000, petitioner had an altercation with Richard Alcantara (Alcantara) of the ASF, arising from a statement of Alcantara that petitioners security license for his .38 caliber revolver service firearm and duty detail order had already expired. On even date, Alcantara filed a complaint for Gross Misconduct, claiming that when he directed petitioner to present his security license, petitioner angrily and on top of his voice questioned his authority. And Alcantara recommended that petitioner be relieved from his post, and that immediate disciplinary action against him be taken. On January 23, 2000, petitioner reported for work at the Ayala Center but he was not allowed to stay in the premises, a Recall Order having been issued by respondent through its Operations Manager. Petitioner thus filed an information report wherein he narrated that Alcantara confronted him on January 21, 2000 about his right to carry a firearm and afterwards tried to grab it from its holster, resulting in a heated argument between them. As more than nine months had elapsed since the investigation was conducted by respondent with no categorical findings thereon made, petitioner filed on October 23, 2000 a complaint for illegal constructive dismissal, illegal suspension, and non-payment and underpayment of salaries, holiday pay, rest day, service incentive leave, 13th month pay, meal and travel allowance and night shift differential against respondent, along with its employee Rosario K. Balais (Rosario) who was allegedly responsible for running the day to day affairs of respondents business. Petitioner likewise prayed for reinstatement and payment of full backwages, attorneys fees and other money claims. In its position paper, respondent denied that it dismissed petitioner from the service, it claiming that while it was still in the process of investigating the January 21, 2000 incident, it offered petitioner another assignment which he declined, saying pahinga muna ako *I will in the meantime take a rest+. The Labor Arbiter ruled that petitioners suspension for more than nine months had ripened into constructive termination, on account of which he ordered the payment of separation pay equivalent to one month salary of P8,000 for every year of service, or for the total amount of P32,000. The Arbiter, however, found that there was insufficient evidence to support petitioners assertion that he was entitled to his money claims. Both parties appealed to the National Labor Relations Commission (NLRC).

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The NLRC modified the decision of the Labor Arbiter. While it found that petitioner was indeed constructively dismissed, it set aside the award of separation pay, given respondents willingness to assign petitioner to another post which he declined. On the same ground, the NLRC denied petitioners claim for backwages. It merely ordered his reinstatement. Petitioners motion for reconsideration having been denied by the NLRC by Resolution, he filed a petition for certiorari with the Court of Appeals, maintaining that his suspension for more than nine months amounted to constructive dismissal to entitle him to separation pay and backwages. The appellate court upheld the NLRC decision and accordingly dismissed petitioners appeal. The appellate court sustained the findings of the Labor Arbiter and the NLRC that while a security guard, like petitioner, may be lawfully placed on a floating status, the same should continue only for six months, otherwise the security agency could be liable for constructive dismissal under Article 286 of the Labor Code, viz: ART. 286. When employment not deemed terminated. - The bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment of the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

ISSUE: Whether or not petitioners nine-month suspension is tantamount to constructive dismissal.

RULING: The Supreme Court finds that, indeed, petitioner was constructively dismissed, but not on the grounds advanced by the appellate court, which echoed those of the NLRC and the Labor Arbiter. Article 286 applies only when there is a bona fide suspension of the employer's operation of a business or undertaking for a period not exceeding six (6) months. In such a case, there is no termination of employment but only a temporary displacement of employees, albeit the displacement should not exceed six (6) months. The paramount consideration should be the dire exigency of the business of the employer that compels it to put some of its employees temporarily out of work. In security services, the temporary "off-detail" of guards takes place when the security agency's clients decide not to renew their contracts with the security agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster.
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Verily, a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. In security services, this happens when the security agencys clients which do not renew their contracts are more than those that do and the new ones that the agency gets. Also, in instances when contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause, the replaced security guard may be placed on temporary off -detail if there are no available posts under respondents existing contracts. When a security guard is placed on a floating status, he does not receive any salary or financial benefit provided by law. Due to the grim economic consequences to the employee, the employer should bear the burden of proving that there are no posts available to which the employee temporarily out of work can be assigned. This, respondent failed to discharge. As per the Recall Order, it can be gathered that respondent intended to put petitioner under preventive suspension for an indefinite period of time pending the investigation of the complaint against him. The allowable period of suspension in such a case is not six months but only 30 days, following Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code (Implementing Rules). Hence, in the event the employer chooses to extend the period of suspension, he is required to pay the wages and other benefits due the worker and the worker is not bound to reimburse the amount paid to him during the extended period of suspension even if, after the completion of the hearing or investigation, the employer decides to dismiss him. Respondent did not inform petitioner that it was extending its investigation, nor did it pay him his wages and other benefits after the lapse of the 30-day period of suspension. Neither did respondent issue an order lifting petitioners suspension, or any official assignment, memorandum or detail order for him to assume his post or another post. Respondent merely chose to dawdle with the investigation, in absolute disregard of petitioners welfare. At the time petitioner filed the complaint for illegal suspension and/or constructive dismissal on October 23, 2000, petitioner had already been placed under preventive suspension for nine months. To date, there is no showing or information that, if at all, respondent still intends to conclude its investigation. This Court thus rules that petitioners prolonged suspension, owing to respondents neg lect to conclude the investigation, had ripened to constructive dismissal. Retirement Kimberly Clark Phils. Inc. vs. Dimayuga, September 18, 2009 Magdadaro vs. PNB, July 17, 2009 G.R. No. 166198 July 17, 2009 MARCELINO A. MAGDADARO, Petitioner,
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vs. PHILIPPINE NATIONAL BANK, Respondent. Facts: Marcelino A. Magdadaro (petitioner) was employed by Philippine National Bank (respondent) since 8 January 1968. On 21 September 1998, petitioner filed his application for early retirement under respondents Special Separation Incentive Program (SSIP). Petitioner was then holding the position of Senior Assistant Manager of respondents Branch Operations and Consumer Finance Division for the Visayas. Petitioner stated in his application that 31 December 1999 was his preferred effective date of retirement. Respondent approved petitioners application for early retirement but made it effective on 31 December 1998. Petitioner protested the acceleration of his retirement. He received, under protest, his retirement and separation benefits amounting to P908,950.44. On 18 October 1999, petitioner filed a complaint for illegal dismissal and payment of moral, exemplary and actual damages against respondent before the Regional Arbitration Branch No. VII of the National Labor Relations Commission (NLRC), Cebu City. The Ruling of the Labor Arbiter and the NLRC In a Decision dated 3 August 2000, the Labor Arbiter ruled that respondent had the discretion and prerogative to set the effective date of retirement under the SSIP. The Labor Arbiter ruled that respondents insistence on the date of effectivity of petitioners retirement was not tantamount to illegal dismissal. The Labor Arbiter ruled that there was no dismissal to speak of because petitioner voluntarily availed of the SSIP. Still, the Labor Arbiter granted petitioners preferred date of retirement and awarded him additional retirement benefits. Both petitioner and respondent appealed from the Labor Arbiters Decision. In its 4 March 2003 Decision, the NLRC affirmed the Labor Arbiters Decision. However, the NLRC considered petitioners retirement on 31 December 1998 as tantamount to illegal dismissal. The NLRC ruled that while it recognized respondents prerogative to change petitioners retirement date, management prerogative should be exercised with prudence and without malice. Petitioner and respondent filed their respective motions for reconsideration. In its 24 July 2003 Resolution, the NLRC denied both motions for reconsideration for lack of merit. Respondent filed a petition for certiorari before the Court of Appeals. The Ruling of the Court of Appeals The Court of Appeals granted the petition. The Court of Appeals ruled that the NLRC acted with grave abuse of discretion in affirming the decision of the Labor Arbiter, while at the same time finding that petitioners retirement was tantamount to illegal dismissal. The Court of Appeals held that petitioner voluntarily applied for the SSIP. The Court of Appeals ruled that petitioner could not claim to have been illegally dismissed just because the date of effectivity of his retirement did not conform to his preferred retirement date. Petitioner filed a motion for reconsideration. In its 6 December 2004 Resolution, the Court of Appeals denied the motion. The Issue The only issue in this case is whether petitioner was illegally dismissed from employment. The Ruling of this Court
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The petition has no merit. Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the former. Retirement is provided for under Article 287 of the Labor Code, as amended by Republic Act No. 7641, or is determined by an existing agreement between the employer and the employee. In this case, respondent offered the SSIP to overhaul the bank structure and to allow it to effectively compete with local peer and foreign banks. SSIP was not compulsory on employees. Employees who wished to avail of the SSIP were required to accomplish a form for availment of separation benefits under the SSIP and to submit the accomplished form to the Personnel Administration and Industrial Relations Division (PAIRD) for approval. Petitioner voluntarily availed of the SSIP. He accomplished the application form and submitted it to the PAIRD. He only questioned the approval of his retirement on a date earlier than his preferred retirement date. The Labor Arbiter ruled that petitioner was not illegally dismissed from the service. Even the NLRC ruled that petitioner could no longer withdraw his application for early retirement under the SSIP. However, the NLRC ruled that respondent could not accelerate the petitioners retirement date. The NLRC ruled that it could not imagine how petitioners continued employment until 31 December 1999 would impair the delivery of bank services and attribute bad faith on respondent when it accelerated petitioners retirement.1avvphi1 We do not agree. Whether petitioners early retirement within the SSIP period will improve or impair the delivery of bank services is a business decision properly within the exercise of management prerogative. More importantly, the SSIP provides: 7. Management shall have the discretion and prerogative in approving the applications filed under the Plan, as well as in setting the effectivity dates for separation within the implementation period of the Plan. (Emphasis supplied) It is clear that it is within respondents prerogative to set the date of effectivity of retirement and it may not be necessarily what is stated in the application.

Serrano vs. Severino Santos Transit, August 9, 2010 G.R. No. 187698 August 9, 2010 RODOLFO J. SERRANO, Petitioner, vs.SEVERINO SANTOS TRANSIT and/or SEVERINO SANTOS, Respondents. FACTS: Petitioner Rodolfo Serrano has been an employee of Severino Santos Transit for 14 years. Petitioner applied for optional retirement from the company whose representative advised him that he must first sign the already prepared Quitclaim before his retirement pay could be released. As petitioners request to first go over the computation of his retirement pay was denied, he signed the Quitclaim on which he wrote "U.P." (under protest) after his signature, indicating his protest to the amount of P75,277.45 which he received, computed by the
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company at 15 days per year of service. Petitioner soon after filed a complaint before the Labor Arbiter, alleging that the company erred in its computation since under Republic Act No. 7641, otherwise known as the Retirement Pay Law, his retirement pay should have been computed at 22.5 days per year of service to include the cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of the 13th month pay which the company did not. The company maintained, however, that the Quitclaim signed by petitioner barred his claim and, in any event, its computation was correct since petitioner was not entitled to the 5-day SIL and pro-rated 13th month pay for, as a bus conductor, he was paid on commission basis. The Labor Arbiter ruled in favor of Serrano. In the same Labor Advisory on Retirement Pay Law, it was likewise decisively made clear that "the law expanded the concept of "one-half month salary" from the usual one-month salary divided by two. However, the National Labor Relations Commission (NLRC) to which respondents appealed reversed the Labor Arbiters ruling and dismissed petitioners complaint. ISSUE: Whether or not petitioner is entitled to the computation of retirement pay as given by RA 7641 HELD: Yes. Admittedly, petitioner worked for 14 years for the bus company which did not adopt any retirement scheme. Even if petitioner as bus conductor was paid on commission basis then, he falls within the coverage of R.A. 7641 and its implementing rules. As thus correctly ruled by the Labor Arbiter, petitioners retirement pay should include the cash equivalent of the 5 -day SIL and 1/12 of the 13th month pay. For purposes, however, of applying the law on SIL, as well as on retirement, the Court notes that there is a difference between drivers paid under the "boundary system" and conductors who are paid on commission basis. In practice, taxi drivers do not receive fixed wages. They retain only those sums in excess of the "boundary" or fee they pay to the owners or operators of the vehicles.7 Conductors, on the other hand, are paid a certain percentage of the bus earnings for the day. A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty." The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

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As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. Probationary Status of Fixed Term Employees Mercado vs. AMA Computer College, April 13, 2010
G.R. No. 183572- April 13, 2010 YOLANDA M. MERCADO, CHARITO S. DE LEON, DIANA R. LACHICA, MARGARITO M. ALBA, JR., and FELIX A. TONOG vs. AMA COMPUTER COLLEGE-PARAAQUE CITY, INC. BRION, J.:

Facts: AMACC is an educational institution engaged in computer-based education in the country. One of AMACCs biggest schools in the country is its branch at Paraaque City. The petitioners were faculty members who started teaching at AMACC on May 25, 1998. The petitioner Mercado was engaged as a Professor 3, while petitioner Tonog was engaged as an Assistant Professor 2. On the other hand, petitioners De Leon, Lachica and Alba, Jr., were all engaged as Instructor 1. The petitioners executed individual Teachers Contracts for each of the trimesters that they were engaged to teach. For the school year 2000-2001, AMACC implemented new faculty screening guidelines, set forth in its Guidelines on the Implementation of AMACC Faculty Plantilla. Under the new screening guidelines, teachers were to be hired or maintained based on extensive teaching experience, capability, potential, high academic qualifications and research background. The performance standards under the new screening guidelines were also used to determine the present faculty members entitlement to salary increases. The petitioners failed to obtain a passing rating based on the performance standards; hence AMACC did not give them any salary increase. Because of AMACCs action on the salary increases, the petitioners filed a complaint with the Arbitration Branch of the NLRC on July 25, 2000, for underpayment of wages, nonpayment of overtime and overload compensation, 13 th month pay, and for discriminatory practices. On September 7, 2000, the petitioners individually received a memorandum from AMACC, through Human Resources Supervisor Mary Grace Beronia, informing them that with the expiration of their contract to teach, their contract would no longer be renewed. The petitioners amended their labor arbitration complaint to include the charge of illegal dismissal against AMACC. In their Position Paper, the petitioners claimed that their dismissal was illegal because it was made in retaliation for their complaint for monetary benefits and discriminatory practices against AMACC. The petitioners also contended that
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AMACC failed to give them adequate notice; hence, their dismissal was ineffectual. AMACC contended in response that the petitioners worked under a contracted term under a nontenured appointment and were still within the three-year probationary period for teachers. Their contracts were not renewed for the following term because they failed to pass the Performance Appraisal System for Teachers (PAST) while others failed to comply with the other requirements for regularization, promotion, or increase in salary. This move, according to AMACC, was justified since the school has to maintain its high academic standards. On March 15, 2002, Labor Arbiter declared in his decision that the petitioners had been illegally dismissed, and ordered AMACC to reinstate them to their former positions without loss of seniority rights and to pay them full backwages, attorneys fees and 13th month pay. The LA ruled that Article 281 of the Labor Code on probationary employment applied to the case; that AMACC allowed the petitioners to teach for the first semester of school year 2000-2001; that AMACC did not specify who among the petitioners failed to pass the PAST and who among them did not comply with the other requirements of regularization, promotions or increase in salary; and that the petitioners dismissal could not be sustained on the basis of AMACCs vague and general allegations without substantial factual basis. On appeal, the NLRC in a Resolution dated July 18, 2005 denied AMACCs appeal for lack of merit and affirmed in toto the LAs ruling. The NLRC, however, observed that the applicable law is Section 92 of the Manual of Regulations for Private Schools (which mandates a probationary period of nine consecutive trimesters of satisfactory service for academic personnel in the tertiary level where collegiate courses are offered on a trimester basis), not Article 281 of the Labor Code (which prescribes a probationary period of six months) as the LA ruled. The NLRC ruled that the new screening guidelines for the school year 2000-20001 cannot be imposed on the petitioners and their employment contracts since the new guidelines were not imposed when the petitioners were first employed in 1998. In a decision issued on November 29, 2007, the CA granted AMACCs petition for certiorari and dismissed the petitioners complaint for illegal dismissal. The CA ruled that under the Manual for Regulations for Private Schools, a teaching personnel in a private educational institution (1) must be a full time teacher; (2) must have rendered three consecutive years of service; and (3) such service must be satisfactory before he or she can acquire permanent status.The CA noted that the petitioners had not completed three (3) consecutive years of service (i.e. six regular semesters or nine consecutive trimesters of satisfactory service) and were still within their probationary period; their teaching stints only covered a period of two (2) years and three (3) months when AMACC decided not to renew their contracts on September 7, 2000. ISSUE: 1) WON CA gravely erred in not ordering their reinstatement with full, backwages.
HELD: We find the petition meritorious. Rule on Employment on Probationary Status

Fixed-period Employment The use of employment for fixed periods during the teachers probationary period is likewise an accepted practice in the teaching profession. We mentioned this in passing in Magis Young Achievers Learning Center v. Adelaida P. Manalo, albeit a case that involved elementary, not
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tertiary, education, and hence spoke of a school year rather than a semester or a trimester. We noted in this case:
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 teachers 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. It is important that the contract of probationary employment specify the period or term of its effectivity. The failure to stipulate its precise duration could lead to the inference that the contract is binding for the full three-year probationary period.

c. Academic and Management Prerogative AMACCs right to academic freedom is particularly important in t he present case, because of the new screening guidelines for AMACC faculty put in place for the school year 2000-2001. We agree with the CA that AMACC has the inherent right to establish high standards of competency and efficiency for its faculty members in order to achieve and maintain academic excellence. The schools prerogative to provide standards for its teachers and to determine whether or not these standards have been met is in accordance with academic freedom that gives the educational institution the right to choose who should teach. The same academic freedom grants the school the autonomy to decide for itself the terms and conditions for hiring its teacher, subject of course to the overarching limitations under the Labor Code. Academic freedom, too, is not the only legal basis for AMACCs issuance of screening guidelines. The authority to hire is likewise covered and protected by its management prerogative the right of an employer to regulate all aspects of employment, such as hiring, the freedom to prescribe work assignments, working methods, process to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers. Thus, AMACC has every right to determine for itself that it shall use fixed-term employment contracts as its medium for hiring its teachers. It also acted within the terms of the Manual of Regulations for Private Schools when it recognized the petitioners to be merely on probationary status up to a maximum of nine trimesters. The Conflict: Probationary Status and Fixed-term Employment The existence of the term-to-term contracts covering the petitioners employment is not disputed, nor is it disputed that they were on probationary status not permanent or regular status from the time they were employed on May 25, 1998 and until the expiration of their Teaching Contracts on September 7, 2000. As the CA correctly found, their teaching stints only covered a period of at least seven (7) consecutive trimesters or two (2) years and three (3) months of service. This case, however, brings to the fore the essential question of which,
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between the two factors affecting employment, should prevail given AMACCs position that the teachers contracts expired and it had the right not to renew them. In other words, should the teachers probationary status be disregarded simply because the contracts were fixed term?
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 the Labor Code expressly provides, are the grounds available to terminate the employment of a teacher on probationary status. For example, the school may impose reasonably stricter attendance or report compliance records on teachers on probation, and reject a probationary teacher for failing in this regard, although the same attendance or compliance record may not be required for a teacher already on permanent status. At the same time, the same just and authorizes causes for dismissal under the Labor Code apply to probationary teachers, so that they may be the first to be laid-off if the school does not have enough students for a given semester or trimester. Termination of employment on this basis is an authorized cause under the Labor Code. 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 is 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
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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. Under the given facts where the school year is divided into trimesters, the school apparently utilizes its fixed-term contracts as a convenient arrangement dictated by the trimestral system and not because the workplace parties really intended to limit the period of their relationship to any fixed term and to finish this relationship at the end of that term. 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. To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The school, however, cannot forget that its system of fixed-term contract is a system that operates during the probationary period and for this reason is subject to the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the requirements of this Article on probationary status would be fully negated as the school may freely choose not to renew contracts simply because their terms have expired. The inevitable effect of course is to wreck the scheme that the Constitution and the Labor Code established to balance relationships between labor and management. Given the clear constitutional and statutory intents, we cannot but conclude 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. This conclusion is immeasurably strengthened by the petitioners and the AMACCs hardly concealed expectation that the employment on probation could lead to permanent status, and that the contracts are renewable unless the petitioners fail to pass the schools standards. To highlight what we mean by a fixed-term contract specifically used for the fixed term it offers, a replacement teacher, for example, may be contracted for a period of one year to temporarily take the place of a permanent teacher on a one-year study leave. The expiration of the replacement teachers contracted term, under the circumstances, leads to no probationary status implications as she was never employed on probationary basis; her employment is for a specific purpose with particular focus on the term and with every intent to end her teaching relationship with the school upon expiration of this term. If the school were to apply the probationary standards (as in fact it says it did in the present case), these standards must not only be reasonable but 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. As explained above, the details of this finding of just cause must be communicated to the affected teachers as a matter of due process.

While we can grant that the standards were duly communicated to the petitioners and could be applied beginning the 1st trimester of the school year 2000-2001, glaring and very basic gaps in the schools evidence still exist. The exact terms of the standards were never introduced as evidence; neither does the evidence show how these standards were applied to the petitioners. Without these
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pieces of evidence (effectively, the finding of just cause for the non-renewal of the petitioners contracts), we have nothing to consider and pass upon as valid or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the termination of employment of employees on probationary status) lacks the supporting finding of just cause that the law requires and, hence, is illegal. In this light, the CA decision should be reversed. Thus, the LAs decision, affirmed as to the results by the NLRC, should stand as the decision to be enforced, appropriately re-computed to consider the period of appeal and review of the case up to our level. Given the period that has lapsed and the inevitable change of circumstances that must have taken place in the interim in the academic world and at AMACC, which changes inevitably affect current school operations, we hold that - in lieu of reinstatement - the petitioners should be paid separation pay computed on a trimestral basis from the time of separation from service up to the end of the complete trimester preceding the finality of this Decision. The separation pay shall be in addition to the other awards, properly recomputed, that the LA originally decreed.

DMA SHIPPING PHILS INC V CABILLAR 452 SCRA 551 CALLEJO, SR; February 28, 2005

NATURE Petition for Review

FACTS - Henry Cabillar was hired by Monsoon, through DMA Shipping, as Chief Officer of the M/V Eagle Moon. - After three (3) months, Cabillar wrote the manager of Monsoon, requesting for an early repatriation and for his reliever grounded on the failure of DMA Shipping to give the promised additional allowance. Monsoon approved an increase in Cabillars wage and the latter withdrew his request for repatriation. - While the vessel was docked in India, the gantry crane operators refused to work and demanded for an increase in their allowance. The master of the M/V Eagle Moon instructed Cabillar to talk to the crew members under his immediate supervision to convince them not to proceed with the intended strike and have the matter discussed with the management when the vessel returns to Singapore. - Instead of talking to the crew members, Cabillar himself joined the strike. Monsoon expressed its displeasure on Cabillar for joining the strike. Nevertheless, Monsoon agreed to the demands of the striking crew members to avert any further losses. - When the vessel arrived at Singapore, officers of Monsoon informed Cabillar that he has been separated from his employment because of the incident in Calcutta. - Cabillar filed a complaint with the POEA against DMA and Monsoon seeking payment for the unexpired portion of his contract.

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- The Executive Labor Arbiter rendered a decision in favor of Cabillar declaring his dismissal as illegal. The NLRC and the Court of Appeals affirmed. Hence this petition.

ISSUES 1. WON the respondent was dismissed by the petitioner Monsoon and 2. If so, WON his dismissal was for a valid cause 3. WON the respondent is entitled to backwages, damages and attorneys fees

HELD 1. Petitioner was dismissed. Ratio WON the respondent was dismissed or that he resigned as chief officer of the vessel is a question of fact. The labor arbiter ruled that the respondent was dismissed. The NLRC and the Court of Appeals affirmed. Petitioners failed to make a clear showing that the findings were are arbitrary and bereft of any rational basis. Reasoning - The entry in the logbook of the vessel shows that the ship captain, for and in behalf of the petitioners, dismissed the respondent for joining the strike. - The petitioners failed to adduce documentary evidence to prove their allegation that (1) they and the respondent agreed that in consideration for the respondents resignation, they would give him a very good rating (2) they defrayed his plane fare back to the Philippines ( 3) they paid for his hotel bills in Singapore. 2. Respondent was dismissed for just cause. Ratio Under their employment contracts, the crew and officers of the vessel bound themselves to follow certain procedures for their grievances. Reasoning - The crew and the respondent refused to follow the procedure and stop the strike. - They may have a valid grievance against the petitioners but they are bound to follow the procedures set forth in their contracts of employment to address said grievances. 3. Petitioners are to pay indemnity. Ratio The petitioners themselves violated their contracts of employment with the respondent and the crew because the captain of the vessel failed to comply with the disciplinary procedures. Reasoning - The respondent was not furnished with any written notice of any charges against him. - There was no formal investigation of the charges. - Respondent was not furnished with a copy of the written notice of the penalty imposed on him. - For such violation, petitioners are liable for moral damages or for indemnity of P30,000, if the respondent fails to prove such moral damages.1 In this case, the respondent failed to prove such moral damages. Disposition AFFIRMED with MODIFICATION. Petitioners are ordered to pay P30,000

Agabon v. NLRC, G.R. No. 158693, 442 SCRA 573, Nov. 17, 2004.

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by way of indemnity. The awards for other damages and attorneys fees are deleted.

UY V BUENO 484 SCRA 628 PUNO; March 14, 2006


NATURE Petition for review on certiorari of a decision of the CA FACTS - Amalia Bueno was the Manager of Countrywide Rural Bank of La Carota, Inc. (bank hereafter) Marbel Branch. She was verbally and summarily dismissed by Atty. Andrea Uy, interim President and Corporate Secretary of the bank, during a depositors' meeting. - Bueno filed a case for illegal dismissal and prayed for reinstatement with full backwages and damages. ISSUE WON Uy is an officer of the bank, making her soldarily liable with the corporation for illegal dismissal HELD NO - The minutes of the depositors' meeting clearly showed that Uy was a mere depositor of the bank. She was only elected as officer of the Interim Board of Directors craeted by the association of depositors with the sole task of rehabilitating the bank (which is under receivership). - There is no evidence that the association of depositors that elected the interim board was recognized by BSP. Hence, it had no legal authority to act for the bank. - The act of dismissing Bueno by Uy cannot be deemed as an act as an officer of the bank. Consequently, it cannot be held that there existed an employeremployee relationship between Uy and Bueno. - The requirement of employer-employee relationship is jurisdictional for the provisions of the Labor Code on Post-employment to apply. Since such relationship was not established, the labor arbiter never acquired jurisdiction over Uy. Disposition CA decision finding Uy solidarily liable with the bank reversed

CABRERA V NLRC (NATIONAL SERVICE CORPORATION, VILLAMOR) 198 SCRA 573 CRUZ; June 27, 1991

NATURE Appeal from the decision of the NLRC dismissing the complaint for illegal dismissal by the petitioners on the ground that it is without jurisdiction.

FACTS - Dismissed by the National Service Corporation, the petitioners complained to the Ministry of Labor and Employment on September 17, 1980. After considering the position papers of the parties, the Labor Arbiter ordered the petitioners' reinstatement without loss of seniority rights and the payment to them of two years back wages and other benefits. 3 The decision was appealed to and affirmed by the First Division of the NLRC on December 9, 1985, and in due time, the petitioners moved for the issuance of a writ of execution. This was opposed by NASECO on the ground that it had not been furnished with a copy of the decision, but the opposition was rejected and the petition was granted. Reconsideration of the order having been denied, the NASECO appealed to the NLRC, which, through its Third Division this time, declared itself without jurisdiction and dismissed the case on August 18, 1987. 4 Citing the NHA case, the public respondent held that the NASECO was not covered by the Labor Code but by Civil Service rules and regulations, being a government-owned or controlled corporation. ISSUE WON the National Service Corporation is covered by the Labor Code HELD YES - The decision in National Housing Corporation v. Juco was already overturned by the decision in National Service Corporation v. NLRC. The NLRC erred in dismissing the petitioners' complaint for lack of jurisdiction because the rule now is that only government-owned or controlled corporations with original charters

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come under the Civil Service. The NASECO having been organized under the Corporation Law and not by virtue of a special legislative charter, its relations with its personnel are governed by the Labor Code and come under the jurisdiction of the National Labor Relations Commission.

GAMUGAMO V PNOC SHIPPING AND TRANSPORT CORP 381 SCRA742 DAVIDE JR; May 7, 2002

NATURE Special Civil Action in the Supreme Court. Certiorari

FACTS - On January 23,1963, petitioner Cayo Gamogamo was employed with the Department of Health as Dental Aide (wherein he was also promoted to the position of Dentist 1). He remained employed at the DOH for 14 years until he resigned on November 2, 1977. - On November 9, 1977, petitioner was hired as a company dentist by Luzon Stevedoring Corporation (LUSTEVECO). Subsequently, respondent PNOC Shipping and Transport Corp acquired and took over the shipping business of LUSTEVECO. Petitioner was among those who opted to be absorbed by the respondent. He continued to work as a company dentist. - ON June 10,1993, President Fidel V. Ramos issued a memorandum approving the privatization of PNOC subsidiaries, including respondent pursuant to the provisions of Section III (B) of the Guidelines and Regulations to implement E.O. No. 37. Respondent implemented a Manpower Reduction Program to govern employees whose respective positions have been classified as redundant (respondent decreased its operations and downsized its organization due to lay up and sale of its vessels. - Sometime in 1995, petitioner requested to be included in the next retrenchment schedule. However, his request was turned down because: 1.) he was holding a permanent position 2.) he was already due for mandatory retirement in April 1995 under his retirement plan. Eventually petitioner retired after serving respondent for 17 years and 4 mos. He received a retirement pay which is equivalent to one month pay for every year of service and other benefits (P512,524.15) - On August 30,1995, respondents president died and was replaced by Nemesio Prudente who implemented significant cost-saving measures. He ordered that a study on the cost-effect of the retrenchment of employees be conducted (upon motion of 2 other employees, Dr. Rogelio Buena (company doctor) and Mrs. Luz C. Reyes (telephone operator) who were holding permanent/non-redundant positions. These 2 employees were retrenched and paid a 2-month separation pay for every year of service under Respondents Manpower Reduction Program. - In view of the action taken by respondent in the retrenchment of the said 2 employees, petitioner filed a complaint at the NLRC for the full payment of his retirement benefits. Petitioner argued that his service with the DOH should have been included in the computation of his years of service. Hence, with an accumulated service of 32 years he should have been paid a 2-month pay for every year of service per the retirement plan (and thus should have received at least P1,833,920) - The Labor Arbiter dismissed petitioners complaint. On appeal however, the NLRC reversed the decision of the Labor Arbiter (c onsidering the 14 years of his service to DOH) - Respondent filed with the CA a special civil action for certiorari. CA set aside the judgment of the NLRC. Hence, petitioner filed this petition alleging that 1.) his years of service with the DOH must be considered as creditable service for the purpose of computing his retirement pay 2.) he was discriminated against in the application of the Manpower Reduction Program.

ISSUE WON, for the purpose of computing an employees retirement pay, prior service rendered in a government agency can be tacked in and added to the creditable service later acquired in a government-owned and controlled corporation without original charter.

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HELD NO

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- Petition denied and the appealed decision in CA is affirmed (in favor of respondent) Ratio The Court cannot uphold petitioners contention that his 14 years of service with the DOH should be considered because his last 2 employers were government-owned and controlled corporations and fall under the Civil Service Law. Article IX (B), Section 2 paragraph 1 of the 1987 Con stitution states: The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government owned or controlled corporations with original charters. While respondent and LUSTEVECO are government-owned and controlled corporations, they have no original charters; hence, they are not under the Civil Service Law Reasoning - totalization of service credits is only resorted to when the retiree does not qualify for benefits in either of both systems. In this case, petitioner is qualified to receive benefits granted by the GSIS, if such right has not yet been exercised. - It may also be pointed out that upon his receipt of the amount of P512,524.15 from respondent as retirement benefit pursuant to its retirement scheme, petitioner signed and delivered to respondent a release and undertaking wherein he waives all actions, causes of actions, debts, dues, monies and accounts in connection with his employment with respondent. This quitclaim releases respondent from any other obligation in favor of petitioner.

LIGHT RAILWAY TRANSIT AUTHORITY V VENUS 485 SCRA 301 PUNO; March 24, 2006

FACTS - consolidated petitions of Light Rail Transit Authority (LRTA) and Metro Transit Organization, Inc. (METRO), seeking the reversal of the Decision of the Court of Appeals directing them to reinstate private respondent workers to their former positions without loss of seniority and other rights and privileges, and ordering them to jointly and severally pay the latter their full back wages, benefits, and moral damages. The LRTA and METRO were also ordered to jointly and severally pay attorneys fees equivalent to ten percent (10%) of the total money judgment. - Petitioner LRTA is a government-owned and controlled corporation created by Executive Order No. 603, Series of 1980, as amended, to construct and maintain a light rail transit system and provide the commuting public with an efficient, economical, dependable and safe transportation. Petitioner METRO, formerly Meralco Transit Organization, Inc., was a qualified transportation corporation duly organized in accordance with the provisions of the Corporation Code, registered with the Securities and Exchange Commission, and existing under Philippine laws. petitioner LRTA, after a bidding process, entered into a ten (10)year Agreement for the Management and Operation of the Metro Manila Light Rail Transit System from June 8, 1984 until June 8, 1994 with petitioner METRO. - The Agreement provided, among others, that 4. METRO shall be free to employ such employees and officers as it shall deem necessary in order to carry out the requirements of [the] Agreement. Such employees and officers shall be the employees of METRO and not of the AUTHORITY [LRTA]. METRO shall prepare a compensation schedule and the corresponding salaries and fringe benefits of [its] personnel in consultation with the AUTHORITY [LRTA] [par. 3.05]; - On July 25, 2000, the Union filed a Notice of Strike with the National Conciliation and Mediation Board National Capital Region against petitioner METRO on account of a deadlock in the collective bargaining negotiation. On the same day, the Union struck. They completely paralyzed the operations of the entire light rail transit system. As the strike adversely affected the mobility of the commuting public, then Secretary of Labor Bienvenido E. Laguesma issued on that same day an assumption of jurisdiction order [3] directing all the striking employees to return to work immediately upon receipt of this Order and for the Company to accept them back under the same terms and conditions of employment prevailing prior to the strike - Despite the issuance, posting, and publication of the assumption of jurisdiction and return to work order, the Union officers and members failed to return to work. Thus, effective July 27, 2000, private respondents, were considered dismissed from employment - Workers filed a complaint for illegal dismissal. On October 1, 2001, Labor Arbiter Luis D. Flores rendered a consolidated judgment in favor of the private respondent workers

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- On May 29, 2002, on appeal, the NLRC found that the striking workers failed to heed the return to work order and reversed and set aside the decision of the labor arbiter. The suit against LRTA was dismissed since LRTA is a government-owned and controlled corporation created by virtue of Executive Order No. 603 with an original charter and it ha[d] no participation whatsoever with the termination of complainants employment. In fine, the cases against the LRTA and METRO were dismissed, respectively, for lack of jurisdiction and for lack of merit. - On a petition for certiorari however, the Court of Appeals reversed the NLRC and reinstated the Decision rendered by the Labor Arbiter. Public respondent appellate court declared the workers dismissal as illegal, pierced the veil of separate corporate personality and held the L RTA and METRO as jointly liable for back wages.

ISSUE WON LRTA should be held liable for the illegal dismissal of employees

HELD NO - petitioner LRTA argues that it has no employer-employee relationship with private respondent workers as they were hired by petitioner METRO alone pursuant to its ten (10)-year Agreement for the Management and Operation of the Metro Manila Light Rail Transit System with petitioner METRO. Piercing the corporate veil of METRO was unwarranted, as there was no competent and convincing evidence of any wrongful, fraudulent or unlawful act on the part of METRO, and, more so, on the part of LRTA. - Petitioner LRTA further contends that it is a government-owned and controlled corporation with an original charter, Executive Order No. 603, Series of 1980, as amended, and thus under the exclusive jurisdiction only of the Civil Service Commission, not the NLRC. - We agree with petitioner LRTA. Section 2 (1), Article IX B, 1987 Constitution, expressly provides that [t]he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charters. Corporations with original charters are those which have been created by special law and not through the general corporation law. - In Philippine National Oil Company Energy Development Corporation v. Hon. Leogrado- under the present state of the law, the test in determining whether a government-owned or controlled corporation is subject to the Civil Service Law is the manner of its creation such that government corporations created by special charter are subject to its provisions while those incorporated under the general Corporation Law are not within its coverage. - There should be no dispute then that employment in petitioner LRTA should be governed only by civil service rules, and not the Labor Code and beyond the reach of the Department of Labor and Employment, since petitioner LRTA is a government-owned and controlled corporation with an original charter, Executive Order No. 603, Series of 1980 - In contrast, petitioner METRO is covered by the Labor Code despite its later acquisition by petitioner LRTA. In Lumanta v. National Labor Relations Commission, this Court ruled that 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 - We therefore hold that the employees of petitioner METRO cannot be considered as employees of petitioner LRTA. The employees hired by METRO are covered by the Labor Code and are under the jurisdiction of the Department of Labor and Employment, whereas the employees of petitioner LRTA, a government-owned and controlled corporation with original charter, are covered by civil service rules. Herein private respondent workers cannot have the best of two worlds, e.g., be considered government employees of petitioner LRTA, yet allowed to strike as private employees under our labor laws.

EBRO III V NLRC (INTERNATIONAL CATHOLIC MIGRATION COMMISSION)

261 SCRA 399


MENDOZA; September 4, 1996

NATURE

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Petition for review on certiorari to set aside the order dated October 13, 1992 and the resolution dated March 3, 1993 of the National Labor Relations Commission.

FACTS
- Private respondent International Catholic Migration Commission (ICMC) is a non-profit agency engaged in international humanitarian and voluntary work. It is duly registered with the United National Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. It was one of the agencies accredited by the Philippine Government to operate the refugee processing center at Sabang, Morong, Bataan. - On June 24, 1985, private respondent ICMC employed petitioner Jose G. Ebro III to teach "English as a Second Language and Cultural Orientation Training Program" at the refugee processing center. The employment contract provided in pertinent part: Salary: Your monthly salary for the first 6 months probationary period is P3,155.00 inclusive of cost of living allowance. Upon being made regular after successful completion of the six (6) months probationary period your monthly salary will be adjusted to P3,445.00 inclusive of cost of living allowance If either party wishes to terminate employment, a notice of two (2) weeks should be given in writing to the party. - After six months, ICMC notified petitioner that effective December 21, 1985, the latter's services were terminated for his failure to meet the requirements of "1. classroom performance . . . up to the standards set in the Guide for Instruction; 2. regular attendance in the mandated teacher training, and in the schedule team meetings, one-on-one conferences with the supervisor, etc.; and 3. compliance with ICMC and PRPC policies and procedures." - On February 4, 1986, petitioner filed a complaint for illegal dismissal, unfair labor practice, underpayment of wages, accrued leave pay, 14th month pay, damages, attorney's fees, and expenses of litigation. Petitioner alleged that there was no objective evaluation of his performance to warrant his dismissal and that he should have been considered a regular employee from the start because ICMC failed to acquaint him with the standards under which he must qualify as such. He prayed for reinstatement with backwages; P3,155.00 for probationary and P3,445.00 for regular salary adjustments; value of lodging or dormitory privileges; cost of insurance coverage for group life, medical, death, dismemberment and disability benefits; moral, and exemplary, and nominal damages plus interest on the above claims with attorney's fees. - Answering the complaint, ICMC claimed that petitioner failed to quality for regular employment because he showed no interest in improving his professional performance both in and out of the classroom after he had been periodically evaluated; that petitioner was paid his salary up to December 31, 1985, two weeks pay in lieu of notice, and 14th month pay pro-rata; and that his accrued leave balance already been converted to cash. - After the parties had formally offered their evidence, private respondents submitted their memorandum on July 31, 1989 in which, among other things, they invoked ICMC's diplomatic immunity on the basis of the Memorandum of Agreement signed on July 15, 1988 between the Philippines government and ICMC. - The Labor Arbiter held that ICMC's legal immunity under the Memorandum could not be given retroactive effect since "[that would] deprive complainant's property right without due process and impair the obligation of contract of employment." He also expressed doubt on the ground that it was provided for by agreement and not through an act of Congress. Accordingly, the Labor Arbiter ordered ICMC to reinstate petitioner as regular teacher without loss of seniority rights and to pay him one year backwages, other benefits, and ten percent attorney's fees for a total sum of P70,944.85. - Both parties appealed to the NLRC. On August 13, 1990, petitioner moved to dismiss private respondent's appeal because of the latter's failure to post a cash/surety bond. In its order of October 13, 1992, however, the NLRC ordered the case dismissed on the ground that, under the Memorandum of Agreement between the Philippine government and ICMC, the latter was immune from suit.

ISSUE WON the Memorandum of Agreement executed on July 15, 1988 granted ICMC immunity from suit

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HELD YES
Ratio The grant of immunity from local jurisdiction to ICMC . . . is clearly necessitated by their international character and respective purposes. The objective is to avoid the danger of partiality and interference by the host country in their internal workings. The exercise of jurisdiction by the Department of Labor in these instances would defeat the very purpose of immunity, which is to shield the affairs of international organizations, in accordance with international practice, from political pressure or control by the host country to the prejudice of member State of the organization, and to ensure the unhampered performance of their functions. (International Catholic Migration Commission v. Calleja) Reasoning - The grant of immunity to ICMC is in virtue of the Convention on the Privileges and Immunities of Specialized Agencies of the United Nations, adopted by the UN General Assembly on November 21, 1947, and concurred in by the Philippine Senate on May 17, 1949. This Convention has the force and effect of law, considering that under the Constitution, the Philippines adopts the generally accepted principles of international law as part of the law of the land.

- The scope of immunity of the ICMC contained in the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations is instructive. Art. III, 4 of the Convention provides for immunity from "every form of legal process." Thus, even if private respondents had been served summons and subpoenas prior to the execution of the Memorandum, they, as officers of ICMC, can claim immunity under the same in order to prevent enforcement of an adverse judgment, since a writ of execution is "a legal process" within the meaning of Article III, 4. - Art III 4 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations requires that the waiver of the privilege must be express. There was no such waiver of immunity in this case. Nor can ICMC be estopped from claiming diplomatic immunity since estoppel does not operate to confer jurisdiction to a tribunal that has none over a cause of action.
- Finally, neither can it be said that recognition of ICMC's immunity from suit deprives petitioner of due process. As pointed out in ICMC v. Calleja, petitioner is not exactly without remedy for whatever violation of rights it may have suffered for the following reason: Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of the United Nations provides that "each specialized agency shall make provision for appropriate modes of settlement of: (a) disputes arising out of contracts or other disputes of private character to which the specialized agency is a party." Moreover, pursuant to Article IV of the Memorandum of Agreement between ICMC and the Philippine Government, whenever there is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and immunities accorded. Disposition Petition is DISMISSED for lack of merit.

NATIONAL MINES AND ALLIED WORKERS UNION V SAN ILDEFONSO COLLEGE

CHIANG KAI SHEK COLLEGE V CA (NLRC, CALAYLAY, AQUINO, GACUTAN, BELO) 437 SCRA 171
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DAVIDE, JR; August 24, 2004


FACTS - In 1992, Ms. Diana Belo, a teacher of Chiang Kai Shek College since 1977, applied for a leave of absence for the school year 1992-1993. Upon submitting her application, she was informed of the school policy that if she takes a leave of absence, she is not assured of a teaching load upon her return. She was likewise informed that only teachers in active service may enjoy the privilege and benefits provided by the school, such as free tuition for the tea chers children. - Ms. Belo, nonetheless, took her leave of absence. In May 1993, she attempted to return to CKSC and signified her readiness to teach for the coming school year. However, she was not allowed to return. Hence, she filed a complaint for illegal dismissal, among others, against CKSC. - The Labor Arbiter dismissed the complaint but the NLRC disagreed. The Court of Appeals upheld the NLRCs ruling. Hence, this petition. ISSUE WON private respondent was constructively dismissed HELD YES - Under the Manual of Regulations for Private Schools, for a private school teacher to acquire a permanent status of employment and, therefore, be entitled to a security of tenure, the following requisites must concur: (a) the teacher is a full-time teacher; (b) the teacher must have rendered three consecutive years of service; and (c) such service must have been satisfactory. Since Ms. Belo has measured up to these standards, she therefore enjoys security of tenure. - Constructive dismissal is defined as a cessation from work because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. - Ms. Belo was constructively dismissed when the petitioners, in implementing their policies, effectively barred her from teaching for the school year 1993-1994. The three policies are (1) the non-assurance of a teaching load to a teacher who took a leave of absence; (2) the hiring of non-permanent teachers in April to whom teaching loads were already assigned when Ms. Belo signified in May 1993 her intention to teach; and (3) the non-applicability to children of teachers on leave of the free tuition fee benefits extended to children of teachers in service. - Ms. Belo was definitely singled out in the implementation of a future policy (i.e., the policy that employees not in service are not entitled to any benefit extended by the school). The petitioners did not take heed of the principle enshrined in our labor laws that policies should be adequately known to the employees and uniformly implemented to the body of employees as a whole and not in isolation. - The continued employment of Ms. Belo was also rendered unlikely by the insistence of the petitioners in implementing the alleged policy that a teacher who goes on leave for one year is not assured of a teaching load. While this alleged policy was mentioned in Mr. Chiens letter o f 9 June 1992, it was not included in the schools written statement of policies dated 13 March 1992. Hence, it was then a non -existent policy. When a non-existent policy is implemented and, in this case, only to Ms. Belo, it constitutes a clear case of discrimination. - Petitioners invocation of the third policy that of giving teaching assignments to probationary teachers in April to justify their refusal to provide Ms. Belo a teaching load is a lame excuse that rings of untruth and dishonesty. Patently clear is the illegal manner by which the petitioners eased out Ms. Belo from the teaching corps. - Likewise, we do not find merit in petitioners assertion that the Court of Appeals should not have passed upon the illegality of the school policy of non-assurance of a teaching load, since the alleged illegality was never raised as an issue before the respondent court or in the forums below. As pointed out by the private respondent, that policy was part of the defense invoked by the petitioners in the Arbiter level, in the NLRC, and in the respondent court to the charge of illegal dismissal; and, hence, it must necessarily be passed upon and scrutinized. Besides, that policy is intimately intertwined with the main issue of whether Ms. Belo was illegally dismissed. - This case is an exception to the general rule that the factual findings and conclusions of the Labor Arbiter are accorded weight and respect on appeal, and even finality. For one thing, the findings of the NLRC and the Labor Arbiter are contrary to each other; hence, the reviewing court may delve into the records and examine for itself the questioned findings. Disposition The Petition is DENIED.

AUSTRIA V NLRC (CENTRAL PHIL. UNION MISSION CORP. OF THE 7TH-DAY ADVENTIST) 312 SCRA 410 KAPUNAN; August 16, 1999

FACTS - Pastor Dionisio Austria worked with the Central Philippine Union Mission Corporation of the Seventh Day Adventists (SDA) for 28 years from 1963 to 1991. He began his work with the SDA on 15 July 1963 as a literature evangelist, selling literature of the SDA over the island of Negros. From then on, he worked his way up the ladder and got promoted several times. In January, 1968, he became the Assistant Publishing Director in the West Visayan Mission. In July, 1972, he was elevated to the position of Pastor covering the island of Panay, and the provinces of Romblon and Guimaras. He held the same position up to 1988. Finally, in 1989, he was promoted as District Pastor of the Negros Mission of the SDA and was assigned at Sagay, Balintawak and Toboso, Negros Occidental, with 12 churches under his jurisdiction. In January, 1991, he was transferred to Bacolod City. He held the position of district pastor until his services were terminated on 31 October 1991.

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- On various occasions from August up to October, 1991, Eufronio Ibesate, the treasurer of the Negros Mission asked him to admit accountability and responsibility for the church tithes and offerings collected by his wife, Thelma Austria, in his district which amounted to P15,078.10, and to remit the same to the Negros Mission. Petitioner reasoned out that he should not be made accountable for the unremitted collections since it was Pastor Gideon Buhat and Ibesate who authorized his wife to collect the tithes and offerings since he was very sick to do the collecting at that time. - On 16 October 1991, petitioner went to the office of Pastor Buhat, the president of the Negros Mission. During said call, petitioner tried to persuade Pastor Buhat to convene the Executive Committee for the purpose of settling the dispute between him and Pastor David Rodrigo. The dispute between David Rodrigo and petitioner arose from an incident in which petitioner assisted his friend, Danny Diamada, to collect from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle which he failed to pay to Diamada. Due to the assistance of petitioner in collecting Pastor Rodrigo's debt, the latter harbored ill-feelings against petitioner. When news reached petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros Mission, he immediately proceeded to the office of Pastor Buhat and asked the latter to convene the Executive Committee. Pastor Buhat denied the request of petitioner since some committee members were out of town and there was no quorum. Thereafter, the two exchanged heated arguments. Petitioner then left the office of Pastor Buhat. While on his way out, petitioner overheard Pastor Buhat saying "Pastor daw inisog na ina iya (Pastor you are talking tough)." Irked by such remark, petitioner returned to the office of Pastor Buhat, and tried to overturn the latter's table, though unsuccessfully, since it was heavy. Thereafter, petitioner banged the attache case of Pastor Buhat on the table, scattered the books in his office, and threw the phone. Fortunately, Pastors Yonillo Leopoldo and Claudio Montao were around and they pacified both. - On 17 October 1991, petitioner received a letter inviting him and his wife to attend the Executive Committee meeting. From October 21 to 22, the fact-finding committee conducted an investigation. Petitioner immediately wrote Pastor Rueben Moralde, president of the SDA and chairman of the fact-finding committee, requesting that certain members of the fact-finding committee be excluded in the investigation and resolution of the case. Out of the 6 members requested to inhibit themselves from the investigation and decision-making, only 2 were actually excluded: Pastor Buhat and Pastor Rodrigo. Subsequently, petitioner received a letter of dismissal citing misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties, and commission of an offense against the person of employer's duly authorized representative, as grounds for the termination of his services.

ISSUES
1. WON the Labor Arbiter/NLRC has jurisdiction to try and decide the complaint filed by petitioner against the SDA 2. WON the termination of the services of petitioner is an ecclesiastical affair, and, as such, involves the separation of church and state 3. WON such termination is valid

HELD
1. YES and 2. NO [Resolved jointly since they are related] Ratio An ecclesiastical affair is one that concerns doctrine, creed or form or worship of the church, or the adoption and enforcement within a religious association of needful laws and regulations for the government of the membership, and the power of excluding from such associations those deemed unworthy of membership. Reasoning - Based on this definition, an ecclesiastical affair involves the relationship between the church and its members and relate to matters of faith, religious doctrines, worship and governance of the congregation. To be concrete, examples of this so-called ecclesiastical affairs to which the State cannot meddle are proceedings for excommunication, ordinations of religious ministers, administration of sacraments and other activities which attached religious significance. The case at bar does not even remotely concern any of the above cited examples. While the matter at hand relates to the church and its religious minister it does not ipso facto give the case a religious significance. Simply stated, what is involved here is the relationship of the church as an employer and the minister as an employee. It is purely secular and has no relation whatsoever with the practice of faith, worship or doctrines of the church. In this case, petitioner was not excommunicated or expelled from the membership of the SDA but was terminated from employment. - Aside from these, SDA admitted in a certification issued by its officer, Ibesate, that petitioner has been its employee for 28 years. SDA even registered petitioner with the SSS as its employee. The worker's records of petitioner have been submitted by private respondents as part of their exhibits. From all of these it is clear that when the SDA terminated the services of petitioner, it was merely exercising its management prerogative to fire an employee which it believes to be unfit for the job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the case.

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- Finally, private respondents are estopped from raising the issue of lack of jurisdiction for the first time on appeal. The active participation of a party coupled with his failure to object to the jurisdiction of the court or quasi-judicial body is tantamount to an invocation of that jurisdiction and a willingness to abide by the resolution of the case and will bar said party from later on impugning the court or body's jurisdiction. 3. NO. Reasoning - The issue being the legality of petitioner's dismissal, the same must be measured against the requisites for a valid dismissal, namely: (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and to defend himself, and; (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code. Without the concurrence of these twin requirements, the termination would, in the eyes of the law, be illegal. As to Due Process - Article 277(b) of the Labor Code further require the employer to furnish the employee with 2 written notices, to wit: (a) a written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side, and, (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. - The first notice, which may be considered as the proper charge, serves to apprise the employee of the particular acts or omissions for which his dismissal is sought. The second notice on the other hand seeks to inform the employee of the employer's decision to dismiss him. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative, if he so desires. Non-compliance therewith is fatal because these requirements are conditions sine quo non before dismissal may be validly effected. - SDA failed to substantially comply with the above requirements. With regard to the first notice, the letter dated 17 October 1991, which notified petitioner and his wife to attend the meeting on 21 October 1991, cannot be construed as the written charge required by law. A perusal of the said letter reveals that it never categorically stated the particular acts or omissions on which his impending termination was grounded. In fact, the letter never even mentioned that he would be subject to investigation. The letter merely mentioned that he and his wife were invited to a meeting wherein what would be discussed were the alleged unremitted church tithes and the events that transpired on 16 October 1991. For this reason, it cannot be said that petitioner was given enough opportunity to properly prepare for his defense. While admittedly, SDA complied with the second requirement, the notice of termination, this does not cure the initial defect of lack of the proper written charge required by law. As to Just Cause - Private respondents allege that they have lost their confidence in petitioner for his failure, despite demands, to remit the tithes and offerings which were collected in his district. Settled is the rule that under Article 282 (c) of the Labor Code, the breach of trust must be willful. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion, otherwise, the employee would eternally remain at the mercy of the employer. It should be genuine and not simulated. This ground has never been intended to afford an occasion for abuse, because of its subjective nature. The records show that there were only 6 instances when petitioner personally collected and received from the church treasurers the tithes, collections, and donations for the church. The testimony of Naomi Geniebla, the Negros Mission Church Auditor and a witness for private respondents, show that Pastor Austria was able to remit all his collections to the treasurer of the Negros Mission. Private respondents try to pin on petitioner the alleged non-remittance of the tithes collected by his wife. In the absence of conspiracy and collusion, which private respondents failed to demonstrate, between petitioner and his wife, he cannot be made accountable for the alleged infraction committed by his wife. After all, they still have separate and distinct personalities. Thus, the allegation of breach of trust has no leg to stand on. - Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. For misconduct to be considered serious it must be of such grave and aggravated character and not merely trivial or unimportant. Based on this standard, we believe that the act of petitioner in banging the attache case on the table, throwing the telephone and scattering the books in the office of Pastor Buhat, although improper, cannot be considered as grave enough to be considered as serious misconduct. After all, as correctly observed by the Labor Arbiter, though petitioner committed damage to property, he did not physically assault Pastor Buhat or any other pastor present during the incident of 16 October 1991. In fact, the alleged offense committed upon the person of the employer's representatives was never really established or proven by private respondents. Hence, there is no basis for the allegation that petitioner's act constituted serious misconduct or that the same was an offense against the person of the employer's duly authorized representative. - The final ground alleged by private respondents, gross and habitual neglect of duties, does not requires an exhaustive discussion. All private respondents had were allegations but not proof. Aside from merely citing the said ground, private respondents failed to prove culpability. In fact, the evidence on record shows otherwise. Petitioner's rise from the ranks proves that he was actually a hard-worker. Private respondents' evidence, which consisted of petitioner's Worker's Reports, revealed how petitioner travelled to different churches to attend to the faithful under his care. Indeed, he labored hard for the SDA, but, in return, he was rewarded with a dismissal from the service for a non-existent cause.

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Disposition Finding of the Labor Arbiter that petitioner was terminated from service without just or lawful cause is SUSTAINED. Petitioner is entitled to reinstatement without loss of seniority right and the payment of full back-wages without any deduction corresponding to the period from his illegal dismissal up to the actual reinstatement. Challenged Resolution of NLRC is NULLIFIED and SET ASIDE.

PEARANDA V BAGANGA PLYWOOD CORP [PAGE 1]

CBTC EMPLOYEES UNION V CLAVE 141 SCRA 9 DE LA FUENTE; January 7, 1986

NATURE Petition for certiorari seeking to annul and set aside the decision of the respondent Presidential Executive Assistant

FACTS - Commercial Bank and Trust Company Employees' Union lodged a complaint with the Department of Labor, against Comtrust Bank for non-payment of the holiday pay benefits provided for under Art 95 of the Labor Code in relation to Rule X, Book III of the Rules and Regulations Implementing the Labor Code. - Failing to arrive at an amicable settlement at conciliation level, the parties opted to submit their dispute for voluntary arbitration. The issue presented was: "Whether the permanent employees of the Bank within the collective bargaining unit paid on a monthly basis are entitled to holiday pay effective November 1, 1974, pursuant to Article 95 (now Article 94) of the Labor Code, as amended and Rule X (now Rule IV), Book III of the Rules and Regulations Implementing the Labor Code. " - In addition, the disputants signed a Submission Agreement stipulating as final, unappealable and executory the decision of the Arbitrator, including subsequent issuances for clarificatory and/or relief purposes, notwithstanding Article 262 of the Labor Code. - In the course of the hearing, the Arbitrator apprised the parties of an interpretative bulletin on "holiday pay" about to be issued by the Department of Labor. - The Union filed a Manifestation stating that in the event that said Interpretative Bulletin regarding holiday pay would be adverse to the present claim union respectfully reserves the right to take such action as may be appropriate to protect its interests, a question of law being involved. An Interpretative Bulletin which was inexistent at the time the said commitment was made and which may be contrary to the law itself should not bar the right of the union to claim for its holiday pay benefits - Voluntary Arbitrator stated that, there is more reason to believe that, if the Bank has never made any deduction from its monthly-paid employees for unworked Saturdays, Sundays, legal and special holidays, it is because there is really nothing to deduct properly since the monthly, salary never really included pay for such unworked days-and which give credence to the conclusion that the divisor '250' is the proper one to use in computing the equivalent daily rate of the monthly-paid employees; that both the decree itself and the Rules mentioned enumerated the excepted workers. It is a basic rule of s tatutory construction that putting an exception limits or modifies the enumeration or meaning made in the law. It is thus easy to see that a mere reading of the Decree and of the Rules would show that the monthly-paid employees of the Bank are not expressly included in the enumeration of the exception. - Voluntary Arbitrator directed the bank to pay its monthly paid employees their legal holiday pay. - The next day, the Department of Labor released Policy Instructions No. 9 which clarifies controversies on the entitlement of monthly paid employees. The new determining rule is this: If the monthly paid employee is receiving not less than P 240, the maximum monthly minimum wage, and his monthly pay is uniform from January to December, he is presumed to be already paid the ten (10) paid legal holidays. However, if deductions are made from his monthly salary on account of holidays in months where they occur, then he is still entitled to the ten (10) paid legal holidays. - Bank appealed to NLRC but appeal was dismissed because it was filed way beyond the ten-day period for perfecting an appeal and because it contravened the agreement that the award shall be final and unappealable. - Acting Secretary of Labor reversed NLRC decision and ruled that the appeal was filed on time and that a review of the case was inevitable as the money claim exceeded P100,000.00.

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- Presidential Executive Assistant affirmed DOJ ruling, relying heavily on the Manifestation and Policy Instructions No. 9. Petitioners Claim The legal presumption established in Section 2, Rule IV, Book 1112, of the Rules and Regulations implementing particularly Article 94 (formerly Article 208) of the Labor Code, is merely a disputable presumption Respondents Comments - The Bank maintains that, since its inception or start of operations in 1954, all monthly-paid employees in the Bank are paid their monthly salaries without any deduction for unworked Saturdays, Sundays, legals and special holidays. On the other hand, it also maintains that, as a matter of fact, 'always conscious of its employee who has to work, on respondent's rest days of Saturdays and Sundays or on a legal holiday, an employee who works overtime on any of said days is paid one addition regular pay for the day plus 50% of said regular pay - The Bank further maintains that the holiday pay is intended only for daily-paid workers. - The question submitted for arbitration is now moot and academic.

ISSUE WON the permanent employees of the bank are entitled to holiday pay

HELD YES - In excluding the union members of herein petitioner from the benefits of the holiday pay law, public respondent predicated his ruling on Section 2, Rule IV, Book III of the Rules to implement Article 94 of the labor Code promulgated by the then Secretary of labor and Policy Instructions No. 9. - In Insular Bank of Asia and America Employees' Union (IBAAEU) vs. Inciong, 7 this Court's Second Division, speaking through former Justice Makasiar, expressed the view and declared that the aforementioned section and interpretative bulletin are null and void, having been promulgated by the then Secretary of Labor in excess of his rule-making authority. It was pointed out, inter alia, that in the guise of clarifying the provisions on holiday pay, said rule and policy instructions in effect amended the law by enlarging the scope of the exclusions. - The questioned Section 2, Rule IV, Book III of the Integrated Rules and the Secretary's Policy Instruction No. 9 add another excluded group, namely, 'employees who are uniformly paid by the month'. While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires. Disposition The questioned decision set aside and the award of the arbitrator reinstated.

SONZA V ABS-CBN BROADCASTING CORPORATION 431 SCRA 587 CARPIO; June 10, 2004

NATURE Petition for review on certiorari

SECTION 2. Status of employees paid by the month -Employees who are uniformly paid by the month, irrespective of the number of' working days therein with a salary of not less than the statutory or established minimum wage, shall be presumed to be paid for all days in the month whether worked or not. For this purpose, the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by twelve.
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FACTS

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- ABS-CBN signed Agreement with Mel and Jay Management and Devt Corp (MJMDC), which agreed to provide Sonzas services exclusively to the network as talent for radio and TV. - Sonza resigned and complained that network didnt pay his salaries, sep aration pay, service incentive leave pay, etc. ABS filed Motion to Dismiss because there was no employer-employee relationship. ABS continued to remit Sonzas monthly talent fees. - Labor Arbiter dismissed complaint because of lack of jurisdiction. NLRC affirmed Arbiters decision. Sonza filed certiorari action with CA, which dismissed the case. Hence this petition. ISSUE WON there was an employer-employee relationship between ABS-CBN and Sonza

HELD NO - This is the first Court resolution on nature of relationship between a station and a talent. - There are 4 elements of employer-employee relationship: 1. Selection of employee - if Sonza didnt possess his skills, talents and celebrity status, ABS -CBN would not have entered into agreement with him but would have hired him through personnel department 2. Payment of wages - whatever Sonza received arose from the contract and not from the employer-employee relation - the talent fee is so huge that it indicates more a contractual than an employment relationship 3. Power to dismiss - ABS-CBN coulnt retrench Sonza because it is obligated to pay talent fees for duration of contract 4. Control on employee on means and methods - also called control test; most impt to determine relationship - Sonza contends ABS exercised control over means and methods of his work. Court said ABS merely reserved the right to modify the program format and airtime schedule. Its sole concern was the quality of the show and the ratings. How Sonza appeared, sounded, etc. is outside control of ABS. - Sonza contends that ABS exercised control in providing equipment and crew. Court said these are not tools needed by Sonza. What he needed were his talent, skills, costume. - Sonza contends that ABS subjected him to rules and standards. Court said that the rules are the TV and Radio Code of the Kapisanan ng Broadcaster sa Pilipinas, merely adopted by ABS as its code of ethics. It applies to broadcasters, not just to ABS employees. Besides, these rules are merely guidelines. - Sonza said his exclusivity is a form of control by ABS. Court said exclusivity is a widespread practice in entertainment industry, as protection of investment in building up a talent. Besides, the huge talent fees of an exclusive talent compensates for exclusivity. - Arbiter ruled that as talent of MJMDC, Sonza is not an employee of ABS. Sonza insists that MJMDC is a labor-only contractor and ABS is his employer. In labor-only contract, there are 3 parties the contractor, employee and the principal (deemed the real employer). Under this, the contractor is the agent of the principal. If Sonzas argument was true, then MJMDC turns to be the agent of both Sonza and ABS. Besides, in the Agreement, there were only two parties mentioned Sonza and ABS, with MJMDC as Sonzas agent. - Sonza argues Policy Instruction No. 40 by Minister of Labor said the types of employees in broadcast are the station and program employees. Court said this instruction is a mere executive issuance not binding on the Court.

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- Court also said that Arbiter can decide a case without a formal trial.

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- Sonza argues that treating talents as contractors violates right to security of tenure. Court said this right exists only if there is an employer-employee relation. Besides, law also protects rights of talents to contract. Besides, if hosts were employees, managers can dictate what hosts will say, and this is not conducive to press freedom. - Difference in tax treatment also showed that theres no employer-employee relation. - Sonzas claim is based on their agreement. Therefore, action should not be based on Labor Code but on breach of contract.

RIZAL EMPIRE INSURANCE GROUP V NLRC (RUIZ, CORIA) 150 SCRA 565 PARAS; May 29, 1987

NATURE Petition for certiorari

FACTS - August, 1977- Coria was hired by Rizal Empire Insurance Group(REIG) as a casual employee with a salary of P10.00 a day. - January 1, 1978- Coria was made a regular employee, having been appointed as clerk-typist, with a monthly salary of P300.00. - Being a permanent employee, he was furnished a copy of petitioner company's "General Information, Office Behavior and Other Rules and Regulations." - In the same year, without change in his position-designation, he was transferred to the Claims Department and his salary was increased to P450.00 a month. - 1980- he was transferred to the Underwriting Department and his salary was increased to P580.00 a month plus cost of living allowance, until he was transferred to the Fire Department as filing clerk. - July, 1983- he was made an inspector of the Fire Division with a monthly salary of P685.00 plus allowances and other benefits. - Oct. 15, 1983- Coria was dismissed from work, on the grounds of tardiness and unexcused absences. - Coria filed a complaint with MOLE - March 14, 1985- LA Ruiz reinstated him to his position with back wages. - REIG appealed to the NLRC but was dismissed on the ground that the same had been filed out of time. Hence this petition.

ISSUE WON it is still within the jurisdiction of the SC

HELD NO - Under the provisions of the Revised NLRC Rules, the decision appealed from in this case has become final and executory and can no longer be subject to appeal. Ratio Administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to enforce, have the force of law, and are entitled to great respect (Espanol v. Philippine Veterans Administration, 137 SCRA 314 [1985]).. Reasoning - The record shows that REIG received a copy of the decision of the LA on April 1, 1985. - It filed a Motion for Extension of Time to File Memorandum of Appeal on April 11, 1985 and filed the Memorandum of Appeal on April 22, 1985.

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- Rule VIII of the Revised Rules of the NLRC on appeal, provides that decisions or orders of a LA shall be final and executory unless appealed to the Commission by any or both of the parties within 10 calendar days from receipt of notice and that no motion or request for extension of the period within which to perfect an appeal shall be entertained. NLRC correctly dismissed REIGs appeal pursuant to said rules. - The NLRC didnt commit GAD amounting to lack of jurisdiction in arbitrarily dismissing petitioners' appeal on a technicality. - SC need not interpret the Revised Rules of the NLRC as they are clear and explicit and leave no room for interpretation. - Even on the merits, the ruling of the LA appears to be correct; the consistent promotions in rank and salary of the private respondent indicate he must have been a highly efficient worker, who should be retained despite occasional lapses in punctuality and attendance. Perfection cannot after all be demanded. Disposition Petition DISMISSED.

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO V GLAXO WELLCOME PHILIPPINES INC 438 SCRA 343 TINGA; September 17, 2004

NATURE Petition for review on certiorari of the decision and resolution of the Court of Appeals

FACTS - Petitioner Tecson was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical representative after Tecson had undergone training and orientation. Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. - The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. If management perceives a conflict of interest or a potential conflict between such relationship and the employees employment with the company, the management and the employee will explore the possibility of a transfer to another department in a non-counterchecking position or preparation for employment outside the company after six months. - Tecson was initially assigned to market Glaxos products in the Camarines Sur -Camarines Norte sales area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay. She supervised

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the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area. Even before they got married, Tecson received several reminders from his District Manager regarding the conflict of interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson married Bettsy. - Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecsons superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs, although they told him that they wanted to retain him as much as possible because he was performing his job well. - Tecson requested for time to comply with the company policy against entering into a relationship with an employee of a competitor company. He explained that Astra, Bettsys employer, was planning to merge with Zeneca, another drug company; and Bettsy was planning to avail of the redundancy package to be offered by Astra. With Bettsys separation from her company, the potential conflict of interest would be eliminated. At the same ti me, they would be able to avail of the attractive redundancy package from Astra. - Tecson again requested for more time resolve the problem. Tecson applied for a transfer in Glaxos milk division, thinking t hat since Astra did not have a milk division, the potential conflict of interest would be eliminated. His application was denied in view of Glaxos least-movement-possible policy. Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied. - Tecson sought Glaxos reconsideration regarding his transfer and brought the matter to Glaxos Grievance Committee. Glaxo, howev er, remained firm in its decision and gave Tecson time to comply with the transfer order. Tecson defied the transfer order and continued acting as medical representative in the Camarines Sur-Camarines Norte sales area. - During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued samples of products which were competing with similar products manufactured by Astra. He was also not included in product conferences regarding such products. - Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half month pay for every year of service, or a total of P50,000.00 but he declined the offer. The National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxos policy on relationships between its emplo yees and persons employed with competitor companies, and affirming Glaxos right to transfer Tecson to another sales territory. - Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB Decision. The Court of Appeals promulgated its Decision denying the Petition for Review on the ground that the NCMB did not err in rendering its Decision. The appellate court held that Glaxos policy prohibiting its employees from having personal relationships with employees of competitor companies is a valid exercise of its management prerogatives. Tecson filed a Motion for Reconsideration of the appellate courts Decision, but the motion was denied by the appellate court.

ISSUES 1. WON the Court of Appeals erred in ruling that Glaxos policy against its employees marrying employees from competitor companies is valid, and in not holding that said policy violates the equal protection clause of the Constitution 2. WON petitioner was constructively dismissed

HELD 1. NO - Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. - The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. - That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.

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- The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. It is a 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 U.S. Supreme Court decisions that the equal protection clause erects no shield against merely private conduct, however, discriminatory or wrongful. The only exception occurs when the state in any of its manifestations or actions has been found to have become entwined or involved in the wrongful private conduct. Obviously, however, the exception is not present in this case. Significantly, 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. - In any event, from the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. - The Court of Appeals also correctly noted that the assailed company policy which forms part of respondents Employee Code of Conduct and of its contracts with its employees, such as that signed by Tecson, was made known to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should be complied with in good faith. He is therefore estopped from questioning said policy. 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 a 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 record does not show that Tecson was demoted or unduly discriminated upon by reason of such transfer. Glaxo properly exercised its management prerogative in reassigning Tecson to the Butuan City sales area. 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, Glaxo did not terminate Tecson from employment but only reassigned him to another area where his home province, Agusan del Sur, was included. In effecting Tecsons transfer, Glaxo even considered the welfare of Tecsons family. Clearly, the foregoing dispels any suspicion of unf airness and bad faith on the part of Glaxo.

SALINAS V NLRC (ATLANTIC GULF AND PACIFIC CO) 319 SCRA 54 PURISIMA; November 24, 1999

FACTS - Petitioners were employed with Atlantic Gulf and Pacific Co. (AG & P): Salinas: 1983-1988 as carpenter/finishing carpenter

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Alejandro: 1982-1989 as bulk cement operator, bulk cement plant/carrier operator & crane driver Cortez: 1979-1988 as carpenter/forklift operator Samulde: 1982-1989 as lubeman/stationary operator - Complaints (separate but consolidated by the LA): illegal dismissal - Petitioners Claim: They had been covered by a number of contracts renewed continuously, with periods ranging from five (5) t o nine (9) years, and they performed the same kind of work through out their employment, and such was usually necessary and desirable in the trade or business of the respondent corporation; and their work did not end on a project-to-project basis, although the contrary was made to appear by the employer through the signing of separate employment contracts. - LA: Dismissed petitions on the ground that the petitioners are project employees are project employees whose work contracts with AG & P indicate that they were employed in such category; that they have been assigned to different work projects, not just to one and that their work relation with AG & P, relative to termination, is governed by Policy Instruction No. 20 (rule governing project employees). - Appeal to NLRC: Affirmed LAs findings

ISSUES 1. WON the petitioners are project employees Procedural 2. WON this petition for certiorari was proper

HELD 1. NO - The petitioners are regular employees. - The mandate in Article 281 of the Labor Code, which pertinently prescribes that 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' and that any employee who has rende red 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,' should apply in the case of petitioner. - Failure to report the termination to Public Employment Office is a clear indication that petitioners were not and are not project employees. (PI No. 20 requires reports of terminations) - It is basic and irrefragable rule that in carrying out and interpreting the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. The interpretation herein made gives meaning and substance to the liberal and compassionate spirit of the law enunciated in Article 4 of Labor Code that "all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of labor". - It is beyond cavil that petitioners had been providing the respondent corporation with continuous and uninterrupted services, except for a day or so gap in their successive employment contracts. Their contracts had been renewed several times, with the total length of their services ranging from five (5) to nine (9) years. Throughout the duration of their contracts, they had been performing the same kinds of work (e.g., as lubeman, bulk cement operator and carpenter), which were usually necessary and desirable in the construction business of AG & P, its usual trade or business. - Undoubtedly, periods in the present case have been imposed to preclude the acquisition of tenurial security by petitioners, and must be struck down for being contrary to public policy, morals, good customs or public order. 2. YES

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- Anent the issue that the petition should have been brought under Rule 65 and not under Rule 45 of the Revised Rules of Court, this rule is not inflexible. In the interest of justice, often the Court has judiciously treated as special civil actions for certiorari petitions erroneously captioned as petitions for review on certiorari. - With regard to the issue on non-exhaustion of administrative remedies, the Court hold that the failure of petitioners to interpose a motion for reconsideration of the NLRC decision before coming to this Court was not a fatal omission. The exhaustion of administrative remedies doctrine is not a hard and fast rule and does not apply where the issue is purely a legal one. A motion for reconsideration as a prerequisite for the bringing of an action under Rule 65 may be dispensed with where the issue is purely of law, as in this case. At all events and in the interest of substantial justice, especially in cases involving the rights of workers, procedural lapses, if any, may be disregarded to enable the Court to examine and resolve the conflicting rights and responsibilities of the parties. This liberality is warranted in the case at bar, especially since it has been shown that the intervention of the Court is necessary for the protection of the herein petitioner(s). Disposition The questioned Resolution of the NLRC is SET ASIDE and another one is hereby ENTERED ordering the respondent corporation to reinstate petitioners without loss of seniority and with full backwages.

ABELLA V NLRC (QUITCO, DIONELE) 152 SCRA 140 PARAS; July 20, 1987

FACTS - Petitioner Rosalina Perez Abella leased a farm land in Ponteverde, Negros Occidental, known as Hacienda Danao-Ramona, for a period of ten (10) years, renewable, at her option, for another ten (10) years. She did renew for another ten years. During the existence of the lease, she employed private respondents. Private respondent Ricardo Dionele, Sr. has been a regular farm worker for 33 years while . On the other hand, private respondent Romeo Quitco started worked for 14 years. Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the hacienda to the owners thereof, who continued the management, cultivation and operation of the farm

ISSUE WON private respondents are entitled to separation pay

HELD YES - The closing wasnt due to serious losses or financial reverses. The Court cited Article 284 (this should be 283) which says: "Art. 284. 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 unless the closing is for the purpose of circumventing the provisions of this title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year." - Petitioner then contends that the aforequoted provision violates the constitutional guarantee against impairment of obligations and contracts, because when she leased Hacienda Danao-Ramona, neither she nor the lessor contemplated the creation of the obligation to pay separation pay to workers at the end of the lease. The Court said that this contention by petitioner is untenable. The law is clear and to permit such an argument would mean that the years of service given by the workers will mean nothing since there is no agreement here that the new management will be the one to shoulder the separation pay. The old management, pertaining to Abella in this case, should give the payment.

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- In any event, it is well-settled that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. (Volshel Labor Union v. Bureau of Labor Relations, 137 SCRA 43 [1985]). It is the kind of interpretation which gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that `all doubts in the implementation and interpretation of the provisions of this Code including its implementing rules and regulations shall be resolved in favor of labor." The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. Disposition Petition is DISMISSED.

ASIAN TRANSMISSION CORP V CA (BISIG NG ASIAN TRANSMISSION LABOR UNION) 425 SCRA 478 CARPIO-MORALES; March 15, 2004

NATURE Petition for certiorari seeking the nullification of the March 28, 2000 Decision of the Court of Appeals

FACTS - The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993, wherein it clarified, that employees are entitled to 200% of their basic wage on April 9, 1993, which, apart from being Good Friday, and, therefore, a legal holiday, is also Araw ng Kagitingan, which is also a legal holiday, even if unworked. - Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng Kagitingan - Despite the explanatory bulletin, petitioner Asian Transmission Corporation opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998. - Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested. - In accordance with Step 6 of the grievance procedure of the Collective Bargaining Agreement (CBA) existing between petitioner and BATLU, the controversy was submitted for voluntary arbitration. - On July 31, 1998, the Office of the Voluntary Arbitrator rendered a decision directing petitioner to pay its covered employees "200% and not just 100% of their regular daily wages for the unworked April 9, 1998 - Subject of interpretation in the case at bar is Article 943 of the Labor which was amended by Executive Order No. 2034 - In deciding in favor of the Bisig ng Asian Transmission Labor Union (BATLU), the Voluntary Arbitrator held that Article 94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is determined by a legal formula which is not changed by the fact that there are two holidays falling on one day; and that that the law, as amended, enumerates ten regular holidays for every year, and should not be interpreted as authorizing a reduction to nine the number of paid regular holidays "just because April 9 (Araw ng Kagitingan) in certain years, like 1993 and 1998, is also Holy Friday or Maundy Thursday." - The Court of Appeals upheld the findings of the Voluntary Arbitrator, holding that the Collective Bargaining Agreement (CBA) between petitioner and BATLU, the law governing the relations between them, clearly recognizes their intent to consider Araw ng Kagitingan and Maundy Thursday, on whatever date they may fall in any calendar year, as paid legal holidays during the effectivity of the CBA and that "there is no condition, qualification or exception for any variance from the clear intent that all holidays shall be compensated. - The Court of Appeals further held that "in the absence of an explicit provision in law which provides for [a] reduction of holiday pay if two holidays happen to fall on the same day, any doubt in the interpretation and implementation of the Labor Code provisions on holiday pay must be resolved in favor of labor." - Hence, this petition.

ART. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and (c) As used in this Article, "holiday" includes: New Years Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated by law for holding a general election 4 regular holidays are now:1. New Years Day January 1; 2. Maundy Thursday Movable Date; 3. Good Friday Movable Date; 4. Araw n g Kagitingan April 9 (Bataan and Corregidor Day); 5. Labor Day May 1; 6. Independence Day June 12; 7. National Heroes Day Last Sunday of August; 8. Bonifacio Day November 30; 9. Christmas Day December 25; 10. Rizal Day December 30
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WON daily-paid employees are entitled to be paid for two regular holidays which fall on the same day

HELD YES - Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay."8 It is also intended to enable the worker to participate in the national celebrations held during the days identified as with great historical and cultural significance. - Independence Day (June 12), Araw ng Kagitingan (April 9), National Heroes Day (last Sunday of August), Bonifacio Day (November 30) and Rizal Day (December 30) were declared national holidays to afford Filipinos with a recurring opportunity to commemorate the heroism of the Filipino people, promote national identity, and deepen the spirit of patriotism. Labor Day (May 1) is a day traditionally reserved to celebrate the contributions of the working class to the development of the nation, while the religious holidays designated in Executive Order No. 203 allow the worker to celebrate his faith with his family. - As reflected above, Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays. The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the same date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive. - It is elementary, under the rules of statutory construction, that when the language of the law is clear and unequivocal, the law must be taken to mean exactly what it says. In the case at bar, there is nothing in the law which provides or indicates that the entitlement to ten days of holiday pay shall be reduced to nine when two holidays fall on the same day. - In any event, Art. 4 of the Labor Code provides that all doubts in the implementation and interpretation of its provisions, including its implementing rules and regulations, shall be resolved in favor of labor. For the working mans welfare should be the primordial and paramo unt consideration. - Moreover, Sec. 11, Rule IV, Book III of the Omnibus Rules to Implement the Labor Code provides that "Nothing in the law or the rules shall justify an employer in withdrawing or reducing any benefits, supplements or payments for unworked regular holidays as provided in existing individual or collective agreement or employer practice or policy. - From the pertinent provisions of the CBA entered into by the parties, petitioner had obligated itself to pay for the legal holidays as required by law. Disposition Petition is dismissed.

CLEMENTE V GSIS 152 SCRA 500 GUTIERREZ, JR; July 31, 1987

NATURE Petition to review decision of the Employees Compensation Commission (ECC) which affirmed decision of GSIS and denied Clementes claim for death benefits

FACTS - Carolinas husband, Pedro Clemente was for 10 years a janitor in the DOH Dagupan City assigned at the Ilocos Norte Skin Clinic.

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- He was hospitalized for 12 days due to his ailment of nephritis, and was also found to be suffering from Hansens Disease (po rtal cirrhosis and leprosy). He died on Nov 14, 1976. - Petitioner then filed with GSIS a claim for employees compensation under the Labor Code. This was denied by GSIS on the ground that such ailments are not occupational diseases taking into consideration nature of his work. Under Art. 167(L) of the Labor Code and Sec. 1(b) Rule III of the Amended Rules on Employees Compensation, for the sickness and the resulting disability or death to be compensable, sickness must be the result of an occupational disease listed under Annex A of the rules; otherwise proof must be shown that the risk of contracting the disease is increased by the working conditions. - Petitioner claimed that the ailments were contracted in the course of employment and were aggravated by his work since he was in direct contact with persons suffering from different skin diseases and was exposed to obnoxious dusts and other dirt. - ECC also dismissed the claim since there was no substantial evidence of causal connection and there was evidence that deceased had already contracted the Hansens before employment.

ISSUE WON petitioner is entitled to the compensation

HELD YES Ratio Strict rules of evidence are NOT applicable in claims for compensation. The degree of proof required is merely substantial evidence, which means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. What the law requires is a reasonable work-connection and not a direct causal relation. - Doubts should be resolved in favor of the claimant-employee.

Reasoning - The major ailments of the deceased could be traced to bacterial and viral infections. For instance, in the case of leprosy, it is known that the source of infection is discharge from lesions of persons with active cases. - Petitoners husband worked in a skin clinic and was exposed to different carriers of diseases. As janitor, he was the employe e most exposed to the dangerous concentration of infected material, and not being a med practitioner, least likely to know how to avoid them. - GSISs conservative stand is not consistent with the liberal interpretation of the Labor Code and the social justice guarantee embodied in the Constitution in favor of workers. Disposition Decision appealed from is set aside and GSIS is ordered to pay petitioner P12T as death benefits and P1,200 as attorneys fees.

ACUAV CA [PAGE 12]

BONIFACIO V GSIS 146 SCRA 276 FERNAN; December 15, 1986


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NATURE Petition for review on certiorari

FACTS - Lourdes Bonifacio was a classroom teacher assigned to the district of Bagamanoc, Division of Catanduanes, from August 1965 until she contracted carcinoma of the breast with metastases to the gastrointestinal tract and lungs which caused her death on Oct. 5, 1978. - Thereafter a claim for death benefits under P.D. No. 626, as amended, was filed by petitioner with the GSIS. The same was however denied on the ground that the decedent's principal ailment, carcinoma of the breast with metastases to gastrointestinal tract and lungs, is not an occupational disease for her particular work as a teacher, nor is the risk of contracting said disease increased by her working conditions. - The Employees Compensation Commission (ECC), on appeal affirmed the decision of the GSIS.

ISSUES 1. WON the GSIS and the ECC erred in denying petitioners claim 2. WON the rule that in case of doubt in the implementation and interpretation of the provisions of the Labor Code, includin g its implementing rules and regulations, the same shall be resolved in favor of the laborer applies in this case

HELD 1. NO - A compensable sickness means "any illness definitely accepted as an occupational disease listed by the ECC, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by working conditions. For this purpose, the Commission is empowered to determine and approve occupational diseases and work-related illnesses that may be considered compensable based on peculiar hazards of employment." [Art. 167(1) Labor Code as amended by P.D. No. 1368, effective May 1, 1978]. - Thus, for the sickness or the resulting disability or death to be compensable, the sickness must be the result of an accepted occupational disease listed by the ECC, or any other sickness caused by employment subject to proof by claimant that the risk of contracting the same is increased by working conditions. [Sec. 1, Rule 11, Amended Rules on Employees Compensation]. Carcinoma of the breast with metastases to the gastrointestinal tract and lungs is not listed by the Commission as an occupational disease. - The cancer which affected the deceased not being occupational in her particular employment, it became incumbent upon petitioner to prove that the decedent's working conditions increased the risk of her contracting the fatal illness. This onus petitioner failed to satisfactorily discharge. - Petitioner's contention that the decision of the ECC totally ignored the SC's pronouncements on compensation cases is unmeritorious. The petitioner evidently overlooked that his claim is now within the ambit of the Labor Code and the rulings under the old law, Act No. 3428, as amended, no longer control. - The old law as embodied particularly in Section 43 of RA No. 772 amending Act No. 3812, provided for "the presumption of compensability and the rule on aggravation of illness, which favor the employee," and "paved the way for the latitudinarian or expansive application of the Workmen's Compensation Law in favor of the employee or worker." The presumption in essence states that in any proceeding for the enforcement of the claim for compensation under the Workmen's Compensation Act "it shall be presumed in the absence of substantial evidence to the contrary that the claim comes within the provisions of the said Act, that sufficient notice thereof was given, that the injury was not occasioned by the willful intention of the injured employee to bring about the injury or death of himself or of another, that the injury did not result solely from the intoxicatiojn of the injured employee while on duty, and that the contents of verified medical and surgical reports introduced in evidence by claimants for compensation are correct." - Thus, under the Workmen's Compensation Law, it is not necessary for the claimant to carry the burden of proof to establish his case to the point of demonstration It is not necessary to prove that employment was the sole cause of the death or injury suffered by the employee. It is sufficient to show that the employment had contributed to the aggravation or acceleration of such death or ailment. Once the disease had been shown to have arisen in the course of employment, it is presumed by law, in the absence of substantial evidence to the contrary, that it arose out of it.

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- With this legal presumption in the old law, the burden of proof shifts to the employer and the employee no longer suffers the burden of showing causation. Under the present Labor Code, the "latitudinarian or expansive application of the Workmen's Compensation Law in favor of the employee or worker" no longer prevails as the burden of showing proof of causation has shifted back to the employee particularly in cases of sickness or injuries which are not accepted or listed as occupational by the ECC. The Labor Code abolished the presumption of compensability and the rule on aggravation of illness caused by the nature of the employment. 2. NO - While the court does not dispute petitioner's contention that under the law, in case of doubt in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, the doubt shall be resolved in favor of the laborer, the court finds that the same has no application in this case since the pertinent provisions of the Labor Code leave no room for doubt either in their interpretation or application. Disposition Petition is dismissed and the decisions of the GSIS and the ECC denying the claim are affirmed

BRAVO V EMPLOYEES' COMPENSATION COMMISSION 143 SCRA 101 FERNAN; July 22, 1986

NATURE PETITION for certiorari to review the decision of the Employees' Compensation Commission

FACTS - Evelio Bravo was a supervising cartographer engineer at the Bureau of Coast and Geodetic Survey. As litho-photo engraving supervisor (another term for a supervising cartographer engineer?), he was involved in drafting and plate printing, developing and processing either dry or wet negatives, and supervising the formulation of lightsensitive lithographic chemicals from reagent of nitric, phosphoric, oleic acids, potassium ferricynamide, ammonium hydroxide and ammonium dichromate in the kithographic laboratory. - sometime in 1979, he complained of irregular bowel movement, constipation and abdominal pain. In 1980 he was admitted to St. Lukes Hospital and was diagnosed with "adenocarcinoma sigmoid (colon) Duke's C and chronic periappendicitis". He went through a series of operations and incurred hospitalization expenses amounting to P8,650.05. - He did not return to work and retired at the age of 45 under the provisions of RA 1616. He received P37,002.31 from GSIS. He filed a claim for disability benefits in the GSIS. - GSIS: Denied. His diagnosed disease were not occupational diseases in his particular employment and his working conditions did not increase the risk of contracting them. -He sought reconsideration, claiming that his work exposed him to chemicals. His MFR was denied on the ground that his exposure to photographic solutions as litho-photo engraving supervisor had no causal relationship to the development of his adenocarcinoma considering that said ailment is traceable to "familial multiple polyposis, chronic ulcerative colitis, chronic lympho-granuloma venereum, chronic granuloma inguinale and perhaps adenoma. - He appealed to the Employees Compensation Commission, but died pending the appeal. His widow, Angeles, pursued his appeal. - Commission: affirmed GSIS deci. Bravo's ailments were "too remote to be related causally to his work and working conditions" at the Bureau of Coast and Geodetic Survey. His contention that his cancer could be traced to exposure to photographic solutions was merely supposition and devoid of medical support.

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- Petitioners contention

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> while the causes of colonic malignancy are as yet undetermined, there is a "probability" that the fatal ailment of Bravo was work connected as shown by the fact that he was exposed to various chemicals which are generally considered predisposing factors of cancer (relying on the decision in Panotes vs. Employees' Compensation Commission where it was held that the very fact that the cause of a disease is unknown creates the probability that the working conditions could have increased the risk of contracting the disease, if not caused by it) ; that the law merely requires reasonable work-connection because of the liberal interpretation accorded to social legislation; that under the theory of increased risk, her husbands cancer of the colon is a compensable disease because his exposure to chemicals and the "stressful demand" of his work increased the risk of contracting said ailment; and that Commission issued the Resolutions Nos. 2610 and 26775 which provides guidelines for deciding on pending compensation cases regarding cancer. - Solicitor Generals reply > resolutions are just proofs that the Commission is continuously in involved in its task "to initiate, rationalize, and coordinate policies of the employees' compensation program." They do not imply that the law merely requires reasonable work-connection because that requirement which was mandated in the repealed Workmen's Compensation Act is different from the present requirement of clear medical basis "where before a mere aggravation or presumption of compensability was sufficient."

ISSUES WON cancer of the colon and peri-appendicitis which caused the death of a former litho-photo engraving supervisor are compensable diseases under the Labor Code a. WON cancer of the colon and peri-appendicitis are listed under compensable diseases under the Labor Code and Rule III, Section IV of the Amended Rules on Employees Compensation b. WON petitioner could claim benefits through the increased risk doctrine

HELD NO Ratio Article 167, paragraph (1) of the Labor Code and Rule III, Section IN of the Amended Rules on Employees' Compensation provide that for a sickness and the resulting disability or death to be compensable, the said sickness must be an occupational disease listed under Annex "A" of said Rules, otherwise, the claimant or employee concerned must prove that the risk of contracting the disease is increased by the working conditions (increased risk doctrine) a. NO - Both cancer of the colon and peri-appendicitis are not listed as occupational diseases for Bravo's kind of employment. b. NO - Petitioner failed to submit convincing proofs to entitle her to compensation benefits. Ratio A claimant who depends on the theory of increased risk must present substantial proof to show that his ailment was contracted during his employment. He or she must also submit proof that the risk of contracting the ailment was increased by the particular working conditions. Reasoning

5 Resolution No. 2610 approves the recommendation of the Commission's Technical Committee on Medical Matters that appealed compensation cases "whose subject contingencies concern cancer diseases shall be held compensable, in line with pertinent Supreme Court Decisions, provided that such diseases shall be duly confirmed by formal reports on biopsies, or opinions of cancer specialists". That resolution shall be applied prospectively.

Resolution No. 2677 amends Resolution No. 2610 by adding to the pertinent paragraph thereof the phrase "provided that certain predisposing factors that are medically recognized or proven are present." It also approves the modified guidelines on cancer of the breast, liver stomach (gastric), lungs and nasopharynx. As regards "other types of cancer diseases", the guideline states: "An employee's prolonged exposure to chemicals may predispose him or her to contract and develop other types of cancer diseases". For cancer cases decided by the Supreme Court, the guidelines states: "A claim must be resolved in favor of a claimant or appellant if facts of his or her case on record indicate reasonable work-connection of the disease, the disease belongs to borderline or 'twilight' cases, and if the cause of the cancer disease is unknown".

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- On reliance on Panotes case: In the Panotes case and the Cristobal case, both claimants presented conditions of their employment. In the present case, the petitioner only enumerated the chemicals to which Bravo was allegedly exposed as a litho-photo engraving supervisor and rely on the "probability" that those chemicals caused his cancer of the colon. On interpretation in compensation cases > Strict rules of evidence are not applied in compensation cases. However, the present scheme and theory of employees' compensation under the Labor Code requires a clear medical basis for a claim for benefits to succeed. There are no more presumptions as to what caused a particular illness because the determination of compensability is medically and scientifically oriented.

On application of the resolutions by the Commission > they were issued after the death of Evelio, and are applied prospectively. Even if they were applied, the petitioner did not submit formal requirements required by said resolutions. On liberal interpretation due to social legislation > We are aware of the mandate that social legislation should be applied in consonance with the principles of social justice and protection to labor. However, we cannot adopt a sweeping interpretation of the law in favor of labor lest we engage in judicial legislation. Disposition decision of the Employees' Compensation Commission is hereby affirmed.

PAL V NLRC (IRINEO) 201 SRCA 687 NARVASA; September 24, 1991

FACTS - On the basis of the findings and recommendations of a Fact Finding Panel upon investigation, Irineo and 3 other PAL employees, Damian, Rabasco and Macatol, were prosecuted and convicted for estafa through falsification of commercial documents - All 4 filed motions for reconsideration and/or new trial. Only one of them, Macatol, was absolved for lack of sufficient evidence. 12 years later, Macatol filed a complaint for illegal dismissal which was dismissed by the Labor Arbiter on the ground of prescription. The NLRC affirmed, contending that the prescriptive period accrued from the time of his dismissal and not the termination of the criminal case - A later appeal with the IAC resulted in the acquittal of Irineo and Rabasco on grounds of reasonable doubt. - 17 years after his dismissal, Irineo filed a complaint against PAL for reinstatement and backwages, claiming the termination was illegal. The Labor Arbiters decision decreed his reinstatement without loss of seniority rights, payment of backwages and moral damages of P300k. The Arbiter overruled the defense of prescription and held that since there was a PAL circular which placed any employee charged with any crime inimical to the co mpanys interest under preventive suspension, and a standing order by the CIR forbidding the dismissal of any PAL employee without court authority, Irineos dismissal merely amounted to suspension. The Arbiter rendered a judgment terminating Irineos suspension with backwages and moral damages. - PAL appealed to the NLRC but failed to obtain a reversal of the Arbiters decision. Hence this petition for certiorari.

ISSUE

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WON the NLRC gravely abused discretion amounting to lack or excess of jurisdiction and arbitrarily exercised power without due regard for the rule of law

HELD YES - That there should be care and solicitude in the protection and vindication of the rights of workingmen cannot be gainsaid; but that care and solicitude cannot justify disregard of relevant facts or eschewal of rationality in the construction of the text of applicable rules in order to arrive at a disposition in favor of an employee who is perceived as otherwise deserving of sympathy and commiseration. - The letter to Irineo from then PAL president Benigno Toda clearly indicated, For being i nvolved in the irregular refund of tickets in the international service to the damage and prejudice of the company, you are dismissed from the service effective immediately. For the Arbiter and the N LRC to construe this as mere suspension would be illogical. -Their reliance on PAL circular to justify their decision, construing this as a complete foreclosure of any alternative action on PALs part was unfounded. To further support their decision they refer said CIR standing order which had been imposed in relation to a pending labor dispute with the CIR. However, having ended when the parties entered into a CBA 2 years before Irineos dismissal, the standing order was no longer relevant to the event. - Irineos assertion only after 17 years meant he slept on his rightshis claim is thus time-barred. - Premises considered, it appears that the NLRCs conclusions are flawed by errors serious as to constitute grave abuse of discretion Disposition Court GRANTS the petition and issues the writ of certiorari prayed for.

MANNING INTERNATIONAL CORPORATION V NLRC (BENEDICTO) 195 SCRA 155 NARVASA; March 13, 1991

NATURE Petition for certiorari to review

FACTS - Francisco Benedictoa.k.a. Lazaro Benedicto, according to his passportwas hired by a foreign firm, Abdulasis & Mohamed A. Aljomaih Co., thru its Philippine representative. Manning International Corporation, as a truck driver for its establishment in Riyadh, Saudi Arabia. Benedicto was engaged for a stipulated term of two (2) years. He left for Saudi Arabia on December 1, 1980 to fulfil his employment contract.

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- Some months before the expiration of his contract with Abdulasis, etc., Benedicto was involved in a vehicular accident, was injured, and in consequence, lost both his legs. From the date of the accident, February 2, 1982, he was confined at a hospital in Saudi Arabia until sometime when his employment was terminated. He was repatriated to the Philippines in August 1982. - Benedicto filed a complaint with POEA for the recovery of his salary for the unexpired portion of his contract, insurance benefits and projected cost of medical expenses amounting to P25,000.00 - POEA dismissed Benedictos claim upon finding that complainant was legally terminated from employment because of his disability. However, Manning and Abdulasis were ordered to provide compensation benefits for service-connected illness, injuries or death. - MFR to NLRC affirmed the decision of POEA - Judgment became final and executory. Benedicto moved for computation of the amounts due him, and in substantiation, submitted receipts evidencing his actual medical expenses. His former employers opposed the motion on the ground that the medical expenses referred to another person, Lazaro Benedicto but the Administrator overruled the objection and pointed out that the names Lazaro and Francisco Benedicto both referred to one person, and directed the issuance of an alias writ of execution to enforce payment of P12,000 as total and permanent disability benefits and P19,450.00 as hospitalization and medical expenses for 120 days or a total of P31,450.00. - MFR was filed to NLRC to protest the limitation of the award to him of medical expenses to a period of 120 days. - NLRC set aside the the POEA Order and on considerations of equity and social justice as well as the theory of medical treatment should not be stopped until Benedictos injury or disability is healed and entered a new judgment increasing the amount to be paid by employers. - Petition for certiorari

ISSUES 1. WON the new judgment of the NLRC is void ab initio, insofar as it attempts to vary the disposition of the final and executo ry decision of the POE Administrator 2. WON the challenged decision of NLRC is without legal basis and unjust

HELD 1. YES Ratio When a final judgment becomes executory, it thereby becomes immutable and unalterable, The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modifications is attempted to be made by the Court rendering it or by the highest Court of the land. The only recognized exceptions are the correction of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, where the judgment is void. 2. YES Ratio Considerations of equity and social justice cannot prevail over against the expressed provision of the labor laws allowing d ismissal of employees for cause and without any provision for separation pay. Disposition Contested Decision ANNULLED AND SET ASIDE and REINSTATING and AFFIRMING the Order of the POE Administrator.

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RELIANCE & INSURANCE CO INC V NLRC (RELIANCE SURETY & INSURANCE EMPLOYEES UNION) 193 SCRA 365 SARMIENTO; January 25 1991

NATURE Petition for certiorari whether or not strikers have been found to have staged an illegal strike may be reinstated to work.

FACTS - The manager of Reliance Surety Insurance Co (RSIC) effected a change in the seating arrangement of its personnel to avoid productivity loss due to personal and non-work-related conversations, calls and visits. - Isagani Rubio, Rosalinda Macapagal, Glene Molina, and Severa Cansino protested the transfer of their tables because said change was without prior notice and was just to harass them as union members. When the manager insisted, a heated discussion ensued, during which Rubio and companions insulted the manager and supervisors. - The 4 employees were asked to explain within 48 hours why no disciplinary action should be taken against them for misconduct, insubordination, and gross disrespect. Tension rose in the office as Rubio continued to refuse to stay at his designated place, and Molina and Macapagal still levelled insults to those who testified against them. Hence, Rubio and companions were placed under preventive suspension on 3 February 1987 and ultimately dismissed after investigation on 3 March 1987. - 6 March 1987, the Reliance Surety & Insurance Employees Union (union) filed in behalf of the dismissed employees with the NLRC, against the RSIC a complaint for illegal dismissal including the charge of unfair labor practice. - Unions claim: The company was guilty of unfair labor practice because it effected transfer and changes in the seating arrangement to pressure or intimidate union members; because it interfered in the union members' exercise of their right to self-organization by forcing them to undertake overtime work even on a nonworking Saturday and in times when there were scheduled union meetings to prevent them from attending the same; and because, thru its manager and assistant managers, it caused the resignation and withdrawal of union members from the union. - Pending trial, the union filed with the DOLE a notice of strike predicated on unfair labor practices by the company. RSIC was given notice of strike and a telegram from DOLE for initial conciliation conference both to be held on the same date. But even before the initial conference could take place, the union in the morning of 17 March 1987 struck and picketed the company premises, which obstructed the free ingress to and egress from its premises, thereby preventing its officials and employees from doing their usual duties. - RSIC them filed with the NLRC a petition to declare the strike illegal due to the defiance of the 30 or 15 day cooling-off-period, disregard of the legal requirement to furnish the department with the results of the strike vote at least 7 days before the strike and failure to furnish a written notice of the meeting to declare a strike to the BLR or the Regional Office - Labor Arbiter found the strike to be illegal. NLRC affirmed with modification upon appeal holding that although the strike was illegal, dismissal was not the proper penalty. It said that the strikers should be reinstated without backwages due to the unions belief that the company w as committing unfair labor practice. (Ferrer v. Court of Industrial Relations 6 and Almira v. BF Goodrich Philippines, Inc) - Petitioners claim: NLRC was guilty of grave abuse of discretion.

ISSUE 1. WON the strike was illegal 2. WON the petition should be granted HELD 1. YES

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- The strike in question was illegal, for failure of the striking personnel to observe legal strike requirements, to wit: (1) as to the fifteen-day notice; (2) as to the two-thirds required vote to strike done by secret ballot; (3) as to submission of the strike vote to the Department of Labor at least seven days prior to the strike. - NLRC also found that certain strikers harassed non-striking employees, called company officers names, and committed acts of violence (as a result of which, criminal charges were brought with the fiscal's office.) - The strike itself was prompted by no actual, existing unfair labor practice committed by the petitioner. In effecting a change in the seating arrangement, the petitioner merely exercised a reasonable prerogative employees could not validly question, much less assail as an act of unfair labor practice. Rearranging furniture cannot justify a four-month-long strike. As to the private respondent's charges of harassment, the Commission found none, and as a general rule, the Court is bound by its findings of fact. 2. YES - The strike that was illegal in more ways than one, the reinstated union officers were clearly in bad faith, and to reinstate them without loss of seniority rights, is to reward them for an act public policy does not sanction. - The Ferrer and Almira cases did not involve illegal strikes. In Ferrer was a defective strike, one conducted in violation of the thirty-day "cooling-off" period, but one carried out in good faith "to offset what petitioners were warranted in believing in good faith to be unfair labor practices [committed by] Management. What Almira on the other hand declared was that a violent strike alone does not make the action illegal, which would justify the dismissal of strikers. - The Court reiterates that good faith is still a valid defense against claims of illegality of a strike. We do find, however, not a semblance of good faith here, but rather, plain arrogance, pride, and cynicism of certain workers. - WRT respondent, Isagani Rubio, what militates against his readmission to the firm is the fact that he had accepted the sum of P2,448.80 "in full satisfaction of the . . . Decision" (of the Labor Arbiter). - The sympathy of the Court is on the side of the laboring classes, not only because the Constitution imposes sympathy but because of the one-sided relation between labor and capital. The Court must take care, however, that in the contest between labor and capital, the results achieved are fair and in conformity with the rules. We will not accomplish that objective here by approving the act of the National Labor Relations Commission which we hold to constitute a grave abuse of discretion. Disposition petition is GRANTED.

PHILIPPINE AIRLINES, INC. (PAL) V NLRC [PAGE 25]

DUNCAN ASSOCIATION V GLAXO WELLCOME PHILS [PAGE 43]

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU) V LAGUESMA 288 SCRA 15 MENDOZA; March 25, 1998

FACTS - UPSU is a union of supervisory employees. The union filed a petition for certification election on behalf of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary of Labor and Employment, on the ground that the route

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managers are managerial employees and, therefore, ineligible for union membership under the first sentence of Art. 245 of the Labor Code, which says, 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.

ISSUE 1. WON the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees 2. WON the first sentence of Art. 245 of the Labor Code, prohibiting managerial employees from forming, assisting or joining any labor organization, is constitutional in light of Art. III, Sec.8 of the Constitution. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged.

HELD 1. YES - Their job descriptions clearly reveal so. They also fall under this category under the purview of art. 212. The term manager generally refers to an yone who is responsible for subordinates and other organization resources. As a class, managers constitute three levels of a pyramid. - What distinguishes them from the rank-and file employees is that they act in the interest of the employer in supervising such rank-and-file employees - Managerial employees may therefore be said to fall into two distinct categories: the managers per se, who compose the former group described above, and the supervisors who form the latter group. Whether they belong to the first or second category, managers, vis--vis employers, are, likewise, employees 2. NO - As already stated, whether they belong to the first category (managers per se) or the second category (supervisors), managers are employees. Nonetheless, in the United States, as Justice Puno's separate opinion notes, supervisors have no right to form unions. They are excluded from the definition of the term "employee" in 2(3) of the Labor-Management Relations Act of 1947. - Commission intended the absolute right to organize of government workers, supervisory employees, and security guards to be constitutionally guaranteed. By implication, no similar absolute constitutional right to organize for labor purposes should be deemed to have been granted to top-level and middle managers. As to them the right of self-organization may be regulated and even abridged conformably to Art. III, 8. - Types of Managerial Employees: > FIRST-LINE MANAGERS The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-level management. First-line managers direct operating employees only; they do not supervise other managers. Example of first-line managers are the foreman or production supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a large office. First-level managers are often called supervisors. > MIDDLE MANAGERS The term middle management can refer to more than one level in an organization. Middle managers direct the activities of other managers and sometimes also those of operating employees. Middle managers principal responsibilities are to direct the activities that implement their organizations policies and to balance the demands of their superiors with the capacities of their subordinates. A plant manager in an electronics firm is an example of a middle manager. > TOP MANAGERS Composed of a comparatively small group of executives, top management is responsible for the overall management of the organization. It establishes operating policies and guides the organizations interactions with its environment. Typical titles of top managers are chief executive officer, president, and senior vice-president. Actual titles vary from one organization to another and are not always a reliable guide to membership in the highest management classification. Disposition petition is DISMISSED

SONZA V ABS-CBN BROADCASTING CORPORATION [PAGE 42] ASIATIC DEVELOPMENT CORP V BROGADA
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495 SCRA 166 CORONA; July 14, 2006

NATURE Petition for review on certiorari

FACTS - Respondents Wellington and Flordeliza Brogada are the parents of Fermin B. Brogada who was allegedly employed by petitioner Asiatic Development Corporation from July 1994 up to his death in November 14, 1996. - Respondents filed with the SSC a petition for social security coverage and payment of contributions in order to avail of the benefits accruing from the death of Fermin. They alleged that Fermin worked as survey aide under Engr. Bienvenido Orense, petitioners geodetic engineer. Fermin was working on a project with Engr. Orense for one of petitioners clients when he was shot and killed. - Petitioner denied its liability on the ground that there was no employer-employee relationship between it and Fermin. It claimed that Fermin was the employee of Engr. Orense. - SSS held that Fermin was an employee and was subject to the compulsory coverage. On appeal, the SSC resolution was affirmed by the CA.

ISSUE WON an employer-employee relationship exists HELD - The question of WON an employer-employee relationship exists is a question of fact. In petitions for review on certiorari under Rule 45, only questions of law may be raised by the parties and passed upon by this Court. Factual findings of quasi-judicial bodies, when adopted and confirmed by the CA and if supported by substantial evidence, are accorded respect and even finality by this Court. While this Court has recognized several exceptions to this rule, none of these exceptions finds application here. - Both the SSC and CA found that Fermin was petitioners employee. Thus, petitioner is liable for unpaid social security contributions. - Petitioners claims are a mere reiteration of arguments unsuccessfully raised before the SSC and the CA. No compelling reaso n whatsoever is shown by petitioner for this Court to reverse the SSCs findings and conclusions, as affirmed by the CA. Disposition Petition is DENIED.

VILLAVILLA V CA (SSS, MERCADO, COSUCO) 212 SCRA 488 BELLOSILLO; August 11, 1992
FACTS - Arturo Villavilla, son of petitioners, was employed as "tripulante" (crew member) of the fishing boat "F/B Saint Theresa" from 1974 until September 11, 1977, when the boat sank off Isla Binatikan, Taytay, Palawan. Arturo was not among the known survivors of that sinking and had been missing since then. - On November 20, 1979, petitioners Andres Villavilla and Ester Gadiente Villavilla, parents of Arturo, filed a petition with the Social Security Commission against Reynaldo Mercado and Marcelino Cosuco, owners of the ill-fated fishing boat, for death compensation benefits of Arturo whom respondents failed to register as their employee. - On May 29, 1981, the Social Security System (SSS) filed a petition in intervention alleging that records from the SSS Production Department showed that "F/B Saint Theresa", owned by Marcelino Cosuco and operated by Reynaldo Mercado, was a registered member-employer, and that in the event petitioners succeeded in proving the employment of Arturo with private respondents, the latter should be held liable in damages equivalent to the benefits due the petitioners for failure to report Arturo for coverage pursuant to Sec. 24 (a) of the Social Security Act, as amended. - Respondent Cosuco filed his answer denying all allegations in the petition and claiming that he already sold the fishing boat to respondent Mercado on December 10, 1975, and from then on he did not participate anymore in the operation and management of the boat nor in the hiring of its crewmembers. - Meanwhile respondent Mercado was declared in default for failure to file his answer. - After petitioners had presented their evidence and rested their case, respondent Cosuco filed a motion to dismiss (demurrer to evidence) on the ground of res judicata and lack of cause of action. - Respondent Social Security Commission issued an Order dismissing the petition for lack of cause of action. - The Court of Appeals affirmed the questioned Order of respondent Commission there being no reversible error. ISSUE

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1. WON there was an employer-employee relationship between petitioners' deceased son, Arturo Villavilla, and herein private respondents 2. WON private respondents are liable for death compensation benefits of Arturo Villavilla 3. WON there was a violation of the Social Security Act, as amended, by private respondents for not registering Arturo Villavilla with the System as their employee as mandated by law HELD 1. NO - The records disclose that the relationship between Mercado and the crew members of the ship headed by its skipper, Capt. Pedro Matibag, is one positively showing the existence of a joint venture. This is clearly revealed in the testimonies of Capt. Pedro Matibag and Gil Chua, a crew member, both witnesses for petitioners. - The arrangement between the boat owner and the crew members, one of whom was petitioners' son, partook of the nature of a joint venture: the crew members did not receive fixed compensation as they only shared in their catch; they ventured to the sea irrespective of the instructions of the boat owners, i.e., upon their own best judgment as to when, how long, and where to go fishing; the boat owners did not hire them but simply joined the fishing expedition upon invitation of the ship master, even without the knowledge of the boat owner. In short, there was neither right of control nor actual exercise of such right on the part of the boat owner over his crew members. - It is clear that there was no employer-employee relationship between petitioner's son Arturo and private respondent Mercado, much less private respondent Cosuco. As such, Arturo could not be made subject of compulsory coverage under the Social Security Act; hence, private respondents cannot be said to have violated said law when they did not register him with the Social Security System. A fortiori, respondent as well as intervenor are not answerable to petitioners for any death benefits under the law. - Culled from the foregoing, the inexorable conclusion is that respondent Court of Appeals did not err in sustaining the judgment of respondent Social Security Commission. - It may not be amiss to mention that while petitioners merely raise factual questions which are not proper under Rule 45 of the Rules of Court, We nevertheless went to great lengths in dissecting the facts of this case if only to convince Us that petitioners, who are pauper litigants and seeking claims under a social legislation, have not been denied its benefits. For, We are not unaware that in this jurisdiction all doubts in the implementation and interpretation of provisions of social legislations should be resolved in favor of the working class. But, alas, justice is not fully served by sustaining the contention of the poor simply because he is poor. Justice is done by properly applying the law regardless of the station in life of the contending parties.

MIGUEL V JCT GROUP INC 453 SCRA 529 PANGANIBAN; March 16, 2005

NATURE Petition for Review on Certiorari under Rule 45 of the Rules of Court CA decision on the ground of grave abuse of discretion because it annulled and set aside decisions of the labor arbiter and NLRC

FACTS - 1984 > Glorious Sun Garment Manufacturing Company was a garment exporter until it folded up and, thereafter, De Soliel Apparel Manufacturing Corporation and American Inter-Fashion Corporation took over Glorious Suns manufacturing facilities and absorbed its employees (petitioners Miguel et al) - 1986 > PCGG sequestered De Soleil and AIFC - 1989 > JCT Group, Inc. and De Soleil executed a Management and Operating Agreement for servicing De Soleils export quota to ensure its rehabilitation and preserve its viability and profitability - 1990 > De Soleil ceased business operations thus terminating employment - 1993 > complaints for illegal dismissal and payment of backwages before NLRC against De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Vicente Cuevas III. But JCT and Cuevas filed a motion to dismiss due to lack of jurisdiction because of the absence of employer-employee relationship between them and petitioners. - 1995 > Without resolving the motion to dismiss, Labor Arbiter Sampang rendered (1) Declaring De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Cuevas jointly and severally guilty of illegal dismissal and to pay complainants backwages, separation pay, service incentive leave pay, 13th month pay, unpaid salaries as computed by the Research and Information Unit (2) Declaring De Soleil et al liable for the payment of attorneys fees (10% of the total awards or P3,691,743.06)

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- Because of the huge amount [monetary award, inclusive of attorneys fees, aggregated P41,313,094.98 computed by Research and Information Unit], JCT and Cuevas and Glorious Sun filed separate motions with NLRC for reduction of the appeal bond . NLRC reduced it to P5,000,000.00 for each respondent. Again, they filed a motion for reconsideration of said order by way of further reduction of the bond to P500,000.00. CA and SCA denied their motions - 1995 > Meanwhile, Glorious Sun and JCT et al et al appealed the labor arbiters decision to NLRC and petitioners filed a motion to dismiss the appeals bec of failure to post a bond as required in A223 LC - 1996 > NLRC absolved Glorious Sun and dismissed JCT et als appeal and sent to CA for appropriate disposition - CA: reversed NLRC decision and remanded the case to the labor arbiter bec it found no factual basis for the ruling that JCT had become the employer of petitioners after the cessation of operations of Glorious Sun and failed to explain Cuevas liability in solidum with AIF, De Soleil and JCT; hence this petition by Miguel et al

ISSUE WON CA committed grave abuse of discretion amounting in ruling to remand the case to the labor arbiter because of lack of factual findings to prove employeremployee relationship between JCT et al and Miguel et al which would be the basis of the liability of JCT et al

HELD NO. Instead, NLRC and the Labor arbiter abused their discretion when they ruled in favor of the petitioners without determining the existence of an employeremployee relationship between them and respondents because it was silent on why JCT and Cuevas were held liable. Doctrine Grave abuse of discretion implies such capricious and whimsical exercise of judgment as to be equivalent to lack or excess of jurisdiction. That is, power is arbitrarily or despotically exercised by reason of passion, prejudice, or personal hostility; and caprice is so patent or so gross as to amount to an evasion of a positive duty, or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. Reasoning - LABOR ARBITER: made no determination whether there was employer-employee relationship and, if so, whether JCT et al assumed the obligations of Miguel et als previous employers. There is no dispute that given the nature of their functions and length of services, were regular employees. But the question is: who was/were their employer/s? - MOA: does not appear that JCT became the employer of Miguel et al by virtue of this - NLRC: silent on JCT being the employer of Miguel et al after Glorious Sun ceased operations, save for its conclusion that they were absorbed by, or their work continued under JCT and did not state the reason for liability in solidum of Cuevas. Computation of the monetary award total ing P37,557,317.08 (exclusive of attorneys fees) covers a period starting on initial employment (with Glorious Sun) some dating back to 1978 - Saballa v NLRC > This Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make certain that they truly and accurately reflect their conclusions and their final dispositions. The same thing goes for the findings of fact made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantial evidence; otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal. Obiter - employer-employee relationship test: 1) power to select employees 2) who pays for their wages 3) who has the power to dismiss them, and 4) who exercises control in the methods and the results by which the work is accomplished

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*** The last factor, the control test, is the most important. Disposition Petition is DENIED and the assailed Decision AFFIRMED

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WACK-WACK GOLF & COUNTRY CLUB V NLRC (CAGASAN, DOMINGUEZ, BSMI) 456 SCRA 280 CALLEJO, SR; April 15, 2005

NATURE Petition for review decision of CA

FACTS - A large portion of the Wack Wack (WW) clubhouse (including the kitchen) was destroyed by fire, and because of this, the management had to suspend operations of the Food and Beverage department, requiring the suspension of 54 employees. The Employees Union found the suspension as arbitrary and constitutive of union-busting, and went on strike. The parties soon after entered into an amicable settlement, whereby a special separation benefi t/ retirement package was formulated. The same provides for, among other things, a 1 month separation pay for every year of service, and be considered on priority basis for employment by concessionaires and/or contractors, and even by the club, upon full resumption of operations. - The package was availed of by 3 employees (Cagasan, Dominguez, and Baluyot), who received large sums of money as separation pay. Soon after, WW entered into a Management Contract with Business Staffing and Management Inc (BSMI), whereby the latter will provide management services for WW. Cagasan and Dominguez filed their application for employment with BMSI. They, by reason of the priority given by the separation package, were rehired on probationary status by BMSI. - WW also engaged other contractors in the operations of the club (like janitorial services, Finance and accounting services). Because of the various management service contracts, BMSI made an organizational analysis and manpower evaluation to streamline its operations. It found the positions of Cagasan and Domiguez redundant, and subsequently terminated them. Cagasan and Dominguez then filed complaints in the NLRC for illegal dismissal against WW. NLRC ordered reinstatement

ISSUES 1. WON BMSI is an independent contractor (which will answer the question as WON there was an employer-employee relationship) 2. WON the employees were illegally dismissed

HELD 1. YES Reasoning - An independent contractor is one who undertakes job contracting, i.e., a person who: (a) 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 (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises and other materials which are necessary in the conduct of the business. Jurisprudence shows that determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is 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

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performance of specified pieces of work; the control and supervision of the work to another; the employers power with respec t to the hiring, firing, and payment of the contractors workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. - There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. - In December 1993, Labor Sec. Laguesma, in a case, recognized BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers. Thus, there is no employer-employee relation between WW and the workers. 2. NO Ratio As there was no employer-employee relationship between WW and the complainants, there can be no illegal dismissal. Reasoning - the complainants (private respondents herein) were validly terminated upon their option to take the separation package provided by WW. Thus, the same have no cause of action against WW. Disposition Petition granted. CA and NLRC decisions set aside

PHILIPPINE GLOBAL COMMUNICATIONS INC V DE VERA 459 SCRA 260 GARCIA; June 7, 2005

NATURE petition for review on certiorari

FACTS - Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. - It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981, offered his services to the petitioner, therein proposing his plan of works required of a practitioner in industrial medicine. - The parties agreed and formalized respondents proposal in a document denominated as RETAINERSHIP CONTRACT which will be for a period of one year subject to renewal, it being made clear therein that respondent will cover the retainership the Company previously had with Dr. K. Eulau and that respondents retainer fee will be at P4,000.00 a month. Said contract was renewed yearly. The retainership arrangement went on from 1981 to 1994 with changes in the retainers fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally. On December 1996 Philcom, thru a letter bearing on the subject boldly written as TERMINATION RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue the latters retainers contract with the Company effective at the close of business hours of December 31, 1996 because management has decided that it would be more p ractical to provide medical services to its employees through accredited hospitals near the company premises. - On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due process. He averred that he was designated as a company physician on retainer basis for reasons allegedly known only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as anyway he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other regular employees of Philcom. - On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision dismissing De Veras complaint for lack o f merit, on the rationale that as a retained physician under a valid contract mutually agreed upon by the parties, De Vera was an independent contractor and that he was not dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed after December 31, 1996.

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NLRC reversed (the word used is modified) that of the Labor Arbiter, on a finding that De Vera is Philcoms regular employee and accordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement. - Court of Appeals modified NLRCs decision that of the NLRC by deleting the award of traveling allowance, and ordering payment of se paration pay to De Vera in lieu of reinstatement.

ISSUES WON an employer-employee relationship exists between petitioner and respondent

HELD NO - De Vera was an independent contractor beinf the retained physician of petitioner company. - In a long line of decisions, the Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test, to wit: the selection and engagement of the employee; the payment of wages; the power of dismissal; and the power to control the employees conduct, or the socalled control test, considered to be the most important element. - Applying the four-fold test to this case, we initially find that it was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner in the letter which he sent to petitioner. - The letter was substantially the basis of the labor arbiters finding that there existed no employer-employee relationship between petitioner and respondent, in addition to the following factual settings: - The fact that the complainant was not considered an employee was recognized by the complainant himself in a signed letter, the tenor of which indicated that the complainant was proposing to extend his time with the respondent and seeking additional compensation for said extension. This shows that the respondent PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is proposing his own schedule and asking to be paid for the same. This is proof that the complainant understood that his relationship with the respondent PHILCOM was a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work. - De Veras service for the respondent was covered by a retainership contract [which] was renewed every year from 1982 to 1994. Upon reading the contract dated September 6, 1982, signed by the complainant himself (Annex C of Respondents Position Paper), it clearly states that is a retainership contract. The retainer fee is indicated thereon and the duration of the contract for one year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he was unaware that the contract was good only for one year, as he signed the same without an y objections. The complainant also accepted its renewal every year thereafter until 1994. As a literate person and educated person, the complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis. - The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employer-employee relationship. - Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary. - We note, too, that the power to terminate the parties relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause.Finally, remarkably absent from the parties arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. - Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. He could even embark in the private practice of his profession, not to mention the fact that respondents work hours and the additional compensation therefor were negotiated upon by the parties. In fine, the parties themselves practically agreed on every terms and conditions of respondents engagement, which thereby ne gates the element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work.

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Disposition petition is GRANTED and the challenged decision of the Court of Appeals REVERSED and SET ASIDE. The 21 December 1998 decision of the labor arbiter is REINSTATED.

SONZA V ABS-CBN [PAGE 42]

JARDIN V NLRC (PHILJAMA INTL) 326 SCRA 299 QUISUMBING; February 23, 2000

NATURE Special civil action for certiorari seeks to annul the decision of public respondent promulgated on October 28, 1994, in NLRC NCR CA No. 003883-92, and its resolution dated December 13, 1994 which denied petitioners motion for reconsideration.

FACTS - Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondents taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners daily earnings t he amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests. - Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit. - On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter. The labor tribunal declared that petitioners are employees of private respondent, and, as such, their dismissal must be for just cause and after due process. - Private respondents first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its decision dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code.

ISSUE WON the NLRC committed grave abuse of discretion in entertaining the motion for reconsideration and in holding that there is no employer-employee relationship in the boundary system.

HELD YES

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Ratio Only one motion for reconsideration from the same party is allowed before the NLRC in line with the policy of assisting the parties in obtaining an expeditious and inexpensive settlement of labor cases. When the NLRC entertained the second motion for reconsideration, it therefore committed grave abuse of discretion. Reasoning - The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power. - In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondents decision dated April 28, 1994, which public respondent denied. With this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be had. Thus, when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party, thus: "SEC. 14. Motions for Reconsideration. --- Motions for reconsideration of any order, resolution or decision of the Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision with proof of service that a copy of the same has been furnished within the reglementary period the adverse party and provided further, that only one such motion from the same party shall be entertained." [Emphasis supplied] - The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry. - As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent is indubitably a prohibited pleading which should have not been entertained at all. Public respondent cannot just disregard its own rules on the pretext of "satisfying the ends of justice", especially when its disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and granting private respondents second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases. Obiter - There is another compelling reason why we cannot leave untouched the flip-flopping decisions of the public respondent. As mentioned earlier, its October 28, 1994 judgment is not in accord with the applicable decisions of this Court. The labor tribunal reasoned out as follows: - Four-fold test for employer-employee relations: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct. - NLRC found that the boundary system is a leasehold system which takes it out of the ordinary notion of control over employees conduct. - The SC iterated its ruling that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. - The SC explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The management of the business is in the owners hands. The owner as holder of the c ertificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. - As consistently held by this Court, termination of employment must be effected in accordance with law. The just and authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of the Labor Code. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of the petitioners that they had been dismissed from work. These lack of valid cause and failure on the part of private respondent to comply with the twin-notice requirement underscored the illegality surrounding petitioners dismissal.

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- Under the law, 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 It must be emphasized, though, that recent judicial pronouncements distinguish between employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those whose illegal dismissals were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after that date are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. The legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Considering that petitioners were terminated from work on August 1, 1991, they are entitled to full backwages on the basis of their last daily earnings.

MANILA GOLF & COUNTRY CLUB INC V IAC (LLAMAR) 337 SCRA 207 NARVASA; September 27, 1994

NATURE Petition for review

FACTS - three separate proceedings, all initiated by or on behalf of herein private respondent and his fellow caddies: 1) filed with the Social Security Commission (SSC) via petition of 17 persons who styled themselves "Caddies of Manila Golf and Country Club-PTCCEA (Philippine Technical, Clerical, Commercial Employees Association) for coverage and availment of benefits under the Social S ecurity Act. It alleged that although the petitioners were employees of the Manila Golf and Country Club, a domestic corporation, the latter had not registered them as such with the SSS. 2) a certification election case filed with the Labor Relations Division of the Ministry of Labor by the PTCCEA on behalf of the same caddies- it was resolved in favor of the petitioners 3) a compulsory arbitration case initiated before the Arbitration Branch of the Ministry of Labor by the same labor organization- it was dismissed for lack of merit by Labor Arbiter on the ground that there was no employer-employee relationship between the petitioning caddies and the respondent Club - In the case before the SSC, the Club filed answer praying for the dismissal of the petition, alleging in substance that the petitioners, caddies by occupation, were allowed into the Club premises to render services as such to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such caddies, the petitioners were not subject to the direction and control of the Club as regards the manner in which they performed their work; and hence, they were not the Club's employees. - Subsequently, all but two (Fermin Llamar and Raymundo Jomok) of the 17 petitioners of their own accord withdrew their claim for social security coverage, avowedly coming to realize that indeed there was no employment relationship between them and the Club. The Commission dismissed the petition for lack of merit:. . . that the caddy's fees were paid by the golf players themselves and not by respondent club...While respondent clu b promulgates rules and regulations on the assignment, deportment and conduct of caddies the same are designed to impose personal discipline among the caddies but not to direct or conduct their actual work. In fact, a golf player is at liberty to choose a caddy of his preference regardless of the respondent club's group rotation system and has the discretion

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on whether or not to pay a caddy...This lends credence to respondent's assertion that the caddies are never their employees in the absence of two elements, namely, (1) payment of wages and (2) control or supervision over them. - From this Resolution appeal was taken to the IAC by the union representing Llamar and Jomok. The appeal ascribed two errors to the SSC: (1) refusing to suspend the proceedings to await judgment by the Labor Relations Division of National Capital Regional Office in the certification election on the precise issue of the existence of employer-employee relationship between the respondent club and the appellants, it being contended that said issue was "a function of the proper labor office"; and (2) adjudicating that self same issue a manner contrary to the ruling of the Director of the Bureau of Labor Relations, which "has not only become final but (has been) executed or (become) res adjudicata." - IAC: declared Fermin Llamar an employee of the Manila Gold and Country Club, ordering that he be reported as such for social security coverage and paid any corresponding benefits, but it conspicuously ignored the issue of res adjudicata raised in said second assignment. - The questioned employer-employee relationship between the Club and Fermin Llamar passed the so-called "control test," establishment in the case i.e., "whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished," the Club's control over the caddies encompassing: (a) the promulgation of no less than 24 rules and regulations just about every aspect of the conduct that the caddy must observe, or avoid, when serving as such, any violation of any which could subject him to disciplinary action, which may include suspending or cutting off his access to the club premises; (b) the devising and enforcement of a group rotation system whereby a caddy is assigned a number which designates his turn to serve a player; (c) the club's "suggesting" the rate of fees payable to the caddies.

ISSUE WON persons rendering caddying services for members of golf clubs and their guests in said clubs' courses or premises are the employees of such clubs and therefore within the compulsory coverage of the Social Security System (SSS)

HELD NO Ratio The Court does not agree that said facts necessarily or logically point to such a relationship, and to the exclusion of any form of arrangements, other than of employment, that would make the respondent's services available to the members and guest of the petitioner. As long as it is, the list made in the appealed decision detailing the various matters of conduct, dress, language, etc. covered by the petitioner's regulations, does not, in the mind of the Court, so circumscribe the actions or judgment of the caddies concerned as to leave them little or no freedom of choice whatsoever in the manner of carrying out their services. Reasoning - In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach themselves on sufference but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away for as long they like . It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to work on their part. All these considerations clash frontally with the concept of employment. The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication of the latter's status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary, showing that the Club has not the measure of control over the incidents of the caddies' work and compensation that an employer would possess. In the final analysis, petitioner has no was of compelling the presence of the caddies as they are not required to render a definite number of hours of work on a single day. Even the group rotation of caddies is not absolute because a player is at liberty to choose a caddy of his preference regardless of the caddy's order in the rotation. Obiter (on issue of res judicata)

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- That same issue of res adjudicata, ignored by the IAC beyond bare mention thereof, as already pointed out, is now among the mainways of the private respondent's defenses to the petition for review. - Because the same question of employer-employee relationship has been dragged into three different fora, willy-nilly and in quick succession, it has birthed controversy as to which of the resulting adjudications must now be recognized as decisive. On the one hand, there is the certification case where the decision found for the existence of employer-employee relationship between the parties; on the other, the compulsory arbitration case which was dismissed for lack of merit on the ground that there existed no such relationship between the Club and the private respondent. - It is well settled that for res adjudicata, or the principle of bar by prior judgment, to apply, the following essential requisites must concur: (1) there must be a final judgment or order; (2) said judgment or order must be on the merits; (3) the court rendering the same must have jurisdiction over the subject matter and the parties; and (4) there must be between the two cases identity of parties, identity of subject matter and identity of cause of action. - A certification proceedings is not a "litigation" in the sense in which the term is commonly understood, but mere investigation of a non-adversary, fact-finding character, in which the investigating agency plays the part of a disinterested investigator seeking merely to ascertain the desires of the employees as to the matter of their representation. - In any case, this Court is not inclined to allow private respondent the benefit of any doubt as to which of the conflicting ruling just adverted to should be accorded primacy, given the fact that it was he who actively sought them simultaneously, as it were, from separate fora. Accordingly, the IAC is not to be faulted for ignoring private respondent's invocation of res adjudicata; on contrary, it acted correctly in doing so. Disposition Reversed and set aside, it being hereby declared that the private respondent, Fermin Llamar, is not an employee of petitioner Manila Golf and Country Club and that petitioner is under no obligation to report him for compulsory coverage to the Social Security System.

FELIX V BUENASEDA 240 SCRA 139 KAPUNAN; January 17, 1995

NATURE Petition for review on certiorari

FACTS - Petitioner Dr. Alfredo Felix joined the National Center for Mental Health (NCMH) as a resident physician and after only 3 years, was promoted to Senior Resident Physician, a position he held until the Ministry of Health reorganized the NCMH in Jan. 1988, pursuant to E.O. 119. Under the said reorganization, Felix was appointed to the position of Sr. Resident Physician in a temporary capacity immediately after he and other employees allegedly tendered their courtesy resignations to the Sec. of Health. Felix was later promoted to the position of Medical Specialist 1 (Temporary Status) which was renewed the following year.

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- In 1988, the Dept. of Health or DoH issued Dept. Order (D.O.) 347, which required board certification as a prerequisite for renewal of specialist positions in various med. centers, hospitals and agencies and specifically provided that specialists working in various branches of DoH be recognized as Fellows of their respective societies and/or Diplomates of their specialty boards or both, the purpose of which was to upgrade the quality o f specialists in DoH hospitals by requiring them to pass rigorous theoretical and clinical exams given by recognized specialty boards. - (Then) Sec. of Health Alfredo Bengzon issued D.O. 478 (amending Sec.4 of D.O. 347) which provided for an extension of appointments of Medical Specialists in cases where termination of those who failed to meet the requirement for board certification might result in disruption of hospital services. The said order provided, among others, that: xxxxx 2. Medical specialists recommended for extension of appointment shall meet the following minimum criteria: a. DOH medical specialist certified b. Has been in the service of the Department at least three (3) years prior to December 1988 c. Has applied or taken the specialty board examination. - In 1991, after reviewing petitioners service record and performance, the Medical Credentials Committee of the NCMH recommend ed non-renewal of his appointment as Medical Specialist 1, informing him of its decision on Aug. 22, 1991. He was, however, allowed to continue in the service, and receive his salary even after being informed of the termination of his appointment. - On Nov. 25, 1991, the Chiefs of Service held an emergency meeting to discuss the petitioners case. In the meeting, the overa ll consensus among the dept. heads was for petitioners non-renewal where his poor performance, frequent tardiness and inflexibility were pointed as among the factors responsible for the recommendation not to renew his appointment. The matter was referred to the CSC, which ruled that the temporary appointment can be terminated any time and that any renewal of such appointment is within the discretion of the appointing authority. Consequently, petitioner was advised by hospital authorities to vacate his cottage. Refusing to comply, petitioner filed a petition with the Merit System Protection Board (MSPB) complaining about the alleged harassment and questioning the non-renewal of his appointment, the MSPB, however, dismissed his complaint for lack of merit. - This decision was appealed to the Civil Service Commission (CSC) which dismissed the same. The MFR was also denied by the CSC hence this appeal. Petitioners claims 1. CSC erred in holding that by submitting his courtesy resignation and accepting his temporary appointment, petitioner had effectively divested himself of his security of tenure, considering the circumstances of such courtesy resignation and acceptance of appointment. 2. Respondent commission erred in not declaring that the conversion of the permanent appointment of petitioner to temporary was done in bad faith in the guise of reorganization and thus invalid, being violative of the petitioners right of security of tenure. Respondent CSCs claims 1. The petitioners temporary appointments after the reorganization pursuant to E.O. 119 were valid and did not violate his constitutional right to security of tenure. 2. Petitioner is guilty of estoppel or laches, having acquiesced to such temporary appointments from 1988-1991 3. The respondent CSC did not act with grave abuse of discretion in affirming the petitioners non-renewal of his appointment to the NCMH.

ISSUE WON petitioners removal from a permanent position (Medical Specialist 1), as a result of the reorganization of the DoH, was void for being violative of the constitutional provision on security of tenure HELD NO Reasoning - A residency or resident physician position in a medical specialty is never a permanent one. Residency connotes training and temporary status. Promotion to the next post-graduate year is based on merit and performance determined by periodic evaluations and examinations of knowledge, skills and bedside manner.

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Under this system, residents, especially those in university teaching hospitals enjoy their right to security of tenure only to the extent that they periodically make the grade. While physicians (or consultants) of specialist rank are not subject to the same stringent evaluation procedures, specialty societies require continuing education as a requirement for accreditation in good standing, in addition to peer review processes based on performance, mortality and morbidity audits, feedback from residents, interns and medical students and research output. The nature of the contracts of resident physicians meets traditional tests for determining employer employee relationships, but because the focus of residency is training, they are neither here nor there. Moreover, stringent standards and requirements for renewal of specialist rank positions or for promotion to the next postgraduate residency year are necessary because lives are ultimately at stake. - From the position of senior resident physician, which he held at the time of the government reorganization, the next logical step in the stepladder process was obviously his promotion to the rank of Medical Specialist 1, a position which he apparently accepted. Such status, however, clearly carried with it certain professional responsibilities including the responsibility of keeping up with the minimum requirements of specialty rank, the responsibility of keeping abreast with current knowledge in his specialty and in Medicine in general, and the responsibility of completing board certification requirements within a reasonable period of time. The evaluation made by petitioner's peers and superiors clearly showed that he was deficient in a lot of areas, in addition to the fact that at the time of his non-renewal, he was not even board-certified. - As respondent CSC has correctly pointed out, the appointment was for a definite and renewable period which, when it was not renewed, did not involve a dismissal but an expiration of the petitioners term. *On estoppel by laches: - Public policy and convenience demand that any claim to any position in the civil service, permanent, temporary or otherwise, or any claim to a violation of the constitutional provision on security of tenure be made within a reasonable period of time. The failure to assert a claim or the voluntary acceptance of another position in government, obviously without reservation, leads to a presumption that the civil servant has either given up his claim or has already settled into the new position. This is the essence of laches which is the failure or neglect, for an unreasonable and unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier; it is the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. - Petitioner made no attempt to oppose earlier renewals of his temporary Specialist 1 contracts, clearly demonstrating his acquiescence to - if not his unqualified acceptance of - the promotion (albeit of a temporary nature). Whatever objections petitioner had against the earlier change from the status of permanent senior resident physician to temporary senior resident physician were neither pursued nor mentioned at or after his designation as Medical Specialist 1 (Temporary). He is therefore estopped from insisting upon a right or claim which he had plainly abandoned when he, from all indications, enthusiastically accepted the promotion. His negligence to assert his claim within a reasonable time, coupled with his failure to repudiate his promotion to a temporary position, warrants a presumption that he either abandoned (his claim) or declined to assert it. Disposition Petition dismissed for lack of merit

R TRANSPORT CORP V EJANDRA 428 SCRA 724 CORONA; May 20, 2004

NATURE Petition for review of the decision of the CFI of Iloilo

FACTS - Rogelio Ejandra worked for petitioner bus company as a driver. - On Jan 31 1996, he was apprehended for obstruction of traffic. His license was confiscated. He reported this to his manager, Oscar Pasquin, who gave him P500 to redeem the license. He was able to retrieve the license after a week since the apprehending officer turned it in only then. - On feb 8, 1996, he reported for work. The company said they were reviewing if they were going to allow him drive again. Also, he was being blamed for damage to the bus. Ejandra said the bus was damaged during the week he wasnt able to drive.

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- Petitioner, on the other hand, claims that Ejandra is a habitual absentee and has abandoned his job. To belie private respondents allegation that his license had been confiscated, petitioner asserted that, had it been true, he should have presented an apprehension report and informed petitioner of his problems with the LTO. But he did not. Petitioner further argued that private respondent was not an employee because theirs was a contract of lease and not of employment, with petitioner being paid on commission basis - The labor arbiter ruled in favor of Ejandra. It was held that he didnt abandon his work, since there wa s valid reason for his 1 week absence. He also was not afforded due process. NLRC and CA affirmed.

ISSUES 1. WON there was an employee employer relationship 2. WON Ejandra was dismissed for a just cause

HELD 1. YES - Petitioner is barred to negate the existence of an employer-employee relationship. He has invoked rulings on the right of an employer to dismiss an employee for just cause. The power to dismiss an employee is one of the indications that there was such relationship. Also, A97 of the Labor Code says that employees can be paid in form of commissions. 2. NO - To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason and (2) a clear intention to sever the employer-employee relationship. Petitioner did not fulfill the requisites. First, Ejandras absence was justified since his license wasnt release until after a week. Second, Ejandra did not want to sever their relationship when he got his license back. Third, labor arbiter Yulo correctly observed that, if private respondent really abandoned his work, petitioner should have reported such fact to the nearest Regional Office of the Department of Labor and Employment in accordance with Section 7, Rule XXIII, Book V of Department Order No. 9, series of 1997 (Rules Implementing Book V of the Labor Code). Petitioner made no such report. - In addition, he wasnt also given due process by not giving him notice and hearing. Disposition Decision reversed

SONZA V ABS-CBN [PAGE 42]

INSULAR LIFE V NLRC (BASIAO) 179 SCRA 459 NARVASA; November 15, 1989

NATURE Petition for certiorari and prohibition to review the resolution of the NLRC.

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FACTS

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- In 1968, Insular Life Assurance Co., Ltd. (Company) and Melecio T. Basiao entered into a contract by w/c Basiao was "authorized to solicit w/in the Phils applications for insurance policies and annuities in accordance with the existing rules and regulations" of the Company; he would receive "compensation, in the form of commissions . . . ", and the "rules in Rate Book and its Agent's Manual, as well as all its circulars and those which may from time to time be promulgated by it . . ." were made part of said contract. - The contract also contained provisions governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement, viz.: "RELATION WITH THE COMPANY. 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. However, the Agent shall observe and conform to all rules and regulations which the Company may from time to time prescribe. "TERMINATION. The Company may terminate the contract at will, without any previous notice to the Agent, for or on account of . . . (explicitly specified causes) . . . - in April 1972, the parties entered into another contract - an Agency Manager's Contract, while Basiao concurrently fulfilled his commitments under the first contract with the Company. - In May 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action and this (he claimed) prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting April 1, 1980. - Basiao filed w/ the Ministry of Labor a complaint against the Company and its president. The complaint sought to recover commissions allegedly unpaid, plus attorney's fees. The respondents claim: Ministry had no jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an independent contractor and that the Company had no obligation to him for unpaid commissions under the terms and conditions of his contract. - The Labor Arbiter found for Basiao. He ruled that the underwriting agreement had established an employer-employee relationship between him and the Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's decision directed payment of his unpaid commissions ". . . equivalent to the balance of the first year's premium remaining unpaid, at the time of his termination, of all the insurance policies solicited by . . . (him) in favor of the respondent company . . ." plus 10% attorney's fees. - This decision was, on appeal by the Company, affirmed by the NLRC.

ISSUE WON Basiao had become the Company's employee by virtue of the contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of the Labor Code

HELD NO - Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and premature to consider Basiao's claim for commissions on its merits. -Control test" (Viana vs. Alejo Al-Lagadan, 1956): "In determining the existence of employer-employee relationship, the following elements are generally considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees' conduct - although the latter is the most important element (35 Am. Jur. 445). . . ," - However, 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.

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- Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. - Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to processing and approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between him and the company. - Mafinco Trading Corporation v Ople: a person engaged to sell soft drinks for another, using a truck supplied by the latter, but with the right to employ his own workers, sell according to his own methods subject only to prearranged routes, observing no working hours fixed by the other party and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a peddler's discount given by the other party for at least 250 cases of soft drinks sold daily, was not an employee but an independent contractor. - Investment Planning Corporation of the Philippines v SSS: there was no employer-employee relationship between a commission agent and an investment company, but that the former was an independent contractor where said agent and others similarly placed were: (a) paid compensation in the form of commissions based on percentages of their sales, any balance of commissions earned being payable to their legal representatives in the event of death or registration; (b) required to put up performance bonds; (c) subject to a set of rules and regulations governing the performance of their duties under the agreement with the company and termination of their services for certain causes; (d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to submit a record of their activities, and who, finally, shouldered their own selling and transportation expenses. - Sara v NLRC: one who had been engaged by a rice miller to buy and sell rice and palay without compensation except a certain percentage of what he was able to buy or sell, did work at his own pleasure without any supervision or control on the part of his principal and relied on his own resources in the performance of his work, was a plain commission agent, an independent contractor and not an employee.

ALMIREZ V INFINITE LOOP TECHNOLOGY CORPORATION 481 SCRA 364 CARPIO-MORALES; January 31, 2006

FACTS - Almirez was hired as a Refinery Senior Process Design Engineer for a specific project by respondent Infinite Loop Technology Corporation through its General Manager Rubino. - September 30, 1999 Details were furnished to Almirez regarding her designation in the company as well as the scope of her services. The scope of the services was to commence on October 18, 1999 and had a guarantee of 12 continuous months. > The senior process design engineer was to work together with the Process Design Consultant in performing the scope of the services which included preparing the process terms of reference or basis of design for the BPSD Petroleum Refinery, to review and revise as necessary the existing conceptual process block diagram of the process flow scheme, implement new process technologies, participate in discussions, make recommendation reports to the company management team, represent the company in meetings and perform other related works. > She was to be paid a professional fee of US$2,000 per month (net of tax) to be 50/50 split in US dollars or equivalent peso every 15 th of the month. She also had other benefits and bonuses along with equipment such as a laptop computer. - Almirez received a total of P77,000 the following amounts on the dates indicated: - 11-23-09 P20,000 (Salary for Nov. 1-15) 12-02-99 P8,000 (Salary for Nov. 15-30) 12-15-99 P2,000 (Full payment for Nov. 15-30 salary)

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P10,000 (Salary for Dec. 1-15,) 1-17-00 P12,000 (Salary for January 1-15) 1-16-00 P12,500 (Salary for January 16-31) 1-20-00 P12,500 (Salary for January 1-15)

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- Almirez then wrote a letter to the company, expressing her disappointment because she was receiving less than expected. She hdadexpected the amount to be net of taxes but she was receiving less because of SSS deductions and tax deductions. She asked that her SSS dues be not deducted from her salary because she was voluntarily paying such obligations on her own. She further stated that she was willing to render her services at Infinite Loop based on the contract and that she was willing to serve as technical consultant on other relevant projects. - Rabino said that Almirezs letter was different from what they had previously agreed upon. According to him, the BPSD project, like any other project, could be deferred and that since the engineering design for the proposed project was not yet available, it would be prudent to suspend the professional services of Almirez as Senior Process Design Engineer effective February 2007. - Almirez, through counsel, wrote a letter to Rabino, asking that she be properly compensated with the total amount of her contract because the contract stated that her tenure would last for 12 months but she had already been suspended by February of 2000. Almirez also noted that she had been paid only P74,229.17 which is way below the amount promised to her of US$2,000 a month net of tax. - Rabino responded by explaining to Almirez that the company and its partner corporations were all experiencing financial difficulties with their projects and asked her to bear with them. - December 12, 2000 Almirez filed a complaint against Infinite Loop for breach of contract of employment. Infinite Loop countered by saying that the NLRC had no jurisdiction to hear the case because there was no employer-employee relationship and the contract was one of services, not employment. - The Labor Arbiter ruled that there was an existence of an employer-employee relationship and ordered Infinite Loop to pay Almirez US$24,000 in its peso equivalent less advances of P77,000. Infinite Loop appealed to the NLRC but the appeal was dismissed. - The Court of Appeals found that the primary cause of Almirezs action was t hat for a sum of money on account of an alleged breach of contract to pay a professional fee. It held that there was no employer-employee relationship so the NLRC and the Labor Arbiter have no jurisdiction over the said case. Thus Almirezs petition was dismissed.

ISSUE WON there was an existence of an employer-employee relationship

HELD 1. NO Ratio Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means to be used in reaching the end. Reasoning - The Court has consistently held a four tier test to evaluate the existence of an employer-employee relationship which include: 1) manner of selection of engagement, 2) payment of wages, 3) presence or absence of power of dismissal and 4) presence or absence of power of control. - The last test is known as the control test and is regarded as the most crucial and determinative indicator of the presence of absence of an employer-employee relationship. - There is no showing of a controlling power of Infinite Loop over Almirez. They only specified what she needed to achieve but now how she was go on about it. - The company had hired her based on her expertise but the company naturally had to appraised of the work progress.

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- The deduction for SSS and tax do not bolster Almirezs contention that there was an employee -employer relationship. However, only one pay slip was issued (Januaryb 16-31, 2000) and the rest were in cash vouchers. As such, the payslip cannot be considered as proof of an employer-employee relationship. - The use of the word salary is not determinative of such a relationship either. Salary is defined as remuneration for servi ces given. The contract details her salary and it serves between the parties was the law governing them. But the contract, as pointed out earlier, is bereft of proof of control of Infinite Loop over Almirez. Disposition Petition is denied for lack of merit with costs against petitioner.

SEVILLA V CA (TOURIST WORLD SERVICES) 160 SCRA 171 SARMIENTO; April 15, 1998

NATURE Appeal by certiorari

FACTS - On the strength of a contract, Tourist World Service Inc. (TWS) leased the premises belonging to Mrs. Segundina Noguera for t he formers use as a branch office. Lina Sevilla bound herself solidarily liable with TWS for the prompt payment of the monthly rentals thereon. - When the branch office was opened, it was run by appellant Sevilla payable to TWS by any airline for any fare brought in on the efforts of Sevilla, 4% was to go to Sevilla and 3% was to be withheld by TWS. - TWS appears to have been informed that Sevilla was connected with a rival firm, the Philippine Travel Bureau, and, since the branch office was anyhow losing, the TWS considered closing down its office. - This was firmed up by two resolutions of the TWS board of directors to abolish the office of the manager and VP of the branch office and authorizing the corporate secretary to receive the properties in the said branch office. - The corporate secretary went to the branch office, and finding the premises locked and being unable to contact Sevilla, padlocked the premises to protect the interests of TWS. - When neither Sevilla nor her employees could enter the locked premises, she filed a complaint against TWS with a prayer for the issuance of a mandatory preliminary injunction. - The trial court dismissed the case holding that TWS, being the true lessee, was within its prerogative to terminate the lease and padlock the premises. It likewise found that Sevilla was a mere employee of TWS and as such, was bound by the acts of her employer. - The CA affirmed. Hence this petition.

ISSUE 1. WON there was an employer-employee relation between TWS and Sevilla 2. WON the padlocking of the premises by TWS without the knowledge and consent of Sevilla entitled the latter to the relief of damages prayed for

HELD 1. NO. It was a principal-agent relationship.

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Ratio In this jurisdiction, there has been no uniform test to determine the existence of an employer-employee relation. In general, We have relied on the socalled right of control test, where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In addition, the existing economic conditions prevailing between the parties, like the inclusion of the employee in the payrolls, are also considered in determining the existence of an employer-employee relationship. Reasoning - Sevilla was not subject to control by TWS either as to the result of the enterprise or as to the means used in connection therewith. - Under the contract of lease, Sevilla bound herself in solidum for the rental payments; an arrangement that would belie the claims of a master-servant relationship for a true employee cannot be made to part with his own money in pursuance of his employers business, or otherwise assume liability thereof. - Sevilla was not in the companys payroll. She retained 4% in commissions from airline bookings, the remaining 3% going to TWS . Unlike an employee who usually earns a fixed salary, she earned compensation in fluctuating amounts depending on her booking successes. - The fact that Sevilla has been designated branch manager does not make her, ergo, TWS employee. Employment is determined b y the right of control test and certain economic parameters. Titles are weak indicators. - When Sevilla agreed to man TWS Ermita branch office, she did so pursuant to a contract of agency. It is the essence of this contract that the agent renders services in representation or on behalf of another. In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her principal, TWS. 2. YES Ratio For its unwarranted revocation of the contact of agency, TWS should be sentenced to pay damages. Reasoning - Sevilla had acquired a personal stake in the business itself, and necessarily, in the equipment pertaining thereto. - Sevilla was not a stranger to that contract of lease having been explicitly named therein as third party in charge of rental payments. She could not be ousted from possession summarily as one would eject an interloper. - The Court is satisfied with the chronicle of events, there was indeed some malevolent design to put the petitioner Sevilla in a bad light following the disclosures that she had worked for a rival firm. Disposition REVERSED.

INSULAR LIFE ASSURANCE CO LTD V NLRC (DELOS REYES) 287 SCRA 476 BELLOSILLO; March 12, 1998
NATURE Petition for review on certiorari of the decision of the NLRC FACTS - On 21 August 1992 petitioner entered into an agency contract with respondent Pantaleon de los Reyes authorizing the latter to solicit within the Philippines applications for life insurance and annuities for which he would be paid compensation in the form of commissions. The contract was prepared by petitioner in its entirety and De los Reyes merely signed his conformity thereto. It contained the stipulation that no employer-employee relationship shall be created between the parties and that the agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. De los Reyes however was prohibited by petitioner from working for any other life insurance company, and violation of this stipulation was sufficient ground for termination of the contract. Aside from soliciting insurance for the petitioner, private respondent was required to submit to the former all completed applications for insurance within ninety (90) consecutive days, deliver policies, receive and collect initial premiums and balances of first year premiums, renewal premiums, deposits on applications and payments on policy loans. Private respondent was also bound to turn over to the company immediately any and all sums of money collected by him. - On 1 March 1993 petitioner and private respondent entered into another contract where the latter was appointed as Acting Unit Manager under its office atthe Cebu DSO V. As such, the duties and responsibilities of De los Reyes included the recruitment, training, organization and development within his designated territory of a sufficient number of qualified, competent and trustworthy underwriters, and to supervise and coordinate the sales efforts of the underwriters in the active solicitation of new business and in the furtherance of the agency's assigned goals. It was similarly provided in the management contract that the relation of the acting unit manager and/or the agents of his unit to the company shall be that of independent contractor. If the appointment was terminated for any reason other than for cause, the acting unit manager would be reverted to agent status and assigned to any unit. As in the previous agency contract, De los Reyes together with his unit force was granted freedom to exercise judgment as to time, place and means of soliciting insurance. Aside from being granted override commissions, the acting unit manager was given production bonus, development allowance and a unit development financing scheme euphemistically termed

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"financial assistance" consisting of payment to him of a free portion of P300.00 per month and a validate portion of P1,200.00. While the latter amount was deemed as an advance against expected commissions, the former was not and would be freely given to the unit manager by the company only upon fulfillment by him of certain manpower and premium quota requirements. The agents and underwriters recruited and trained by the acting unit manager would be attached to the unit but petitioner reserved the right to determine if such assignment would be made or, for any reason, to reassign them elsewhere. Aside from soliciting insurance, De los Reyes was also expressly obliged to participate in the company's conservation program, i.e., preservation and maintenance of existing insurance policies, and to accept moneys duly receipted on agent's receipts provided the same were turned over to the company. As long as he was unit manager in an acting capacity, De los Reyes was prohibited from working for other life insurance companies or with the government. He could not also accept a managerial or supervisory position in any firm doing business in the Philippines without the written consent of petitioner. - Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by petitioner on 18 November 1993 that his services were terminated effective 18 December 1993. He filed a complaint before the Labor Arbiter on the ground that he was illegally dismissed and that he was not paid his salaries and separation pay. ISSUE WON there exist an employer-employee relationship between petitioner and respondent HELD YES - It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the "employee" is an independent contractor when the terms of the agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the "four-fold test" on employment earlier mentioned has to be applied. (a) selection and engagement of employee > Petitioner contends that De los Reyes was ever required to go through the pre-employment procedures and that the probationary employment status was reserved only to employees of petitioner. On this score, it insists that the first requirement of selection and engagement of the employee was not met. A look at the provisions of the contract shows that private respondent was appointed as Acting Unit Manager only upon recommendation of the District Manager. This indicates that private respondent was hired by petitioner because of the favorable endorsement of its duly authorized officer. But, this approbation could only have been based on the performance of De los Reyes as agent under the agency contract so that there can be no other conclusion arrived under this premise than the fact that the agency or underwriter phase of the relationship of De los Reyes with petitioner was nothing more than a trial or probationary period for his eventual appointment as Acting Unit Manager of petitioner. Then, again, the very designation of the appointment of private respondent as "acting" unit manager obviously implies a temporary employment status which may be made permanent only upon compliance with company standards such as those enumerated under the management contract. (b) payment of wages > Petitioner points out that respondent was compensated strictly on commission basis, the amount of which was totally dependent on his total output. But, the manager's contract, speaks differently. It unquestionably demonstrate that the performance requirement imposed on De los Reyes was applicable quarterly while his entitlement to the free portion (P300) and the validated portion (P1,200) was monthly starting on the first month of the twelve (12) months of the appointment. Thus, it has to be admitted that even before the end of the first quarter and prior to the so-called quarterly performance evaluation, private respondent was already entitled to be paid both the free and validated portions of the UDF every month because his production performance could not be determined until after the lapse of the quarter involved. This indicates quite clearly that the unit manager's quarterly performance had no bearing at all on his entitlement at least to the free portion of the UDF which for all intents and purposes comprised the salary regularly paid to him by petitioner. Thus it cannot be validly claimed that the financial assistance consisting of the free portion of the UDF was purely dependent on the premium production of the agent. Be that as it may, it is worth considering that the payment of compensation by way of commission does not militate against the conclusion that private respondent was an employee of petitioner. Under Art. 97 of the Labor Code, "wage" shall mean "however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, price or commission basis . . . .". (c) power of dismissal and power of control > petitioner asserts that its termination of De los Reyes was but an exercise of its inherent right as principal under the contracts and that the rules and guidelines it set forth in the contract cannot, by any stretch of the imagination, be deemed as an exercise of control over the private respondent as these were merely directives that fixed the desired result without dictating the means or method to be employed in attaining it. The management contract, however, prescribes reveals that the company practically dictates the manner by which their jobs are to be carried out particularly exclusivity of service, control of assignments and removal of agents under private respondent's unit, collection of premiums, furnishing of company facilities and materials as well as capital described as Unit Development Fund. - These are but hallmarks of the management system in which herein private respondent worked. This obtaining, there is no escaping the conclusion that private respondent Pantaleon de los Reyes was an employee of herein petitioner. Disposition Petition denied.

CHAVEZ V NLRC (SUPREME PACKAGING INC, LEE) 448 SCRA 478 CALLEJO, SR; January 17, 2005
NATURE Petition for review on certiorari of the Resolution[1] dated December 15, 2000 of the Court of Appeals (CA) reversing its Decision dated April 28, 2000 finding private respondents guilty of illegal dismissal.

FACTS

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- The respondent company, Supreme Packaging, Inc. engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25, 1984. The respondent company furnished the petitioner with a truck. - Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent companys plant manager, his (the petitioners ) desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so. - On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent company terminated the services of the petitioner. Consequently, on May 25, 1995, the petitioner filed an amended complaint against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th month pay, among others. The case was docketed as NLRC Case No. RAB-III-02-6181-95. - The respondents, for their part, denied the existence of an employer-employee relationship between the respondent company and the petitioner. They averred that the petitioner was an independent contractor as evidenced by the contract of service which he and the respondent company entered into. The relationship of the respondent company and the petitioner was allegedly governed by this contract of service. - The respondents insisted that the petitioner had the sole control over the means and methods by which his work was accomplished. He paid the wages of his helpers and exercised control over them. As such, the petitioner was not entitled to regularization because he was not an employee of the respondent company. The respondents, likewise, maintained that they did not dismiss the petitioner. Rather, the severance of his contractual relation with the respondent company was due to his violation of the terms and conditions of their contract. ISSUE WON there existed an employer-employee relationship between the respondent company and the petitioner. HELD YES - The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employers power to control the employees conduct. [11] 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 it. [12] All the four elements are present in this case. - Of the four elements of the employer-employee relationship, the control test is the most important. Although the respondents denied that they exercised control over the manner and methods by which the petitioner accomplished his work, a careful review of the records shows that the latter performed his work as truck driver under the respondents supervision and control. Their right of control was manifested by the following attendant circumstances: 1. The truck driven by the petitioner belonged to respondent company; 2. There was an express instruction from the respondents that the truck shall be used exclusively to deliver respondent companys goods; [19] 3. Respondents directed the petitioner, after completion of each delivery, to park the truck in either of two specific places only, to wit: at its office in Metro Manila at 2320 Osmea Street, Makati City or at BEPZ, Mariveles, Bataan;[20] and 4. Respondents determined how, where and when the petitioner would perform his task by issuing to him gate passes and routing slips. [21] - These circumstances, to the Courts mind, prove that the respondents exercised control ove r the means and methods by which the petitioner accomplished his work as truck driver of the respondent company. - The contract of service indubitably established the existence of an employer-employee relationship between the respondent company and the petitioner. It bears stressing that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract and providing therein that the employee is an independent contractor when, as in this case, the facts clearly show otherwise. Indeed, the employment status of a person is defined and prescribed by law and not by what the parties say it should be.[22] - The employer-employee relationship being established, the Court rules that private respondent is guilty of illegal dismissal.

SAN MIGUEL CORP V ABELLA 461 SCRA 392 CARPIO-MORALES; June 28 2005

NATURE Special Civil Action in the Supreme Court. Certiorari

FACTS - Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative (Sunflower), entered into a one-year Contract of Services commencing on January 1, 1993, to be renewed on a month to month basis until terminated by either party. The pertinent provisions of the contract are:

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1. The cooperative agrees and undertakes to perform and/or provide for the company, on a non-exclusive basis for a period of one year the following services for the Bacolod Shrimp Processing Plant: A. Messengerial/Janitorial B. Shrimp Harvesting/Receiving C. Sanitation/Washing/Cold Storage 4. There is no employer-employee relationship between the company and the cooperative, or the cooperative and any of its members, or the company and any members of the cooperative. The cooperative is an association of self-employed members, an independent contractor, and an entrepreneur. It is subject to the control and direction of the company only as to the result to be accomplished by the work or services herein specified, and not as to the work herein contracted. The cooperative and its members recognize that it is taking a business risk in accepting a fixed service fee to provide the services contracted for and its realization of profit or loss from its undertaking, in relation to all its other undertakings, will depend on how efficiently it deploys and fields its members and how they perform the work and manage its operations. - Pursuant to the contract, Sunflower engaged private respondents to, as they did, re nder services at SMCs Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by the parties every month after its expiration on January 1, 1994 and private respondents continued to perform their tasks until September 11, 1995. In July 1995, private respondents filed a complaint before the NLRC, Regional Arbitration Branch No. VI, Bacolod City, praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. Private respondents subsequently filed on September 25, 1995 an Amended Complaint to include illegal dismissal as additional cause of action following SMCs closure of its Bacolod Shrimp Processing Plant on September 15, 1995which resulted in the termination of their services. SMC filed a Motion for Leave to File Attached Third Party Complaint dated November 27, 1995 to implead Sunflower as Third Party Defendant which was, by Order of December 11, 1995, granted by Labor Arbiter Ray Alan T. Drilon. In the meantime, on September 30, 1996, SMC filed before the Regional Office at Iloilo City of the Department of Labor and Employment (DOLE) a Notice of Closure of its aquaculture operations effective on even date, citing serious business losses. By Decision of September 23, 1997, Labor Arbiter Drilon dismissed private respondents complaint for lack of merit. - Private respondents appealed to the NLRC. By Decision of December 29, 1998, the NLRC dismissed the appeal for lack of merit, it finding that third party respondent Sunflower was an independent contractor in light of its observation that [i]n all the activities of private respo ndents, they were under the actual direction, control and supervision of third party respondent Sunflower, as well as the payment of wages, and power of dismissal. By Decision of February 7, 2001, the appellate court reversed the NLRC decision and accordingly found for private respondents. Justifying its reversal of the findings of the labor arbiter and the NLRC, the appellate court reasoned:Although the terms of the non-exclusive contract of service between SMC and [Sunflower] showed a clear intent to abstain from establishing an employer-employee relationship between SMC and [Sunflower] or the latters members, the extent to which the parties successfully reali zed this intent in the light of the applicable law is the controlling factor in determining the real and actual relationship between or among the parties.There being a finding of labor-only contracting, liability must be shouldered either by SMC or [Sunflower] or shared by both (See Tabas vs. California Manufacturing, Inc., supra, p. 502). SMC however should be held solely liable for [Sunflower] became non-existent with the closure of the aquaculture business of SMC. ISSUE 1. WON the respondents are employees of SMC 2. WON the retrenchment was valid and consequently, whether the respondents are entitled to relief HELD 1. YES - Since private respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed regular employees of the latter and as such are entitled to all the benefits and rights appurtenant to regular employment. They should thus be awarded differential pay corresponding to the difference between the wages and benefits given them and those accorded SMCs o ther regular employees. Respecting the private respondents who were tasked with janitorial and messengerial duties, this Court quotes with approval the appellate courts ruling thereon: - Those performing janitorial and messengerial services however acquired regular status only after rendering one-year service pursuant to Article 280 of the Labor Code. Although janitorial and messengerial services are considered directly related to the aquaculture business of SMC, they are deemed unnecessary in the conduct of its principal business; hence, the distinctionThe law of course provides for two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. - The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work. As for those of private respondents who were engaged in janitorial and messengerial tasks, they fall under the second category and are thus entitled to differential pay and benefits extended to other SMC regular employees from the day immediately following their first year of service. - In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees w ages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.[50] - In labor-only contracting, the statute creates an employer-employee 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.[51] - The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the existence of an employer-employee relationship between SMC and private respondents. The language of a contract is not, however, determinative of the parties relationship; rather it is the totality of the facts and surrounding circumstances of the case.[52] A party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as labor-only contractor or job contractor, it being crucial that its character be measured in terms of and determined by the criteria set by statute 2. SMC has thus proven substantial business reverses justifying retrenchment of its employees. - In the case at bar, company losses were duly established by financial documents audited by Joaquin Cunanan & Co. showing that the aquaculture operations of SMCs Agribusiness Division accumulated losses amounting to P145,848,172.00 in 1992 resulting in the closure of its Calatrava Aquaculture Center in Negros Occidental, P11,393,071.00 in 1993 and P80,325,608.00 in 1994 which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant in 1995. For termination due to retrenchment to be valid, however, the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the DOLE at least one (1) month before the actual date of the retrenchment in order to give employees some time to prepare for the eventual loss of their jobs, as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of

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termination. Private respondents, however, were merely verbally informed on September 10, 1995 by SMC Prawn Manager Ponciano Capay that effective the following day or on September 11, 1995, they were no longer to report for work as SMC would be closing its operations. Where the dismissal is based on an authorized cause under Article 283 of the Labor Code but the employer failed to comply with the notice requirement, the sanction should be stiff as the dismissal process was initiated by the employers exercise of his management prerogative, as opposed to a dismissal based on a just cause under Article 282 with the same procedural infirmity where the sanction to be imposed upon the employer should be tempered as the dismissal process was, in effect, initiated by an act imputable to the employee. In light of the factual circumstances of the case at bar, the Court awards P50,000.00 to each private respondent as nominal damages.The grant of separation pay as an incidence of termination of employment due to retrenchment to prevent losses is a statutory obligation on the part of the employer and a demandable right on the part of the employee. Private respondents should thus be awarded separation pay equivalent to at least one (1) month pay or to at least one-half month pay for every year of service, whichever is higher, as mandated by Article 283 of the Labor Code or the separation pay awarded by SMC to other regular SMC employees that were terminated as a result of the retrenchment, depending on which is most beneficial to private respondents.Considering that private respondents were not illegally dismissed, however, no backwages need be awarded. It is well settled that backwages may be granted only when there is a finding of illegal dismissal.[80] The appellate court thus erred in awarding backwages to private respondents. What was involved in that case was one of illegal dismissal

LOPEZ V METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM 462 SCRA 428 TINGA; June 30, 2005
NATURE Petition for the review of the decision of the CA FACTS - By virtue of an Agreement, petitioners were engaged by the MWSS as collectors-contractors, wherein the former agreed to collect from the concessionaires of MWSS, charges, fees, assessments of rents for water, sewer and/or plumbing services which the MWSS bills from time to time. - In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred to said private concessionaires, effectively terminating the contracts of service between petitioners and MWSS. - Regular employees of the MWSS were paid their retirement benefits, but not petitioners. Instead, they were refused said benefits, MWSS relying on a resolution of the CSC that contract-collectors of the MWSS are not its employees and therefore not entitled to the benefits due regular government employees. - Petitioners filed a complaint with the CSC which denied their claims, stating that petitioners were engaged by MWSS through a contract of service, which explicitly provides that a bill collector-contractor is not an MWSS employee. Relying on Part V of CSC Memorandum Circular No. 38, Series of 1993, the CSC stated that contract services/job orders are not considered government services, which do not have to be submitted to the CSC for approval, unlike contractual and plantilla appointments. Moreover, it found that petitioners were unable to show that they have contractual appointments duly attested by the CSC. In addition, the CSC stated that petitioners, not being permanent employees of MWSS and not included in the list submitted to the concessionaire, are not entitled to severance pay. Petitioners claims for retirement benefits and terminal leave pay were likewise denied. - Petitioners sought reconsideration of the CSC Resolution, which was however denied - Petitioners filed a petition for review with the Court of Appeals which affirmed the ruling of the CSC. ISSUE WON petitioners were employees of the MWSS and, consequently, entitled to the benefits they claim HELD YES - The Court has invariably affirmed that it will not hesitate to tilt the scales of justice to the labor class for no less than the Constitution dictates that the State . . . shall protect the rights of workers and promote their welfare. It is committed to this policy and has always been quick to r ise to defense in the rights of labor, as in this case. nd private sectors.[52] Besides, there is no reason not to apply this principle in favor of workers in the government. The government, including government-owned and controlled corporations, as employers, should set the example in upholding the rights and interests of the working class. - For purposes of determining the existence of employer-employee relationship, the Court has consistently adhered to the four-fold test, namely: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages. Of the four, the control test is the most important element. - A review of the circumstances surrounding the case reveals that petitioners are employees of MWSS. MWSS wielded its power of selection when it contracted with the individual petitioners, undertaking separate contracts or agreements. The same goes true for the power to dismiss. Although termed as causes for termination of the Agreement, a review of the same shows that the grounds indicated therein can similarly be grounds for termination of employment. - On the issue of remuneration, MWSS claims that the compensation received by petitioners does not fall under the definition of wages as provided in Section 2(i) of P.D. 1146. This assertion, however, simply begs the question. The provision is a simple statement of meaning, operating on the a priori premise or presumption that the recipient is already classified as an employee, and does not lay down any basis or standard for determining who are employees and who are not. - On the other hand, relevant and appropriate is the definition of wages in the Labor Code, namely, that it is the remuneration, however designated, for work done or to be done, or for services rendered or to be rendered. The commissions due petitioners were based on the bills collecte d as per the schedule indicated in the Agreement. Significantly, MWSS granted petitioners benefits usually given to employees, to wit: COLA, meal, emergency, and traveling allowances, hazard pay, cash gift, and other bonuses. Petitioners rendered services to MWSS for which they were paid and given similar benefits due the other employees of MWSS. - Now the aspect of control. MWSS makes an issue out of the proviso in the Agreement that specifically denies the existence of employer-employee relationship between it and petitioners. It is axiomatic that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in an agreement and providing therein that the employee is not an MWSS employee when the terms of the agreement and the surrounding circums tances show otherwise. The employment status of a person is defined and prescribed by law and not by what the parties say it should be.

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- In addition, the control test merely calls for the existence of the right to control, and not the exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee, it is enough that the former has a right to wield the power. - Other manifestations of control are evident from the records. The power to transfer or reassign employees is a management prerogative exclusively enjoyed by employers. In this case, MWSS had free reign over the transfer of bill collectors from one branch to another. MWSS also monitored the performance of the petitioners and determined their efficiency ratings. Disposition Petition was GRANTED IN PART. The Decision of the Court of Appeals in C.A.G.R. SP No. 55263, as well as the Civil Service Commissions Resolutions Nos. 991384 and 992074, were REVERSED and SET ASIDE. MWSS is ordered to pay terminal leave pay and separation pay and/or severance pay to each of herein petitioners on the basis of remunerations/commissions, allowances and bonuses each were actually receiving at the time of termination of their employment as contract collectors of MWSS. The case was remanded to the Civil Service Commission for the computation of the above awards and the appropriate disposition in accordance with the pronouncements in this Decision.

LAZARO V SSS (LAUDATO) 435 SCRA 472 TINGA; July 30, 2004

NATURE Petition for Review under ROC Rule 45, assailing the CA Decision, which affirmed two rulings of the Social Security Commission (SSC)

FACTS - Private respondent Rosalina M. Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three employers. Among the respondents was herein petitioner Angelito L. Lazaro, proprietor of Royal Star Marketing, which is engaged in the business of selling home appliances. Laudato alleged that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory coverage or remit Laudato's social security contributions. - Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on commission basis. Lazaro also maintained that Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star. - SSC ruled in favor of Laudato. Applying the "control test," it held that Laudato was an employee of Royal Star, and ordered Royal Star to pay the unremitted social security contributions of Laudato in the amount of P5,007.35, together with the penalties totaling P22,218.54. In addition, Royal Star was made liable to pay damages to the SSC in the amount of P15,680.07 for not reporting Laudato for social security coverage, pursuant to Section 24 of the Social Security Law. Lazaro's MR was denied, prompting him to file a petition for review with the CA. However, the CA affirmed the finding that Laudato was an employee of Royal Star, and hence entitled to coverage under the Social Security Law. - Lazaro's Argument: that Laudato was not qualified for social security coverage, as she was not an employee of Royal Star, her income dependent on a generation of sales and based on commissions; that Royal Star had no control over Laudato's activities, and that under the so-called "control test," Laudato could not be deemed an employee. ISSUE WON Laudato is an employee of Royal Star HELD YES Doctrine For the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the "control test," that is, whether the employer controls or has reserved the right to control the employee, not only as to the result of the work done, but also as to the means and methods by which the same is accomplished. - The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship. In Grepalife v. Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the person insured. - Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc. v. Maalat, the Supreme Court declared that there was an employer-employee relationship, noting that "[the] supervisor, although compensated on commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes. - The determination of an employer-employee relationship depends heavily on the particular factual circumstances attending the professional interaction of the parties. SC sees no reversible error in the findings of fact of the courts below. Both SSC and CA found that Laudato was a sales supervisor and not a mere agent. As such, Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. This is proven by several documentary evidence. Disposition Petition is DENIED. CA Decision AFFIRMED. Costs against petitioner.

ALMIREZ V INFINITE LOOP TECHNOLOGY CORPORATION [PAGE 57]


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LAZARO V SSS (LAUDATO) [PAGE 61] DOMASIG V NLRC (CATA GARMENTS) 261 SCRA 779 (96) PADILLA; September 16, 1996

NATURE Petition for certiorari under Rule 65 of the Rules of Court to nullify and set aside the Resolution of respondent National Labor Relations Commission remanding the records of the case to the arbitration branch of origin for further proceedings.

FACTS - Complaint was instituted by Eddie Domasig against respondents Cata Garments Corporation, a company engaged in garments business and its owner/manager Otto Ong and Catalina Co for illegal dismissal, unpaid commission and other monetary claim(s). - Complainant alleged that he started working with the respondent on July 6, 1986 as Salesman; three (3) years ago, because of a complaint against respondent by its workers, the company changed its name to Cata Garments Corporation; and that on August 29, 1992, he was dismissed when respondent learned that he was being pirated by a rival corporation which offer he refused. - The Labor Arbiter held that complainant was illegally dismissed and entitled to reinstatement and backwages as well as underpayment of salary; 13th month pay; service incentive leave and legal holiday. The Arbiter also awarded complainant his claim for unpaid commission in the amount of P143,955.00. - NLRC remanded the case for further proceedings. - Petitioners Claim > Petitioner claims he was an employee, and that he was illegally dismissed. - Respondents Comments > Respondents claim that Domasig was a mere commission worker, and not a regular employee (which would warrant backwages).

ISSUE WON Domasig is a regular employee (this case is under the topic of proof of employment)

HELD YES, Domasig is a regular employee. Ratio Substantial evidence is sufficient as a basis for judgment on the existence of employer-employee relationship.

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Reasoning

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- Proof beyond reasonable doubt is not required as a basis for judgment on the legality of an employers dismissal of an employ ee, nor even preponderance of evidence for that matter, substantial evidence being sufficient. Any competent and relevant evidence to prove the relationship may be admitted. - Substantial evidence > relevant evidence as a reasonable mind might accept as adequate to support a conclusion, and its absence is not shown by stressing that there is contrary evidence on record, direct or circumstantial, for the appellate court cannot substitute its own judgment or criterion for that of the trial court in determining wherein lies the weight of evidence or what evidence is entitled to belief. > In a business establishment, an identification card is usually provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was indeed an employee of private respondent. > The list presented by private respondents would even support petitioners allegation that, aside from a monthly salary of P1,500.00, he also rec eived commissions for his work as a salesman of private respondents. - Having been in the employ of private respondents continuously for more than one year, under the law, petitioner is considered a regular employee. Disposition The decision of the labor arbiter dated 19 May 1993 is REINSTATED and AFFIRMED.

ABANTE V LAMADRID 430 SCRA 368 YNARES-SANTIAGO; May 28, 2004

NATURE Petition for review assailing the Decision of the CA which affirmed the Resolution of the NLRC

FACTS - Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation sometime in June 1985 as a salesman covering the whole area of Mindanao. His average monthly income was more or less P16,000.00, but later was increased to approximately P20,269.50. Aside from selling the merchandise of respondent corporation, he was also tasked to collect payments from his various customers. Sometime in 1998, petitioner encountered five customers/clients with bad accounts. - Petitioner was confronted by respondent Lamadrid over the bad accounts and warned that if he does not issue his own checks to cover the said bad accounts, his commissions will not be released and he will lose his job. Not contented with the issuance of the foregoing checks as security for the bad accounts, respondents "tricked" petitioner into signing two documents, which he later discovered to be a Promissory Note and a Deed of Real Estate Mortgage. - Due to financial difficulties, petitioner inquired about his membership with the SSS in order to apply for a salary loan. To his dismay, he learned that he was not covered by the SSS and therefore was not entitled to any benefit. While doing his usual rounds as commission salesman, petitioner was handed by his customers a letter from the respondent company warning them not to deal with petitioner since it no longer recognized him as a commission salesman. Petitioner thus filed a complaint for illegal dismissal with money claims against respondent company and its president, Jose Lamadrid, before the NLRC.

ISSUE 1. WON an employer-employee relationship exists between plaintiff and respondent company 2. WON respondent intimidated and tricked plaintiff into providing security for the bad accounts

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HELD 1. NO

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Ratio To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the last one is the most important. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end. Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated according to the result of his efforts and not the amount thereof, no relationship of employer-employee exists. Reasoning - Petitioner Abante was a commission salesman who received 3% commission of his gross sales. No quota was imposed on him by the respondent. He was not required to report to the office at any time or submit any periodic written report on his sales performance and activities. He was not designated by respondent to conduct his sales activities at any particular or specific place. He pursued his selling activities without interference or supervision from respondent company and relied on his own resources to perform his functions. Respondent company did not prescribe the manner of selling the merchandise; he was left alone to adopt any style or strategy to entice his customers. Moreover, petitioner was free to offer his services to other companies engaged in similar or related marketing activities as evidenced by the certifications issued by various customers. 2. NO Ratio While petitioner may have been coerced into executing force to issue the said documents, it may equally be true that petitioner did so in recognition of a valid financial obligation. He who claims that force or intimidation was employed upon him lies the onus probandi. He who asserts must prove. Disposition The decision of the CA is AFFIRMED in toto.

R TRANSPORT CORP V EJANDRA [PAGE 55] MANILA ELECTRIC COMPANY V QUISUMBING [PAGE 19] MANILA ELECTRIC CO V BENAMIRA 302 SCRA 173 AUSTRIA-MARTINEZ; July 14, 2005

NATURE Petition for review on certiorari of the Court of Appeals decision

FACTS - The individual respondents are licensed security guards formerly employed by Peoples Security, Inc. (PSI) and deployed as such at MERALCOs head office in Ortigas Avenue, Pasig, Metro Manila. On November 30, 1990, the security service agreement between PSI and MERALCO was terminated. Immediately thereafter, fifty-six of PSIs security guards, including herein eight individual respondents, filed a complaint for unpaid monetary benefits a gainst PSI and MERALCO. Meanwhile, the security service agreement between respondent Armed Security & Detective Agency, Inc., (ASDAI) and MERALCO took effect on December 1, 1990. In the agreement, ASDAI was designated as the AGENCY while MERALCO was designated as the COMPANY. - Subsequently, the individual respondents were absorbed by ASDAI and retained at MERALCOs head office.

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- Asuncion rendered a decision in NLRC-NCR Case No. 05-02746-90 in favor of the former PSI security guards, including the individual respondents. - Less than a month later, or on July 21, 1992, the individual respondents filed another complaint for unpaid monetary benefits, this time against ASDAI and MERALCO. - On July 25, 1992, the security service agreement between respondent Advance Forces Security & Investigation Services, Inc. (AFSISI) and MERALCO took effect, terminating the previous security service agreement with ASDAI. Except as to the number of security guards, the amount to be paid the agency, and the effectivity of the agreement, the terms and conditions were substantially identical with the security service agreement with ASDAI. - The individual respondents amended their complaint to implead AFSISI as party respondent. They again amended their complaint to allege that AFSISI terminated their services on August 6, 1992 without notice and just cause and therefore guilty of illegal dismissal. - The individual respondents alleged that: MERALCO and ASDAI never paid their overtime pay, service incentive leave pay, premium pay for Sundays and Holidays, P50.00 monthly uniform allowance and underpaid their 13th month pay; on July 24, 1992, when the security service agreement of ASDAI was terminated and AFSISI took over the security functions of the former on July 25, 1992, respondent security guard Benamira was no longer given any work assignment when AFSISI learned that the former has a pending case against PSI, in effect, dismissing him from the service without just cause; and, the rest of the individual respondents were absorbed by AFSISI but were not given any assignments, thereby dismissing them from the service without just cause. - ASDAI denied in general terms any liability for the claims of the individual respondents, claiming that there is nothing due them in connection with their services. - On the other hand, MERALCO denied liability on the ground of lack of employer-employee relationship with individual respondents. It averred that the individual respondents are the employees of the security agencies it contracted for security services; and that it has no existing liability for the individual respondents claims since said security agencies have been fully paid for their services per their respective security service agreement. - For its part, AFSISI asserted that: it is not liable for illegal dismissal since it did not absorb or hire the individual respondents, the latter were merely hold-over guards from ASDAI; it is not obliged to employ or absorb the security guards of the agency it replaced since there is no provision in its security service agreement with MERALCO or in law requiring it to absorb and hire the guards of ASDAI as it has its own guards duly trained to service its various clients. - After the submission of their respective evidence and position papers, Labor Arbiter Pablo C. Espiritu, Jr. rendered a Decision holding ASDAI and MERALCO jointly and solidarily liable to the monetary claims of individual respondents and dismissing the complaint against AFSISI. Individual respondents partial appeal assailed solely the Labor Arbiters declaration that ASDAI is their employer. They insisted that AFSISI is the party liable for their illegal dismissa l and should be the party directed to reinstate them. For its part, MERALCO attributed grave abuse of discretion on the part of the Labor Arbiter in failing to consider the absence of employer-employee relationship between MERALCO and individual respondents. - On the other hand, ASDAI took exception from the Labor Arbiters finding that it is the employer of the individual respondents and therefore liable for the latters unpaid monetary benefits. - The NLRC affirmed in toto the decision of the Labor Arbiter. The individual respondents filed a motion for partial reconsideration but it was denied by the NLRC. The individual respondents filed a petition for certiorari before the SC. They insisted that they were absorbed by AFSISI and the latter effected their termination without notice and just cause. - After the submission of the responsive pleadings and memoranda, we referred the petition, in accordance with St. Martin Funeral Homes vs. NLRC,[15] to the CA which, on September 27, 2000, modified the decision of the NLRC by declaring MERALCO as the direct employer of the individual respondents. - The CA held that: MERALCO changed the security agency manning its premises three times while engaging the services of the same people, the individual respondents; MERALCO employed a scheme of hiring guards through an agency and periodically entering into service contract with one agency after another in order to evade the security of tenure of individual respondents; individual respondents are regular employees of MERALCO since their services as security guards are usually necessary or desirable in the usual business or trade of MERALCO and they have been in the service of MERALCO for no less than six years; an employer-employee relationship exists between MERALCO and the individual respondents because: (a) MERALCO had the final say in the selection and hiring of the guards, as when its advice was proved to have carried weight in AFSISIs decision not to absorb the individual respondents into its workforce; (b) MERALCO paid the wages of individual respondents through ASDAI and AFSISI; (c) MERALCOs discretion on matters of dismiss al of guards was given great weight and even finality since the record shows that the individual respondents were replaced upon the advice of MERALCO; and, (d) MERALCO has the right, at any time, to inspect the guards, to require without explanation the replacement of any guard whose behavior, conduct or appearance is not satisfactory and ASDAI and AFSISI cannot pull out any security guard from MERALCO without the latters consent; and, a labor -only contract existed between ASDAI and AFSISI and MERALCO, such that MERALCO is guilty of illegal dismissal without just cause and liable for reinstatement of individual respondents to its workforce.

ISSUES

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1. WON there existed an employer-employee relationship

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2. WON individual respondents cannot be considered as regular employees as the duties performed by them as security guards are not necessary in the conduct of MERALCOs principal business which is the distribution of electricity. 3. WON MERALCO has a liability over the dismissed guards

HELD 1. It is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a trier of facts and does not normally undertake the reexamination of the evidence presented by the contending parties during the trial of the case considering that the findings of facts of the CA are conclusive and binding on the Court. However, jurisprudence has recognized several exceptions in which factual issues may be resolved by this Court. - In the present case, the existence of an employer-employee relationship is a question of fact which is well within the province of the CA. Nonetheless, given the reality that the CAs findings are at odds to those of the NLRC, the Court is constrained to look deeper into the attendant c ircumstances obtaining in the present case, as appearing on record. The individual respondents never alleged in their complaint in the Labor Arbiter, in their appeal in the NLRC and even in their petition for certiorari in the CA that MERALCO was their employer. They have always advanced the theory that AFSISI is their employer. A perusal of the records shows it was only in their Memorandum in the CA that this thesis was presented and discussed for the first time. We cannot ignore the fact that this position of individual respondents runs contrary to their earlier submission in their pleadings filed in the Labor Arbiter, NLRC and even in the petition for certiorari in the CA that AFSISI is their employer and liable for their termination. As the object of the pleadings is to draw the lines of battle, so to speak, between the litigants and to indicate fairly the nature of the claims or defenses of both parties, a party cannot subsequently take a position contrary to, or inconsistent, with his pleadings. Moreover, it is a fundamental rule of procedure that higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal. The individual respondents are bound by their submissions that AFSISI is their employer and they should not be permitted to change their theory. Such a change of theory cannot be tolerated on appeal, not due to the strict application of procedural rules but as a matter of fairness. A change of theory on appeal is objectionable because it is contrary to the rules of fair play, justice and due process. - Thus, the CA should not have considered the new theory offered by the individual respondents in their memorandum. - The present petition for review on certiorari is far from novel and, in fact, not without precedence. We have ruled in Social Security System vs. Court of Appeals that: ...The guards or watchmen render their services to private respondent by allowing themselves to be assigned by said respondent, which furnishes them arms and ammunition, to guard and protect the properties and interests of private respondent's clients, thus enabling that respondent to fulfill its contractual obligations. Who the clients will be, and under what terms and conditions the services will be rendered, are matters determined not by the guards or watchmen, but by private respondent. On the other hand, the client companies have no hand in selecting who among the guards or watchmen shall be assigned to them. It is private respondent that issues assignment orders and instructions and exercises control and supervision over the guards or watchmen, so much so that if, for one reason or another, the client is dissatisfied with the services of a particular guard, the client cannot himself terminate the services of such guard, but has to notify private respondent, which either substitutes him with another or metes out to him disciplinary measures. That in the course of a watchman's assignment the client conceivably issues instructions to him, does not in the least detract from the fact that private respondent is the employer of said watchman, for in legal contemplation such instructions carry no more weight than mere requests, the privity of contract being between the client and private respondent, not between the client and the guard or watchman. Corollarily, such giving out of instructions inevitably spring from the client's right predicated on the contract for services entered into by it with private respondent. - In the matter of compensation, there can be no question at all that the guards or watchmen receive compensation from private respondent and not from the companies or establishments whose premises they are guarding. The fee contracted for to be paid by the client is admittedly not equal to the salary of a guard or watchman; such fee is arrived at independently of the salary to which the guard or watchman is entitled under his arrangements with private respondent. - Neither does the petitioner have any power to dismiss the security guards. In fact, We fail to see any evidence in the record that it wielded such a power. It is true that it may request the agency to change a particular guard. But this, precisely, is proof that the power lies in the hands of the agency. - Since the petitioner has to deal with the agency, and not the individual watchmen, on matters pertaining to the contracted task, it stands to reason that the petitioner does not exercise any power over the watchmen's conduct. Always, the agency stands between the petitioner and the watchmen; and it is the agency that is answerable to the petitioner for the conduct of its guards. - In this case, the terms and conditions embodied in the security service agreement between MERALCO and ASDAI expressly recognized ASDAI as the employer of individual respondents.

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- Under the security service agreement, it was ASDAI which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to MERALCO according to the number agreed upon; (c) provided the uniform, firearms and ammunition, nightsticks, flashlights, raincoats and other paraphernalia of the security guards; (d) paid them salaries or wages; and, (e) disciplined and supervised them or principally controlled their conduct. The agreement even explicitly provided that [n]othing herein contained shall be understood to make the security guards under this Agreement, employees of the COMPANY, it being clearly understood that such security guards shall be considered as they are, employees of the AGENCY alone. Clearly, the individual respondents are the employees of ASDAI. - Needless to stress, for the power of control to be present, the person for whom the services are rendered must reserve the right to direct not only the end to be achieved but also the means for reaching such end. Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control. - Verily, the security service agreements in the present case provided that all specific instructions by MERALCO relating to the discharge by the security guards of their duties shall be directed to the agency and not directly to the individual respondents. The individual respondents failed to show that the rules of MERALCO controlled their performance. - Moreover, ASDAI and AFSISI are not labor-only contractors. There is labor only contract when the person acting as contractor is considered merely as an agent or intermediary of the principal who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. On the other hand, job (independent) contracting is present if the following conditions are met: (a) the contractor carries on an independe nt 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 to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business.[29] Given the above distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in job contracting. 2. YES - The individual respondents can not be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCOs principal business, which is the distribution of electricity. - Furthermore, the fact that the individual respondents filed their claim for unpaid monetary benefits against ASDAI is a clear indication that the individual respondents acknowledge that ASDAI is their employer. - We cannot give credence to individual respondents insistence that they were absorbed by AFSISI when MERALCOs security servi ce agreement with ASDAI was terminated. The individual respondents failed to present any evidence to confirm that AFSISI absorbed them into its workforce. Thus, respondent Benamira was not retained in his post at MERALCO since July 25, 1992 due to the termination of the security service agreement of MERALCO with ASDAI. As for the rest of the individual respondents, they retained their post only as hold-over guards until the security guards of AFSISI took over their post on August 6, 1992. - In the present case, respondent Benamira has been off-detail for seventeen days while the rest of the individual respondents have only been off - detail for five days when they amended their complaint on August 11, 1992 to include the charge of illegal dismissal. The inclusion of the charge of illegal dismissal then was premature. Nonetheless, bearing in mind that ASDAI simply stopped giving the individual respondents any assignment and their inactivity clearly persisted beyond the six-month period allowed by Article 286 of the Labor Code, the individual respondents were, in effect, constructively dismissed by ASDAI from employment, hence, they should be reinstated. 3. YES, as an indirect employer. - The fact that there is no actual and direct employer-employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents. When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it, MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code, which reads: ART. 107. Indirect employer - The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. - When ASDAI as contractor failed to pay the individual respondents, MERALCO as p rincipal becomes jointly and severally liable for the individual respondents wages, under Articles 106 and 109 of the Labor Code, which provide: ART. 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.

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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. ART. 109. Solidary liability - The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purpose of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. - ASDAI is held liable by virtue of its status as direct employer, while MERALCO is deemed the indirect employer of the individual respondents for the purpose of paying their wages in the event of failure of ASDAI to pay them. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution. - However, as held in Mariveles Shipyard Corp. vs. Court of Appeals, the solidary liability of MERALCO with that of ASDAI does not preclude the application of Article 1217 of the Civil Code on the right of reimbursement from his co-debtor by the one who paid, which provides: ART. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept. - He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each. - ASDAI may not seek exculpation by claiming that MERALCOs payments to it were inadequate for the individual respondents lawful compensation. As an employer, ASDAI is charged with knowledge of labor laws and the adequacy of the compensation that it demands for contractual services is its principal concern and not any others.[35] Disposition present petition is GRANTED. The assailed Decision, dated September 27, 2000, of the CA is REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated January 3, 1994 and the Resolution of the NLRC dated April 10, 1995 are AFFIRMED with the MODIFICATION that the joint and solidary liability of ASDAI and MERALCO to pay individual respondents monetary claims for underpayment of actual regular hours and ov ertime hours rendered, and premium pay for holiday and rest day, as well as attorneys fees, shall be without prejudice to MERALCOs right of reimbursement from ASDAI.

SAN MIGUEL CORP V ABELLA [PAGE 59]

BIG AA MANUFACTURER V ANTONIO 484 SCRA 392 QUISUMBING; March 3, 2006

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NATURE Petition for review on certiorari of a decision of CA

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FACTS - Petitioner Big AA Manufacturer is a sole proprietorship registered in the name of its proprietor, Enrico E. Alejo. Respondents filed a complaint for illegal lay-off and illegal deductions - Respondents > That as regular employees, they worked from 8:00 a.m. to 5:00 p.m. at petitioners premises using petitioners tools and equipment and they received P250 per day. Eutiquio was employed as carpenter-foreman from 1991-99; Jay as carpenter from 1993-99; Felicisimo as carpenter from 1994-99; and Leonardo, Sr. also as carpenter from 1997-99; That they were dismissed without just cause and due process; hence, their prayer for reinstatement and full backwages. - Petitioner Big AA Manufacturer > That it is a sole proprietorship registered in the name of Enrico Alejo and engaged in manufacturing office furniture, but it denied that respondents were its regular employees. It claimed that Eutiquio Antonio was one of its independent contractors who used the services of the other respondents. It said that its independent contractors were paid by results and were responsible for the salaries of their own workers. Allegedly, there was no employer-employee relationship between petitioner and respondents. But it allowed respondents to use its facilities to meet job orders. It also denied that respondents were laid-off by Big AA Manufacturer, since they were project employees only. It added that since Eutiquio Antonio had refused a job order of office tables, their contractual relationship ended. - Labor Arbiter ruled againstpetitioners. Both appealed to NLRC. Respondents appealed for not ordering their reinstatement to their former positions. The NLRC modified the Labor Arbiters decision. It ordered petitioner to reinstate respondents to their former positions or to pay the m separation pay in case reinstatement was no longer feasible, with full backwages in either case. The NLRC ruled that respondents were regular employees, not independent contractors. It further held that petitioner failed to justify its reason for terminating respondents and its failure to comply with the due process requirements. CA affirmed NLRC ruling.

ISSUES 1. WON respondents were regular employees 2. WON respondents were illegally dismissed

HELD 1. YES - Respondents were employed for more than 1 year and their work as carpenters was necessary or desirable in petitioners usual trade or business of manufacturing office furniture. Under Art. 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or nonregular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. - True, certain forms of employment require the performance of usual or desirable functions and exceed 1 year but do not necessarily result to regular employment under Art. 280 of the Labor Code. Some specific exceptions include project or seasonal employment. Yet, in this case, respondents cannot be considered project employees. Petitioner had neither shown that respondents were hired for a specific project the duration of which was determined at the time of their hiring nor identified the specific project or phase thereof for which respondents were hired. Obiter on Requirements for an Independent contractor: a) he carries a distinct and independent business, b) possesses substantial capital or investment in tools, equipment, machinery or work premises, c) he does not work within another employer/companys premises using the latters tools and materials, and d) he is not under the control and supervision of an employer or company 2. YES - The consistent rule is that the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause, failing in which would make the termination illegal, as in this case. - Contrary to petitioners claim of abandonment as a valid just cause for termination, herein respondents did not abandon their work. Petitioner failed to prove that (1) not only of respondents failure to report for work or absence without valid reason, but (2) also of respondents clear i ntention to sever employer-employee relations as manifested by some overt acts.

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- By filing the complaint for illegal dismissal within two days of their dismissal and by seeking reinstatement in their position paper, respondents manifested their intention against severing their employment relationship with petitioner and abandoning their jobs. It is settled that an employee who forthwith protests his layoff cannot be said to have abandoned his work Disposition Petition denied.

COCA-COLA OTTLERS PHILS INC V NLRC (CANONICATO) 307 SCRA 131 BELLOSILLO; May 17, 1999

FACTS - On April 7, 1986 Coca-Cola entered into a contract of janitorial services with Bacolod Janitorial Services (BJS) as an independent contractor. - Private respondent Ramon Canonicato was hired as a janitor by the Bacolod Janitorial Services (BJS). He was assigned at the Coca Cola Bottlers, Inc. considering his familiarity with its premises, having been previous casual employee there. - Goaded by information that COCA COLA employed previous BJS employees who filed a complaint against the company for regularization pursuant to a compromise agreement, Canonicato submitted a similar complaint against COCA COLA to the Labor Arbiter on 8 June 1993 and consequently did not report for work. - On September 28,1993, BJS sent him a letter advising him to report to work within 3 days from receipt, otherwise he would be terminated. - (there was no express mention of a termination but based on the fact I assume he did not return to work and was terminated) - On July 23, 1993, respondent filed with the Labor Arbiter a complaint for illegal dismissal and underpayment of wages. He included BJS therein as a corespondent. The Labor Arbiter dismissed the complaint and ruled that a) there was no employer-employee relationship between Canonicato and Coca Cola (b) BJS was a legitimate job contractor, hence, any liability of COCA COLA as to Canonicato's salary or wage differentials was solidary with BJS in accordance with pars. 1 and 2 of Art. 106, Labor Code; (c) COCA COLA and BJS must jointly and severally pay Canonicato his wage differentials amounting to P2,776.80 and his 13th month salary of P1,068.00, including ten (10%) percent attorney's fees in the sum of P384.48. - The NLRC rejected the decision of the Labor Arbiter on the ground that the janitorial services of Canonicato were found to be necessary in the usual trade of Coca Cola. In so holding, NLRC applied Art.280 of the Labor Code and declared that Canonito was a regular employee of Coca-Cola. Its motion for reconsideration having been denied, Coca Cola filed this petition.

ISSUE WON Canonito was a regular employee of Coca-cola and thus malking Coca-Cola liable for illegal dismissal

HELD NO - In Kimberly Independent Labor Union v. Drilon where the Court took judicial notice of the practice adopted in several government and private institutions and industries of hiring janitorial services on an "independent contractor basis." In this respect, although janitorial services may be considered directly related to the principal business of an employer, as with every business, we deemed them unnecessary in the conduct of the employer's principal business. - This judicial notice, of course, rests on the assumption that the independent contractor is a legitimate job contractor so that there can be no doubt as to the existence of an employer-employee relationship between contractor and the worker. In this situation, the only pertinent question that may arise will no longer deal with whether there exists an employment bond but whether the employee may be considered regular or casual as to deserve the application of Art. 280 of the Labor Code.

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- It was error therefore for the NLRC to apply Art. 280 of the Labor Code in determining the existence of an employment relationship of the parties herein, especially in light of our explicit holding in Singer Sewing Machine Company v. Drion that The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute - In determining the existence of an employer-employee relationship it is necessary to determine whether the following factors are present: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power to dismiss; and, (d) the power to control the employee's conduct. Notably, these are all found in the relationship between BJS and Canonicato and not between Canonicato and petitioner COCA COLA. As the Solicitor-General manifested - BJS satisfied all the requirements of a job-contractor under the law, namely, (a) the ability to carry on an independent business and undertake the contract work on its own account under its own responsibility according to its manner and method, free from the control and direction of its principal or client in all matters connected with the performance of the work except as to the results thereof; and, (b) the substantial capital or investment in the form of tools, equipment, machinery, work premises, and other materials which are necessary in the conduct of its business. - All told, there being no employer-employee relationship between Canonicato and COCA COLA, the latter cannot be validly ordered to reinstate the former and pay him back wages.

PAL V NLRC (STELLAR INDUSTRIAL SERVICES INC)

298 SCRA 430


PANGANIBAN; November 9, 1998

NATURE

Special civil action for certiorari, seeking to nullify the July 13, 1994 Decision and the June 27, 1996 Resolution of the National Labor Relations Commission, which held Philippines Airlines, Inc. liable for separation pay.

FACTS - Sometime in 1977, PAL, a local air carrier, entered into a service agreement with STELLAR, a domestic corporation engaged, among others, in the business of job contracting janitorial services. Pursuant to their service agreement, which was impliedly renewed year after year, STELLAR hired workers to perform janitorial and maintenance services for PAL. The employees were assigned at PAL's various premises under the supervision of STELLAR's supervisors/foremen and timekeepers. The workers were also furnished by STELLAR with janitorial supplies, such as vacuum cleaner and polisher. - On December 31, 1990, the service agreement between PAL and STELLAR expired. PAL then called for [the] bidding of its janitorial requirements. This notwithstanding, STELLAR exerted efforts to maintain its janitorial contract with PAL which, in the meantime, allowed Manuel Parenas and others to work at the PAL's premises. - Subsequently, in a letter dated October 31, 1990, PAL formally informed STELLAR that the service agreement would no longer be renewed effective November 16, 1991, since PAL's janitorial requirements were bidded to three other job contractors. Alleging that they were illegally dismissed, the aforenamed individual private respondents filed, from January to June 1992, five complaints against PAL and STELLAR for illegal dismissal and for payment of separation pay. - Labor Arbiter Manuel P. Asuncion rendered on October 29, 1993 a Decision which held PAL liable for the separation pay of terminated individual respondents. - In its Decision affirming the ruling of the labor arbiter, Respondent Commission held petitioner, as an indirect employer, jointly and severally liable with STELLAR for separation pay. First, the individual private respondent's work, although not directly related to the business of petitioner, was necessary and

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desirable for the maintenance of the petitioner's premises and airplanes. Second, the individual private respondents were retained for thirteen long years, despite the fact that the contract, which petitioner had entered into STELLAR in 1977, was only for one year. On reconsideration, the NLRC modified its earlier Decision by absolving STELLAR of liability, thereby making PAL solely responsible for the award decreed by the labor arbiter. It held that, first, petitioner was the employer of the individual private respondents, for it engaged in labor-only contracting with STELLAR. This was shown by the failure of petitioner to refute the factual finding that it continued to employ the individual private respondents after the expiration of the service contract on December 31, 1990. Second, the individual private respondents' admission in their Complaint that they were employees of STELLAR was not conclusive, as the existence of an employer-employee relation was a question of law that could not be the subject of stipulation. Respondent Commission concluded that their dismissal was without just and valid cause. Because they were no longer seeking reinstatement, petitioner was liable for separation pay.

ISSUES 1. WON the individual private respondents are regular employees of PAL 2. WON petitioner is liable to them for separation pay

HELD
1. No employer-employee relation between complainants and petitioner.
Ratio a) Janitorial service agreement is not labor-only contacting AND b) Extension of service contract is not a source of employer-employee relation. Reasoning a) Prohibited labor-only contracting is defined in Article 106 of the Labor Code as follows:

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 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.
- This definition covers any person who undertakes to supply workers to an employer, where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, [machinery], 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. - On the other hand, permissible job contracting requires the following conditions: (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, [machinery], work premises, and other materials which are necessary in the conduct of his business.

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- The employee-employer relation existed between the individual private respondents and STELLAR, not PAL. STELLAR possessed these earmarks of an employer: (1) the power of selection and engagement of employees (2) the payment of wages (3) the power of dismissal, and (4) the power to control the employee's conduct - A contract of employment existed between STELLAR and the individual private respondents, proving that it was said corporation which hired them. It was also STELLAR which dismissed them, as evidenced by Complainant Parenas' termination letter, which was signed by Carlos P. Callanga, vice president for operations and comptroller of STELLAR. Likewise, they worked under STELLAR's own supervisors, Rodel Pagsulingan, Napoleon Parungao and Renato Topacio. STELLAR even had its own collective bargaining agreement with its employees, including the individual private respondents. Moreover, PAL had no power of control and dismissal over them.
- In fact, STELLAR claims that it falls under the definition of an independent job contractor. Thus, it alleges that it has sufficient capital in the form of tools and equipment, like vacuum cleaners and polishers, and substantial capitalization as proven by its financial statements. Further, STELLAR has clients other than petitioner, like San Miguel Corporation, Hongkong and Shanghai Bank, Eveready, Benguet Management Corporation and Japan Airlines. - All these circumstances establish that STELLAR undertook said contract on its account, under its own responsibility, according to its own manner and method, and free from the control and direction of the petitioner. Where the control of the principal is limited only to the result of the work, independent job contracting exists. The janitorial service agreement between petitioner and STELLAR is definitely a case of permissible job contracting. b) What actually happened was that PAL and STELLAR impliedly renewed, as they had previously done before, their service agreement until PAL's janitorial requirements were bidded to other job contractors. This explains why the individual private respondents remained working at PAL's premises even after December 31, 1990. - It is evident that petitioner was engaged in permissible job contracting and that the individual private respondents, for the entire duration of their employ, were employees not of petitioner but of STELLAR. In legitimate job contracting, no employer-employee relation exists between the principal and the job contractor's employees. The principal is responsible to the job contractor's employees only for the proper payment of wages. But in labor-only contracting, an employeremployee relation is created by law between the principal and the labor-only contractor's employees, such that the former is responsible to such employees, as if he or she had directly employed them. Besides, the Court has already taken judicial notice of the general practice adopted in several government and private institutions of securing janitorial services on an independent contractor basis. 2. NO, STELLAR is the one liable for separation pay. Ratio Despite the protestations of STELLAR, the service agreement was not a project because its duration was not determined or determinable. Reasoning - In order to avoid liability for separation pay, STELLAR argues that it terminated the services of the individual private respondents for a just and valid cause: the completion of a specific project. Thus, they are not entitled to separation pay. - The Court is not convinced. The position of STELLAR that individual private respondents were its project employees is totally unfounded. A regular employee is distinguished from a project employee by the fact that the latter is employed to carry out a specific project or undertaking, the duration or scope of which was

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specified at the time the employees were engaged. A "project" has reference to a particular job or undertaking that may or may not be within the regular or usual business of the employer. In either case, the project must be distinct, separate and identifiable from the main business of the employer, and its duration must be determined or determinable. - While the service agreement may have had a specific term, STELLAR disregarded it, repeatedly renewed the service agreement, and continued hiring the individual private respondents for thirteen consecutive years. Had STELLAR won the bidding, the alleged "project" would have never ended. In any event, the aforesaid stipulations in the employment contract are not included in Articles 282 and 283 of the Labor Code as valid causes for the dismissal of employees. Again, we must emphasize that the main business of STELLAR is the supply of manpower to perform janitorial services for its clients, and the individual private respondents were janitors engaged to perform activities that were necessary and desirable to STELLAR's enterprise. In this case, we hold that the individual private respondents were STELLAR's regular employees, and there was no valid cause for their dismissal. Disposition petition is hereby GRANTED. The assailed Decision and Resolution are SET ASIDE insofar as they held PAL liable for separation pay. The July 13, 1994 Decision is however reinstated insofar as it ORDERED STELLAR liable for such award.

MERCURY DRUG CORPORATION V LIBUNAO 434 SCRA 404 CALLEJO, SR; July 14, 2004

NATURE Petition for review on certiorari of a CA decision which modified an RTC decision, and the Resolution of the CA denying the p etitioners motion for reconsideration

FACTS According to the plaintiff. > Libunao and his friend bought some items at Mercury. He paid for his purchase and placed his receipt in his pocket. As they exited, they were accosted by Sido, the security guard. Sido was armed with a service gun, and was 20 pounds heavier than Libunao. He held Libunaos upper right arm and demanded to see the receipt. Libunao searched but it took time because Sido was holding his right arm. Sido then said Wala yatang resibo yan! Libunao finally found it, and asked Sido, Satisfied ka na? Sido reacted by lunging at him and saying Putang ina mo! Sido was able to hit lubnao on the face, nose, chin, and mouth. He then pointed his revolver at Libunao and said Putang ina mo, pag hindi kayo lumabas ditto papuputukin ko to sa iyo! Libunao eventually filed a criminal complaint against Sido. He was traumatized by the event, he had to consult a psychiatrist, and was found to be suffering from post-traumatic depression syndrome. According to the defendants > Sido, the security guard at Mercury, noticed Libunao exiting the store with a plastic bag, and that no receipt was stapled to it. He asked for the receipt, but was given the plastic bag. He found no receipt, and when Libunao finally found the receipt and shoved it in his face, he just explained he was doing his duty. Libunao said Baka hindi mo ako kilala, security guard ka lang! Ano ba talaga ang problema mo? A violent argument ensued. - The court rendered judgment in favor of the plaintiff, that the defendants Sido, Mercurly Drug Corporation, and Store Manager Vilma Santos, pay the plaintiff moral and exemplary damages, to discourage disrespect of the public by such acts as were committed by defendants

ISSUE WON the remedy of the petitioner is proper (that Mercury Drug be liable for Sidos actions)

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Ratio The petitioner was not Sidos employer; hence, CC A 2180 should not be applied against petitioner. Reasoning - The respondent was burdened to prove that the petitioner was the employer of Sido but failed to discharge this burden. - The respondents counsel admitted Sido was not employed by the petitioner - Store manager Santos testified that Sido was not an employee of the petitioner, but of BSSC, Black Shield Agency. - The petitioner adduced in evidence its contract with the BSSC, which contained the following provisions: 1. THE AGENCY shall provide the CLIENT with the necessary number of armed, uniformed and qualified security guards properly licensed by the Chief of Philippine Constabulary; who shall provide security services to the CLIENT at its establishment at These security guards during the life of the Agreement shall be assigned in accordance with arrangements to be made between the CLIENT and the AGENCY. ... 6. The AGENCY assumes full responsibility for any claim or cause of action which may accrue in favor of any security guard by reason of employment with the AGENCY, it being understood that security guards are employees of the AGENCY and not of the CLIENT. - Therefore, the respondent had no cause of action against the petitioner for damages for Sidos illegal and harmful acts. The respondent should have sued Sido and the BSSC for damages, conformable to A2180. - In Soliman, Jr. v. Tuazon the court held that where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client, the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty to observe the diligence of a good father of a family cannot be demanded from the said client - The petitioner had assigned Sido to help the management open and close the door of the drug store; inspect the bags of customers as they enter the store; and, check the receipts issued by the cashier to said customers for their purchases. Such circumstances do not automatically make the security guard the employee of the petitioner, and, as such, liable for the guard's tortious acts. The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions. Disposition petition is hereby GRANTED. The Decision dated June 9, 2000 and the Resolution dated August 9, 2000 of the Court of Appeals in CA-G.R. CV No. 59754 are hereby REVERSED and SET ASIDE. The complaint filed by the respondent against petitioner Mercury Drug Corporation in Civil Case No. Q-9214114 is DISMISSED. The counterclaims of the latter are also DISMISSED. No costs.

MARIVELESSHIPYARD V CA 415 SCRA573 QUISUMBING; November 11, 2003


FACTS - In October 1993, petitioner Mariveles Shipyard Corporation engaged the services of Longest Force Investigation and Security Agency, Inc. to render security services at its premises. Pursuant to their agreement, Longest Force deployed its security guards, the private respondents herein, at the petitioners shipyard in Mariveles, Bataan. - According to petitioner, it found the services being rendered by the assigned guards unsatisfactory and inadequate, causing it to terminate its contract with Longest Force on April 1995. Longest Force, in turn, terminated the employment of the security guards it had deployed at petitioners shipyard. - Private respondents filed a case for illegal dismissal and underpayment of wages, among others. In turn, Longest Force filed a cross-claim against Mariveles Shipyard, alleging that the service fee paid by the latter to it was way below the PNPSOSIA and PADPAO rate. - The petitioner denied any liability on account of the alleged illegal dismissal, stressing that no employer-employee relationship existed between it and the

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security guards. Petitioner likewise prayed that Longest Forces cross-claim be dismissed for lack of merit. Petitioner averred that Longest Force had benefited from the contract, it was now estopped from questioning said agreement on the ground that it had made a bad deal. - The Labor Arbiter found Mariveles and Longest Force jointly and severally liable for private respondents money claims and attorneys fees. Longest Force was likewise ordered to reinstate private respondents without loss of seniority rights and privileges with full backwages. The NLRC affirmed the Labor Arbiters decision. - The Court of Appeals refused to give due course to Mariveles Shipyards appeal for failure to comply with procedural requirements. ISSUES 1. WON the Court of Appeals dismissal of the petition was in order despite petitioners subsequent compliance with the procedur al requirements 2. WON petitioner was denied due process of law by the NLRC 3. WON petitioner is jointly and severally liable with Longest Force for private respondents money claims HELD 1. NO - The requirement in the Rules that the certification of non-forum shopping should be executed and signed by the plaintiff or the principal means that counsel cannot sign said certification unless clothed with special authority to do so. The reason for this is that the plaintiff or principal knows better than anyone else whether a petition has previously been filed involving the same case or substantially the same issues. Hence, a certification signed by counsel alone is defective and constitutes a valid cause for dismissal of the petition. In the case of the corporations, the physical act of signing may be performed, on behalf of the corporate entity, only by specifically authorized individuals for the simple reason that corporations, as artificial persons, cannot personally do the task themselves. In this case, not only was the originally appended certification signed by counsel, but in its motion for reconsideration, still petitioner utterly failed to show that Ms. Rosanna Ignacio, its Personnel Manager who signed the verification and certification of non-forum shopping attached thereto, was duly authorized for this purpose. 2. NO - The essence of due process is simply an opportunity to be heard, or, as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained of. Not all cases require a trial-type hearing. The requirement of due process in labor cases before a Labor Arbiter is satisfied when the parties are given the opportunity to submit their position papers to which they are supposed to attach all the supporting documents or documentary evidence that would prove their respective claims, in the event the Labor Arbiter determines that no formal hearing would be conducted or that such hearing was not necessary. In any event, petitioner was given ample opportunity to present its side in several hearings conducted before the Labor Arbiter and in the position papers and other supporting documents that it had submitted. Such opportunity more than satisfies the requirement of due process in labor cases. 3. YES - Petitioners liability is joint and several with that of Longest Force, pursuant to Articles 106, 107 and 109 of the Labor Code. In this case, when petitioner contracted for security services with Longest Force as the security agency that hired private respondents to work as guards for the shipyard corporation, petitioner became an indirect employer of private respondents pursuant to Article 107. Following Article 106, when the agency as contractor failed to pay the guards, the corporation as principal becomes jointly and severally liable for the guards wages. This is mandated by the Labor Code to ensure compliance with its provisions, including payment of statutory minimum wage. The security agency is held liable by virtue of its status as direct employer, while the corporation is deemed the indirect employer of the guards for the purpose of paying their wages in the event of failure of the agency to pay them. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution. - Petitioner cannot evade its liability by claiming that it had religiously paid the compensation of guards as stipulated under the contract with the security agency. Labor standards are enacted by the legislature to alleviate the plight of workers whose wages barely meet the spiraling costs of their basic needs. Labor laws are considered written in every contract. Stipulations in violation thereof are considered null. Similarly, legislated wage increases are deemed amendments to the contract. - However, we must emphasize that the joint and several liability imposed on petitioner is without prejudice to a claim for reimbursement by petitioner against the security agency for such amounts as petitioner may have to pay to complainants, the private respondents herein. The security agency may not seek exculpation by claiming that the principals payments to it were inadequate for the guards lawful compensation. As an employer, the sec urity agency is charged with knowledge of labor laws; and the adequacy of the compensation that it demands for contractual services is its principal concern and not any others. - On the issue of the propriety of the award of overtime pay despite the alleged lack of proof thereof, suffice it to state that such involves a determination and evaluation of facts which cannot be done in a petition for review. - Upon review of the award of backwages and attorneys fees, we discovered certain errors that happened in the addition of the amount of individual backwages that resulted in the erroneous total amount of backwages and attorneys fees. These errors ought to be properly rectified now. Thus, the correct sum of individual backwages should be P126,648.40 instead of P126,684.40, while the correct sum of total backwages awarded and attorneys fees should be P3,926,100.40 and P392,610.04, instead of P3,927,216.40 and P392,721.64, respectively. Disposition The Court of Appeals Resolution is AFFIRMED with MODIFICATION.

NEW GOLDEN CITY BUILDERS V CA (GALLO ET AL) 418 SCRA 411 YNARES-SANTIAGO; December 11, 2003

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FACTS - New Golden City Builders and Development Corporation, a corporation engaged in the construction business, entered into a construction contract with Prince David Development Corporation for the construction of a 17-storey office and residential condominium building along Katipunan Road, Loyola Heights, Quezon City, Metro Manila. - Petitioner engaged the services of Nilo Layno Builders to do the specialized concrete works, form works and steel rebar works, for a total contract price of P5 Million. Nilo Layno Builders hired private respondents to perform work at the project. After the completion of the phase for which Nilo Layno Builders was contracted sometime in 1996, private respondents filed a complaint case against petitioner and its president, Manuel Sy, with the Arbitration Branch of the NLRC for unfair labor practice, non-payment of 13th month pay, non-payment of 5 days service incentive leave, illegal dismissal and severance pay in lieu of reinstatement. - The Labor Arbiter found that Nilo Layno Builders was a labor-only-contractor; thus, private respondents were deemed employees of New Golden City. Both parties appealed the decision of the Labor Arbiter to the NLRC. Petitioner maintained that Nilo Layno Builders was an independent contractor and that private respondents were not its employees. On the other hand, private respondents claimed that the Labor Arbiter erred in finding that they were not illegally dismissed and not entitled to recover monetary claims like premium pay for rest days, regular holidays and special holiday. The NLRC affirmed with modification the Labor Arbiters decision. As modified, the NLRC held that private respondents were illegally dismissed and ordered petitioner to reinstate them and to pay their full back wages. CA affirmed.

ISSUES
1. WON Nilo Layno Builders was an independent contractor and not a labor-only contractor 2. WON an employer-employee relationship existed between petitioner and private respondents

HELD
1. YES Ratio The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only to the results of the work. Reasoning - Under Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labor Code, an independent contractor is one who undertakes job contracting, i.e., a person who: (a) 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 (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises, and other materials which are necessary in the conduct of the business. - Nilo Layno Builders hired its own employees, the private respondents, to do specialized work in the Prince David Project of the petitioner. The means and methods adopted by the private respondents were directed by Nilo Layno Builders except that, from time to time, the engineers of the petitioner visited the site to check whether the work was in accord with the plans and specifications of the principal. As admitted by Nilo G. Layno, he undertook the contract work on his own account and responsibility, free from interference from any other persons, except as to the results; that he was the one paying the salaries of private respondents; and that as employer of the private respondents, he had the power to terminate or dismiss them for just and valid cause. - As a licensed labor contractor, Nilo Layno Builders complied with the conditions set forth in Section 5, Rule VII-A, Book III, Rules to Implement the Labor Code, among others, proof of financial capability and list of equipment, tools, machineries and implements to be used in the business. 2. YES. [But for a limited purpose only]

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Ratio In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal 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 principal employer is not responsible for any claim made by the employees. Reasoning - The petitioner did not, as it could not, illegally dismissed the private complainants. Hence, it could not be held liable for back wages and separation pay. Nevertheless, it is jointly and severally liable with Nilo Layno Builders for the private complainants wages, in the same ma nner and extent that it is liable to its direct employees. The pertinent provisions of the Labor Code read: ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. XXX 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. ART. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. - This liability covers the payment of service incentive leave and 13th month pay of the private complainants during the time they were working at petitioners Prince David Project. So long as the work, task, job or project has been performed for petitioners bene fit or on its behalf, the liability accrues for such period even if, later on, the employees are eventually transferred or reassigned elsewhere. Disposition Petition PARTLY GRANTED. Decision of the CA MODIFIED. Petitioner ABSOLVED from liability for back wages. However, he is ORDERED to pay, jointly and severally with Nilo Layno Builders, private complainants Service Incentive Leave Pay and 13th Month Pay.

VINOYA V NLRC (REGENT FOOD CORP) 324 SCRA 469 KAPUNAN; February 2, 2000

NATURE Petition for certiorari under Rule 65 seeking to annul NLRC decision

FACTS - Petition seeks to annul and set aside the decision of the NLRC which reversed the decision of the Labor Arbiter, ordering RFC to reinstate Alexander Vinoya to his former position and pay him backwages. Petitioners Claim > Vinoya applied and was accepted by RFC as sales representative. RFC issued him an identification card. - He reported daily to the RFC office to take the van for the delivery of products. He was assigned to various supermarkets and grocery stores where he booked sales orders and collected payments for RFC. He was required by RFC to put up a monthly bond of P200 as security deposit to guarantee his work performance. - After more than a year, he was transferred by RFC to Peninsula Manpower Company, Inc., an agency which provides RFC with additional contractual workers pursuant to a contract for the supply of manpower services. After this, petitioner was reassigned to RFC as sales rep. - 5 months later, he was informed by the personnel manager of RFC that his services were terminated and he was asked to surrender his ID card. Petitioner was told that his dismissal was due to the expiration of the Contract of Service between RFC and PMCI. Petitioner claims that he was dismissed from employment despite the absence of any notice or investigation.

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- He filed a case against RFC before the Labor Arbiter for illegal dismissal and non-payment of 13th month pay. Respondents Comments > RFC maintains that there is no employer-employee relationship. Petitioner is actually an employee of PMCI, an independent contractor, which had a Contract of Service with RFC. RFC presented an Employment Contract signed by petitioner on 1 July 1991, wherein PMCI appears as his employer. RFC denies that petitioner was ever employed by it prior to 1 July 1991. Petitioner was issued an ID card so that its clients and customers would recognize him as a duly authorized representative of RFC. With regard to the P200 monthly bond, RFC asserts that it was required in order to guarantee the turnover of his collection since he handled funds of RFC. While RFC admits that it had control and supervision over petitioner, it argues that such was exercised in coordination with PMCI. Finally, RFC contends that the termination of its relationship with petitioner was brought about by the expiration of the Contract of Service between itself and PMCI.

ISSUES 1. WON PMCI is a labor-only contractor or an independent contractor 2. WON petitioner was an employee of RFC or PMCI 3. WON petitioner was lawfully dismissed

HELD 1. PMCI is a labor-only contractor. Ratio In determining the existence of an independent contractor relationship, several factors might be considered such as, but not necessarily confined to, whether the contractor is 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. Reasoning - Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. The following elements are present: (a) 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; (b) 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. - Permissible job contracting or subcontracting refers to an arrangement whereby a principal 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. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) 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; (b) The contractor or subcontractor 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 and welfare benefits. - First of all, PMCI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, among others, to qualify as an independent contractor. -Second, PMCI did not carry on an independent business nor did it undertake the performance of its contract according to its own manner and method, free from the control and supervision of its principal, RFC. The evidence at hand shows that the workers assigned by PMCI to RFC were under the control and supervision of the latter. -Third, PMCI was not engaged to perform a specific and special job or service.. As stated in the Contract of Service, the sole undertaking of PMCI was to provide RFC with a temporary workforce able to carry out whatever service may be required by it. Apart from that, no other particular job, work or service was required from PMCI. Obviously, with such an arrangement, PMCI merely acted as a recruitment agency for RFC.

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- Lastly, in labor-only contracting, the employees recruited, supplied or placed by the contractor perform activities which are directly related to the main business of its principal. In this case, the work of petitioner as sales representative is directly related to the business of RFC. Being in the business of food manufacturing and sales, it is necessary for RFC to hire a sales representative like petitioner to take charge of booking its sales orders and collecting payments for such. Thus, the work of petitioner as sales representative in RFC can only be categorized as clearly related to, and in the pursuit of th e latters business. Logically, when petitioner was assigned by PMCI to RFC, PMCI acted merely as a labor-only contractor. 2. Petitioner was an employee of RFC Ratio In determining the existence of employer-employee relationship the following elements of the "four-fold test" are generally considered, namely: (1) the selection and engagement of the employee or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee. Of these four, the "control test" is the most important. - No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the relationship. Reasoning - PMC I as a labor-only contractor, cannot be considered as the employer of petitioner - Even granting that PMCI is an independent contractor, still, a finding of the same will not save the day for RFC. A perusal of the Contract of Service entered into between RFC and PMCI reveals that petitioner is actually not included in the enumeration of the workers to be assigned to RFC. This only shows that petitioner was never intended to be a part of those to be contracted out. -With regard to the first element, ID card is enough proof that petitioner was previously hired by RFC prior to his transfer as agency worker to PMCI. ID card issued by RFC to petitioner was dated more than one year before the Employment Contract was signed by petitioner in favor of PMCI. While the Employment Contract indicates the word "renewal," presumably an attempt to show that petitioner had previously signed a similar contract with PMCI, no evidence of a prior contract entered into between petitioner and PMCI was ever presented by RFC. It follows that it was RFC who actually hired and engaged petitioner to be its employee - With respect to the payment of wages, the Court takes judicial notice of the practice of employers who, in order to evade the liabilities under the Labor Code, do not issue payslips directly to their employees. Even though the wages were coursed through PMCI, we note that the funds actually came from the pockets of RFC. Thus, in the end, RFC is still the one who paid the wages of petitioner albeit indirectly. - As to the third element, the power to dismiss, the Contract of Service gave RFC the right to terminate the workers assigned to it by PMCI without the latters approval. The dismissal of petitioner was indeed made under the instruction of RFC to PMCI. -The power of control refers to the authority of the employer to control the employee not only with regard to the result of work to be done but also to the means and methods by which the work is to be accomplished. The "control test" calls merely for the existence of the right to control the manner of doing the work, and not necessarily to the actual exercise of the right. The Labor Arbiter found that petitioner was under the direct control and supervision of the personnel of RFC and not PMCI. 3. YES Ratio The requirements for the lawful dismissal of an employee are two-fold, the substantive and the procedural aspects. Not only must the dismissal be for a valid or authorized cause, the rudimentary requirements of due process - notice and hearing must, likewise, be observed before an employee may be dismissed. Reasoning - Since petitioner, due to his length of service, already attained the status of a regular employee, he is entitled to the security of tenure provided under the labor laws. Hence, he may only be validly terminated from service upon compliance with the legal requisites for dismissal. - RFC never pointed to any valid or authorized cause under the Labor Code which allowed it to terminate the services of petitioner. Its lone allegation that the dismissal was due to the expiration or completion of contract is not even one of the grounds for termination allowed by law. - Neither did RFC show that petitioner was given ample opportunity to contest the legality of his dismissal. In fact, no notice of such impending termination was ever given him. - An employee who has been illegally dismissed is entitled to reinstatement to his former position without loss of seniority rights and to payment of full backwages corresponding to the period from his illegal dismissal up to actual reinstatement. Disposition Petition granted.

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MANILA WATER COMPANY V PENA 434 SCRA 52 YNARES-SANTIAGO; July 8, 2004

NATURE Petition for review on certiorari

FACTS Manila Water is one of the 2 concessionaires contracted by MWSS to manage water distribution. Pursuant to RA No. 8041, petitioner undertook to absorb exemployees of MWSS whose names were in the list, and those not in the list were terminated. Respondents are contractual collectors, not listed, but petitioner still engaged their services. They signed a 3 month contract. 121 collectors incorporated the Association Collectors Group Inc. or ACGI. Petitioner continued to transact with ACGI, but eventually terminated its contract. Respondents filed complaint for illegal dismissal, saying they were petitioners employees. Petitioner asserts respondents w ere employees of ACGI, an independent contractor. Arbiter found dismissal illegal. NLRC reversed. Respondents filed certiorari petition with CA, which reversed NLRC decision and reinstated with modification the Arbiter decision. Hence this petition. ISSUES 1. WON theres employer-employee relationship 2. WON respondents were illegally dismissed

HELD 1. YES - We must resolve WON ACGI is an independent contractor or a labor-only contractor. - Labor-only contracting refers to arrangement where contractor merely recruits and places workers for a principal. Elements - contractor doesnt have substantial capital - contractor doesnt control performance of contractual employee - Arbiter correctly ruled that ACGI was not an independent contractor. ACGI doesnt have substantial capital. It has no offic e. The work of the respondents was directly related to business of petitioner. And ACGI did not carry on an independent business according to its own manner. - ACGI was a labor-only contractor, an agent of the petitioner. - Then the workers are employees of the petitioner. - Even the four-fold test (selection, payment of wages, dismissal power, control of conduct) indicate the relationship. 2. YES - The term fixed in the subsequent contract was used to defeat the tenurial security. - Dismissal was illegal.

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GRANDSPAN DEVELOPMENT CORP V BERNARDO 470 SCRA 461 SANDOVAL-GUTIERREZ; September 21, 2005

NATURE Certiorari under Rule 45

FACTS - The instant controversy stemmed from a complaint for illegal dismissal and non-payment of benefits filed with the LA by Ricardo Bernardo, Antonino Ceidoza and Edgar Del Prado, against Grandspan and/or its warehouse manager, Manuel G. Lee - In their complaint, respondents alleged that sometime in 1990, they were employed as truck scale monitors by Grandspan with a daily salary of P104.00 each. Eventually, they were assigned at its Truck Scale Section of the Warehouse/Materials Department. They were issued identification cards signed. - Oct 28, 1992-Grandspan sent them a notice terminating their services effective October 29, 1992 for using profane or offensive language, in violation of Article VI (2) (a) of the companys Rules and Regulations. - Grandspan denied the allegations and claimed that respondents are employees of J. Narag Construction. - Sometime in the 3rd quarter of 1992, Canad Japan Co., Ltd. engaged Grandspans services for fabrication works of several round and rectangular steel tanks needed for the HCMG or Sogo project due for completion in September, 1992. As a consequence, Grandspan subcontracted the services of J. Narag Construction which, in turn, assigned its 3 helpers (herein respondents) to work for its project. - Sometime in October, 1992, Manuel G. Lee, manager of Grandspans Warehouse Department received a report from supervisor Rober t Ong that respondents vandalized the companys log book and chairs. - This prompted petitioner to send J. Narag Construction a memorandum terminating the services of respondents for violation of the companys Rules and Regulations. - June 30, 1994- LA dismissed respondents complaint; concluded that respondents were validly dismissed from employment; held too that respondent were project employees whose services were terminated upon completion of the project for which they were hired. - NLRC- remanded the case to the LA for appropriate proceedings to determine whether there is an employer-employee relationship between the parties. - Both parties filed MRs but were denied by the NLRC in separate Resolutions - Meantime, Del Prado died and was substituted by his surviving parent, Edgardo Del Prado. - Sept 17, 1999- CA set aside the NLRCs Resolutions and ordered Grandspan (1) to reinstate respondents Bernardo and Ceidoza to their former positions and pay, jointly and severally with J. Narag Construction, their backwages and other benefits, and (2) to pay respondent Del Prado his separation pay. - CA found that respondents are employees of petitioner; that they were non-project workers; and that they were denied due process, thus: They(Respondents Bernardo et al) worked in Grandspans premises using the materials, supplies and equipment of Grandspan. They were under the supervision of Grandspan as to the manner and results of their work, and performed services directly connected to the usual business of respondent Grandspan for the fabrication of heavy structural components - Oct 8, 1999- Grandspan filed MR. Respondents also filed a motion for reconsideration and/or clarification praying that the Appellate Court s Decision be modified by awarding respondent Del Prado his backwages.

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- Jan 6, 2000- CA denied Grandspans MR but order Grandspan and J. Narag Construction to pay respondent Del Prado his separation pay and backwages.

ISSUE WON the CA erred in holding that respondents are employees of Grandspan

HELD YES Grandspans Argument: > it has no employer-employee relationship with respondents since they are employees of J. Narag Construction, an independent contractor. - Miguel vs. JCT Group - The test for determining an employer-employee relationship hinges on resolving who has the power to select employees, who pays for their wages, who has the power to dismiss them, and who exercises control in the methods and the results by which the work is accomplished. - SC agrees with CA when it found that J. Narag Construction assigned respondents to perform activities directly related to the main business of petitioner. . These circumstances confirm the existence of an employer-employee relationship between petitioner and respondents. > They worked in petitioners premises, using its equipment, materials and supplies. J. Narag Constructions payroll worksheets covering the period from December 21, 1990 to July 31, 1991 show that the payment of their salaries was approved by petitioner. > The manager and supervisor of petitioners Warehouse Department supervised the manner and results of their work. > It was petitioner who terminated their services after finding them guilty of using profane or offensive language in violation of Article VI (2) (a) of the companys Rules and Regulations - SC also agrees with the CA that J. Narag Construction is a labor-only contractor. > A106 LC as amended, provides that 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. x x x. - J. Narag Construction is indeed a labor-only contractor. These are the reasons: (1) it is not registered as a building contractor with the SEC; (2) it has no contract with petitioner; and (3) there is no proof of its financial capability and has no list of equipment, tools, machineries and implements used in the business. - Kiamco vs. NLRC: 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. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. - Grandspan could not present employment contracts signed by respondents showing that their employment was for the duration of the HCMG or Sogo project and failed to present any report terminating the services of respondents when its projects were actually finished pursuant to Sec2.2 (e) of the Labor Department Order No. 19 SC: The failure of the employer to file termination reports after every project completion with the nearest public employment office is an indication that respondents were not project employees. TF: respondents are Grandspans regular employees. As such, they are entitled to security of tenure and can only be dismissed for a just or authorized cause, as provided by Article 279 of the Labor Code. - Bolinao Security and Investigation Service, Inc. vs. Toston- it is incumbent upon the employer to prove by the quantum of evidence required by law that the dismissal of an employee is not illegal, otherwise, the dismissal would be unjustified.

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- SC: Termination is ILLEGAL. Grandspan violated respondents right (both substantive and procedural) to due process as records show that respondents were not served by notices of any kind nor were asked to explain the misconduct imputed to them. > Loadstar Shipping Co., Inc. vs. Mesano: The law requires that an employee sought to be dismissed must be served two written notices before termination of his employment. The first notice is to apprise the employee of the particular acts or omissions by reason of which his dismissal has been decided upon; and the second notice is to inform the employee of the employers decision to dismiss him. Failure to comply with the requirement of two notices makes the dismissal illegal. The procedure is mandatory. Non-observance thereof renders the dismissal of an employee illegal and void. - SC: they are entitled to reinstatement without loss of seniority rights, full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement. Disposition CAs decision AFFIRMED with modification. Reinstatement in this case is N/A because of antagonism. Respondents are entitled to a separation pay of P4,992.00 plus their respective full backwages, and other privileges and benefits, or their monetary equivalent, during the period of their dismissal up to their supposed actual reinstatement.

PHILIPPINE AIRLINES INC V NLRC (VILLENA, NATIONAL ORGANIZATION OF WORKING MEN, VILLACRUZ) 296 SCRA 214 QUISUMBING; September 25, 1998

NATURE Special Civil Action in the Supreme Court. Certiorari.

FACTS - Petitioner Philippine Airlines Inc. (PAL) is a domestic corporation principally engaged in the air transportation industry for both domestic and foreign markets. Private respondent National Organization of the Workingmen (NOWM) is a labor union, while the other private respondents are members of respondent union and complainants in aforementioned cases. - PAL contracted the services G. C. Services Enterprises, to undertake specific projects. Accordingly, G. C. Services recruited and hired carpenters, painters, and electricians and assigned them to different PAL shops, namely: Carpentry Shop, Electrical Shop, Technical Center Shop and Inflight Center Shop, all under PALs Construction and Corporate Services Department. - PAL terminated its contract with G. C. Services. As a result, all G.C. employees assigned as PAL project workers were notified by G.C. Services not to report anymore to PAL. Later, PAL decided to give G.C. Services employees the opportunity to apply as regular employees, in accordance with its practice of giving employment priority to qualified persons who had been connected with PAL. Due to lack of vacant positions and also due to alleged unsatisfactory work performance records of some, not all G.C. Services employees were hired. Those who were not hired instituted the instant complaint for illegal dismissal. The complainants were represented in their case by the NOWM. - Initially, there were 36 complainants in these three consolidated cases. In the course of the proceedings, PAL agreed to employ 23 qualified complainants. Only 12 complainants were left. - The rest of the complainants alleged that they applied for employment with G.C. Services; that after they were accepted they were made to work at PAL Maintenance Department where each of them worked as carpenters, welders, or electricians; that they were not considered employees of PAL but that of G.C. Services; that their work are necessary and directly related to PALs principal bu siness. In pointing at PAL as their real employer, they averred that G.C. Services is only an agent of PAL because it does not have substantial capital in the form of cash investments, tools, equipment or work premises; that it merely supplied workers to PAL and these workers were supervised, directed and controlled by PAL regular employees; that PAL actually decided when, where and what to work; that PAL decided how many of them were to be taken in, when they would start, and when they would not. Complainants, thus, argued that G.C. Services being a mere agent, the real employer was PAL pursuant to Art.106 of the Labor Code which prohibits the employment of persons through labor only contracting agencies, like the G.C. Services Enterprise.

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- In claiming that they were illegally dismissed, complainants alleged that they were dismissed from employment without just cause and without due process and without any prior notice. They thus prayed for reinstatement with full backwages from the date of their dismissal on March 31, 1990 up to the date of their actual reinstatement. - Respondent PAL denied the existence of employer-employee relationship between it and the complainants. It averred that G.C. Services Enterprises, as a duly licensed independent contractor, contracted on its own account under its own responsibility; that the contractor has substantial capital or investment in the form of tools, equipment and other materials necessary in the conduct of its business; that complainants were being paid their wages by G.C. Services and not PAL; and that they were terminated by G.C. Services. PAL further argued that even granting arguendo that complainants are entitled to be regularized, it is not obliged to employ all the complainants; and that there are no more positions or substantially equivalent positions within its organization for which they maybe (sic) qualified. - The Labor Arbiter ruled that G.C. Services Enterprises is a labor-only contractor and mere agent of PAL (petitioner herein), thus, the private respondents are deemed employees of petitioner. The Labor Arbiter then declared the termination of private respondents services illegal, an d held petitioner and G.C. Services Enterprises jointly and severally liable to pay private respondents their separation pay, backwages as well as attorneys fees. - Both parties appealed to the NLRC, which, affirmed the Labor Arbiters decision with modification as to the computation of the monetary award. - Its motion for reconsideration having been denied, petitioner filed the instant petition.

ISSUES 1. WON the public respondents committed grave abuse of discretion in declaring the dismissal of private respondents illegal despite the finding of redundancy 2. WON private respondents are entitled to separation pay as well as backwages 3. WON petitioner should be held jointly and severally liable

HELD 1. YES - The petitioner regularized and/or re-employed 23 original complainants as there were vacant positions to which they could qualify. However, the remaining 12 complainants (private respondents herein) could no longer be absorbed into petitioners regular workforce as there were no lo nger vacant positions as evidenced by the Table of Organization of PAL Construction and Corporate Services Department. Simply put, the services of private respondents were already in excess of what is reasonably demanded by the actual manpower requirement of petitioner. It is settled that where there is need for reduction of workforce, management has the right to choose whom to layoff, depending on the work still required to be done and the qualities of the workers to be retained. - Under Article 203 (must be 283) of the Labor Code, the employer may terminate an employee due to redundancy or retrenchment. - In Wilshire (sic) File Co., Inc. v. NLRC, 193 SCRA 672 the Supreme Court aptly ruled: 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 the superfluity of a position or positions may be the outcome of a number of factors, such as over-hiring of workers xxx. The employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business. (underscoring supplied) - Clearly, the Labor Arbiter recognized the existence of redundancy. Despite said findings the Labor Arbiter ruled as follows: xxx In consonance therefore under Art. 280 of the Labor Code of the Philippines, herein complainants are regular employees. For being so, they are protected by the Security of Tenure provision of law (Art. 279, Labor Code) the complainant dismissal being not in contemplation with Art. 282 of the Labor Code it is therefore illegal. xxx - The reference to Article 282 is misplaced. Article 282 enumerates the causes for termination by reason of some blameworthy act or omission on the part of the employee. - In the instant case, the cause of termination is redundancy which is an authorized cause for termination under Article 283. In any event, it is absurd for the Labor Arbiter to declare a finding of redundancy, on one hand, and to conclude, on the other, that the termination of private respondents services is illegal. There being redundancy, the dismissal of private respondents is valid

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2. NO

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- Since private respondents were validly dismissed under Art. 283, they are not entitled to backwages. Apparently, public respondents awarded backwages to private respondents to penalize PAL for engaging in a labor-only scheme. However, the law does not give public respondents such authority. The only effect of labor-only contracting is that 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 (Art. 106, Labor Code). - Thus, private respondents are entitled to separation pay only. The award of backwages to them has no basis in law. 3. YES - Petitioner and G.C. Services Enterprises are jointly and severally liable to the private respondents for the latters monetar y claims. The reason is that G.C. Services Enterprises, being a labor only contractor, is merely an agent of the petitioner (the employer); the resultant liability must be shouldered by either one or shared by both. Hence, petitioner cannot avoid liability by invoking its Service Agreement with G.C. Services Enterprises considering that here the liability is imposed by law.

SAN MIGUEL V MAERC INTEGRATED SERVICES 405 SCRA 579 BELLOSILLO; July 10, 2003

FACTS - TWO HUNDRED NINETY-ONE (291) workers filed their complaints (nine [9] complaints in all) against San Miguel Corporation (petitioner herein) and Maerc Integrated Services, Inc. (respondent herein), for illegal dismissal, underpayment of wages, non-payment of service incentive leave pays and other labor standards benefits, and for separation pays from 25 June to 24 October 1991. The complainants alleged that they were hired by San Miguel Corporation (SMC) through its agent or intermediary Maerc Integrated Services, Inc. (MAERC) to work in two (2) designated workplaces in Mandaue City: one, inside the SMC premises at the Mandaue Container Services, and another, in the Philphos Warehouse owned by MAERC. They washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis. Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been working for SMC under the guise of being employees of another contractor, Jopard Services, until the services of the latter were terminated on 31 January 1988. SMC informed MAERC of the termination of their service contract by the end of June 1991. SMC cited its plans to phase out its segregation activities starting 1 June 1991 due to the installation of labor and cost-saving devices. When the service contract was terminated, complainants claimed that SMC stopped them from performing their jobs; that this was tantamount to their being illegally dismissed by SMC who was their real employer as their activities were directly related, necessary and desirable to the main business of SMC; and, that MAERC was merely made a tool or a shield by SMC to avoid its liability under the Labor Code - MAERC for its part admitted that it recruited the complainants and placed them in the bottle segregation project of SMC but maintained that it was only conveniently used by SMC as an intermediary in operating the project or work directly related to the primary business concern of the latter with the end in view of avoiding its obligations and responsibilities towards the complaining workers. -The Labor Arbiter rendered a decision holding that MAERC was an independent contractor. He dismissed the complaints for illegal dismissal but ordered MAERC to pay complainants' separation benefits in the total amount of P2,334,150.00. MAERC and SMC were also ordered to jointly and severally pay complainants their wage differentials in the amount of P845,117.00 and to pay attorney's fees in the amount of P317,926.70. - The National Labor Relations Commission (NLRC) ruled that MAERC was a labor-only contractor and that complainants were employees of SMC. The NLRC also held that whether MAERC was a job contractor or a labor-only contractor, SMC was still solidarily liable with MAERC for the latter's unpaid obligations, citing Art. 109 4 of the Labor Code. Thus, the NLRC modified the judgment of the Labor Arbiter and held SMC jointly and severally liable with MAERC for complainants' separation benefits. In addition, both respondents were ordered to pay jointly and severally an indemnity fee of P2,000.00 to each complainant. - SMC filed petition for certiorari

ISSUE

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WON the complainants are employees of petitioner SMC or of respondent MAERC

HELD Employees of SMC - In ascertaining an employer-employee relationship, the following factors are considered: (a) the selection and engagement of employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the power to control an employee's conduct, the last being the most important. Application of the aforesaid criteria clearly indicates an employer-employee relationship between petitioner and the complainants. - Evidence discloses that petitioner played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the complainants had already been working for SMC long before the signing of the service contract between SMC and MAERC. - The incorporators of MAERC admitted having supplied and recruited workers for SMC even before MAERC was created. The NLRC also found that when MAERC was organized into a corporation, the complainants who were then already working for SMC were made to go through the motion of applying for work with Ms. Olga Ouano, President and General Manager of MAERC, upon the instruction of SMC through its supervisors to make it appear that complainants were hired by MAERC. This was testified to by two (2) of the workers who were segregator and forklift operator assigned to the Beer Marketing Division at the SMC compound and who had been working with SMC under a purported contractor Jopard Services since March 1979 and March 1981, respectively. Both witnesses also testified that together with other complainants they continued working for SMC without break from Jopard Services to MAERC. - As for the payment of workers' wages, it is conceded that MAERC was paid in lump sum but records suggest that the remuneration was not computed merely according to the result or the volume of work performed. The memoranda of the labor rates bearing the signature of a Vice-President and General Manager for the Vismin Beer Operations as well as a director of SMC appended to the contract of service reveal that SMC assumed the responsibility of paying for the mandated overtime, holiday and rest day pays of the MAERC workers. SMC also paid the employer's share of the SSS and Medicare contributions, the 13th month pay, incentive leave pay and maternity benefits. In the lump sum received, MAERC earned a marginal amount representing the contractor's share. These lend credence to the complaining workers' assertion that while MAERC paid the wages of the complainants, it merely acted as an agent of SMC. - Petitioner insists that the most significant determinant of an employer-employee relationship, i.e., the right to control, is absent. The contract of services between MAERC and SMC provided that MAERC was an independent contractor and that the workers hired by it "shall not, in any manner and under any circumstances, be considered employees of the Company, and that the Company has no control or supervision whatsoever over the conduct of the Contractor or any of its workers in respect to how they accomplish their work or perform the Contractor's obligations under the Contract." - In deciding the question of control, the language of the contract is not determinative of the parties' relationship; rather, it is the totality of the facts and surrounding circumstances of each case. - Despite SMCs disclaimer, there are indicia that it actively supervised the complainants. SMC maintained a constant presence in the workplace through its own checkers. Its asseveration that the checkers were there only to check the end result was belied by the testimony of Carlito R. Singson, head of the Mandaue Container Service of SMC, that the checkers were also tasked to report on the identity of the workers whose performance or quality of work was not according to the rules and standards set by SMC. According to Singson, "it (was) necessary to identify the names of those concerned so that the management [referring to MAERC] could call the attention to make these people improve the quality of work." - Other instances attesting to SMC's supervision of the workers are found in the minutes of the meeting held by the SMC officers on 5 December 1988. Among those matters discussed were the calling of SMC contractors to have workers assigned to segregation to undergo and pass eye examination to be done by SMC EENT company doctor and a review of compensation/incentive system for segregators to improve the segregation activities. - But the most telling evidence is a letter by Mr. Antonio Ouano, Vice-President of MAERC dated 27 May 1991 addressed to Francisco Eizmendi, SMC President and Chief Executive Officer, asking the latter to reconsider the phasing out of SMC's segregation activities in Mandaue City. The letter was not denied but in fact used by SMC to advance its own arguments. Briefly, the letter exposed the actual state of affairs under which MAERC was formed and engaged to handle the segregation project of SMC. It provided an account of how in 1987 Eizmendi approached the would-be incorporators of MAERC and offered them the business of servicing the SMC bottle-washing and segregation department in order to avert an impending labor strike. After initial reservations, MAERC incorporators accepted the offer and before long trial segregation was conducted by SMC at the PHILPHOS warehouse. - In legitimate job contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal 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 principal employer is not responsible for any claim made by the employees. - On the other hand, in labor-only contracting, the statute creates an employer-employee 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. The principal employer therefore becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees.

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- This distinction between job contractor and labor-only contractor, however, will not discharge SMC from paying the separation benefits of the workers, inasmuch as MAERC was shown to be a labor-only contractor; in which case, petitioner's liability is that of a direct employer and thus solidarily liable with MAERC. - SMC also failed to comply with the requirement of written notice to both the employees concerned and the Department of Labor and Employment (DOLE) which must be given at least one (1) month before the intended date of retrenchment. The fines imposed for violations of the notice requirement have varied. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. For its failure, petitioner was justly ordered to indemnify each displaced worker P2,000.00. Disposition Petition is DENIED.

PHIL. FEDERATION OF CREDIT COOPERATIVES INC (PFCCI) V NLRC (ABRIL) 300 SCRA 72 ROMERO; December 11, 1998.

FACTS - Victoria Abril was employed by PFCCI in different capacities from 1982 to 1988, when she went on leave until she gave birth. When she went back in 1989, after 8 months, another employee had been permanently appointed to her former position of office secretary. She accepted a position of Regional Field Officer. The contract reads: "That the employer hires the employee on contractual basis to the position of Regional Field Officer of Region 4 under PFCCI/WOCCU/Aid Project No. 8175 and to do the function as stipulated in the job description assigned to him (her): on probationary status effective February 17/90 for a period not to exceed six (6) months from said effectivity, subject to renewal of this contract should the employee's performance be satisfactory." - Said period having elapsed, respondent was allowed to work until PFCCI presented to her another employment contract for a period of one year commencing on January 2, 1991 until December 31, 1991, after which period, her employment was terminated. - LA dismissed her complaint for illegal dismissal against PFCCI. - NLRC set aside LAs decision and ordered her reinstated to her last position held (RFO) or to an equivalent position, with fu ll backwages from Jan 1, 1992 until she is reinstated.

ISSUE WON Abril was a regular employee and thus illegally dismissed HELD YES - It is an elementary rule in the law on labor relations that a probationary employee who is engaged to work beyond the probationary period of six months, as provided under Art. 281 of the Labor Code, as amended, or for any length of time set forth by the employer, shall be considered a regular employee. - Article 281 of the Labor Code, as amended, allows the employer to secure the services of an employee on a probationary basis which allows him to terminate the latter for just cause or upon failure to qualify in accordance with reasonable standards set forth by the employer at the time of his engagement. A probationary employee 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 employment 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. Probationary employees, notwithstanding their limited tenure, are also entitled to security of tenure. Thus, except for just cause as provided by law, or under the employment contract, a probationary employee cannot be terminated. - PFCCI refutes the findings of the NLRC arguing that, after respondent had allegedly abandoned her secretarial position for eight (8) months, she applied for the position of Regional Field Officer for Region IV, which appointment, as petitioner would aptly put it, "had been fixed for a specific project or undertaking the

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completion or termination of which had been determined at the time of the engagement of said private respondent and therefore considered as a casual or contractual employment under Article 280 of the Labor Code." - Abril cannot be classified as casual or contractual. (This is why the Court went into a discussion of the kinds of employment recognized in this jurisdiction) "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 activity exists." - This provision of law comprehends three kinds of employees: (a) regular employees or those whose work is necessary or desirable to the usual business of the employer; (b) project employees or those whose 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; and (c) casual employees or those who are neither regular nor project employees. - For contractual employees, stipulations in employment contracts providing for term employment or fixed period employment are valid when (1) the period were agreed upon knowingly and voluntarily by the parties without force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or (2) 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 contract (see facts) contains stipulations so ambiguous as to preclude a precise application of pertinent labor laws. Since contract of employment is contract of adhesion, ambiguity is construed strictly against the party who prepared it. Also, Art. 1702 of CC provides that in case of doubt, all labor contracts shall be construed in favor of the laborer. The interpretation which the respondent company seeks to wiggle out is wholly unacceptable, as it would result in a violation of petitioner's right to security of tenure guaranteed in Section 3 of Article XIII of the Constitution and in Articles 279 and 281 of the Labor Code. - Regardless of the designation petitioner may have conferred upon respondent's employment status, it is, however, uncontroverted that the latter, having completed the probationary period and allowed to work thereafter, became a regular employee who may be dismissed only for just or authorized causes under Articles 282, 283 and 284 of the Labor Code, as amended. Therefore, the dismissal, premised on the alleged expiration of the contract, is illegal and entitles respondent to the reliefs prayed for. Disposition The petition is hereby DISMISSED and the decision of the National Labor Relations Commission dated November 28. 1994 is AFFIRMED.

PANGILINAN V GENERAL MILLING CORPORATION 434 SCRA 159 CALLEJO, SR; July 12, 2004

NATURE Petition for review on certiorari of a decision of the Court of Appeals

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FACTS

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- Respondent General Milling Corporation is a domestic corporation engaged in the production and sale of livestock and poultry. It is, likewise, the distributor of dressed chicken to various restaurants and establishments nationwide. - Petitioners were employed by the respondent as emergency workers under separate "temporary/casual contracts of employment" for a period of five months. - Upon the expiration of their respective contracts, their services were terminated. - They later filed separate complaints for illegal dismissal and non-payment of holiday pay, 13th month pay, night-shift differential and service incentive leave pay against the respondent before the Arbitration Branch of the National Labor Relations Commission, - Petitioners alleged that their work as chicken dressers was necessary and desirable in the usual business of the respondent, and added that although they worked from 10:00 p.m. to 6:00 a.m., they were not paid night-shift differential. - They stressed that based on the nature of their work, they were regular employees of the respondent; hence, could not be dismissed from their employment unless for just cause and after due notice. - Labor Arbiter Voltaire A. Balitaan rendered a decision in favor of the petitioners declaring that they were regular employees. - Finding that the termination of their employment was not based on any of the just causes provided for in the Labor Code, the Labor Arbiter declared that they were allegedly illegally dismissed. - On May 25, 1998, the NLRC rendered a decision reversing that of the Labor Arbiter - The NLRC held that the petitioners, who were temporary or contractual employees of the respondent, were legally terminated upon the expiration of their respective contracts. Citing the case of Brent School, Inc. vs. Zamora, the NLRC explained that while the petitioners' work was necessary and desirable in the usual business of GMC, they cannot be considered as regular employees since they agreed to a fixed term. - The petitioners' motion for reconsideration of the decision having been denied by the NLRC, they filed a petition for certiorari before the Court of Appeals. - On September 29, 2000, the CA rendered a decision affirming decision of the NLRC - The CA ruled that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, it does not necessarily follow that the parties are forbidden from agreeing on a period of time for the performance of such activities. - Petitioners MFR was denied, hence, this petition

ISSUE WON the petitioners were regular employees of the respondent GMC when their employment was terminated

HELD NO - Petitioners were employees with a fixed period, and, as such, were not regular employees. - Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees or those whose work is necessary or desirable to the usual business of the employer; (b) project employees or those whose 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; and, (c) casual employees or those who are neither regular nor project employees. - A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal.

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- There are two separate instances whereby it can be determined that an employment is regular: (1) if the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer; and, (2) if the employee has been performing the job for at least a year. - In the case of St. Theresa's School of Novaliches Foundation vs. NLRC , we held that Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period. We furthered that it does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employee's duties. - In the case of Brent School Inc. v. Zamora, the SC laid down the guideline before a contract of employment may be held as valid, to wit: Stipulations in employment contracts providing for term employment or fixed period employment are valid when the period were agreed upon knowingly and voluntarily by the parties without 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. - An examination of the contracts entered into by the petitioners showed that their employment was limited to a fixed period, usually five or six months, and did not go beyond such period. - The records reveal that the stipulations in the employment contracts were knowingly and voluntarily agreed to by the petitioners without force, duress or improper pressure, or any circumstances that vitiated their consent. Similarly, nothing therein shows that these contracts were used as a subterfuge by the respondent GMC to evade the provisions of Articles 279 and 280 of the Labor Code. - The petitioners were hired as "emergency workers" and assigned as chicken dressers, packers and helpers at the Cainta Processing Plant. - While the petitioners' employment as chicken dressers is necessary and desirable in the usual business of the respondent, they were employed on a mere temporary basis, since their employment was limited to a fixed period. As such, they cannot be said to be regular employees, but are merely "contractual employees." - Consequently, there was no illegal dismissal when the petitioners' services were terminated by reason of the expiration of their contracts. - Lack of notice of termination is of no consequence, because when the contract specifies the period of its duration, it terminates on the expiration of such period. A contract for employment for a definite period terminates by its own term at the end of such period. Disposition Petition is denied.

DE LEON V NLRC (LA TONDENA) 176 SCRA 615 FERNAN; August 21, 1989

NATURE Petition for certiorari seeking to annul and set aside: (1) majority decision of the NLRC, which reversed the Order of Labor Arbiter Hernandez; and, (2) the Resolution denying petitioner's MFR

FACTS - DE LEON was employed by LA TONDENA (business of manufacture and distillery of wines and liquors) on Dec 11, 1981, at the Maintenance Section of its Engineering Dept in Tondo. - His work consisted mainly of painting company building and equipment, and other odd jobs relating to maintenance. He was paid on a daily basis through petty cash vouchers. - After service of more than 1 year, DE LEON requested that he be included in the payroll of regular workers. LA TONDENA responded by dismissing him from work. - Weeks after this, he was re-hired indirectly through the Vitas-Magsaysay Village Livelihood Council, a labor agency of respondent, and was made to perform tasks he used to do. - Having been refused reinstatement despite repeated demands, petitioner filed a complaint before the Office of the Labor Arbiter. - LA TONDENA claimed he was a casual worker hired only to paint a certain bldg in the company premises, and such work terminated upon completion of the painting job.

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- Labor Arbiter Hernandez ordered reinstatement and payment of backwages to petitioner. Complainant's being hired on casual basis did not dissuade from the cold fact that such jobs he performed related to maintenance as a maintenance man is necessary and desirable to the better operation of the business company. - On appeal, NLRC reversed such decision because his job cannot be considered necessary in the usual trade of employer: "Painting the business or factory building is not a part of the respondent's manufacturing or distilling process of wines and liquors. ISSUE WON petitioner is a regular employee HELD 1. YES Ratio An employment shall be deemed to be casual if it is not covered by Art.2816 of Labor Code: 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. Reasoning - During petitioner's period of employment, the records reveal that the tasks assigned to him included not only painting of company buildings, equipment and tools but also cleaning and oiling machines, even operating a drilling machine, and other odd jobs assigned to him when he had no painting job. - It is not the will and word of the employer that determines whether a certain employment is regular or casual, to which the desperate worker often accedes, but the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence. Disposition Petition is GRANTED.

SAN MIGUEL CORPORATION V NLRC (GUZMAN) 297 SCRA 277 QUISUMBING; October 7, 1998

NATURE Petition for certiorari.

FACTS - In November 1990, Francisco De Guzman, JR. was hired by SMC as helper/bricklayer for a specific project, the repair and upgrading of furnace C at its Manila Glass Plant. His contract of employment provided that said temporary employment was for a specific period of approximately 4 months. On April 30, 1991, De Guzman was able to complete the repair and upgrading of furnace C. Thus, his services were terminated on that same day as there was no more work to be done. His employment contract also ended that day. - On May 10, 1991, De Guzman was again hired for a specific job which involved the draining/cooling down of fuenace F and the emergency repair of furnace E. This project was for a specific period of approximately 3 months. After the completion of this task, at the end of July 1991, DE Guzman's services were terminated. - On Aug.1, 1991, complainant saw his name in a Memorandum posted at the Company's Bulletin Board as among those who were considered dismissed. - On Aug.12, 1994, or after the lapse of more than 3 years from the completion of the last undertaking for which De Guzman was hired, he filed a complaint for illegal dismissal against SMC.

Art. 281. Regular and casual employment. The provisions of a 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 services to be performed is seasonal in nature and the employment is for the duration of the season.
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- On June 30, 1995, labor Arbiter Felipe Garduque II rendered the decision dismissing said complaint for lack of merit, sustaining SMC's argument that DE Guzman was a project employee. The position of a helper does not fall within the classification of regular employees. Hence, complainant never attained regular employment status. Moreover, his silence for more than three (3) years without any reasonable explanation tended to weaken his claim. - Upon appeal, NLRC reversed Labor Arbiter Garduque's decision. In its ruling, NLRC stated that SMCs scheme of subsequently re -hiring complainant after only 10 days from the last day of the expiration of his contract of employment for a specific period, and giving him again another contract of employment for another specific period cannot be countenanced. This is one way of doing violence to the employee's constitutional right to security of tenure under which even employees under probationary status are amply protected. - SMCs MFR was denied by NLRC. Hence, this petition.

ISSUES 1. WON De Guzman is a regular employee 2. WON De Guzman was illegally dismissed

HELD 1. NO Art. 280 of the Labor Code defines regular, project and casual employment as follows: 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. - The above mentioned provision reinforces the Constitutional mandate to protect the interest of labor as it sets the legal framework for ascertaining one's nature of employment, and distinguishing different kinds of employees. Its language manifests the intent to safeguard the tenurial interest of worker who may be denied the enjoyment of the rights and benefits due to an employee, regardless of the nature of his employment, by virtue of lopsided agreements which the economically powerful employer who can maneuver to keep an employee on a casual or contractual status for as long as it is convenient to the employer. - Thus, under Article 280 of the Labor Code, an employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer even if the parties enter into an agreement stating otherwise. But considered not regular under said Article (1) the so-called "project employment" the termination of which is more or less determinable at the time of employment, such as those connected, which by its nature is only for one season of the year and the employment is limited for the duration of that season, such as the Christmas holiday season. Nevertheless, an exception to this exception is made: any employee who has rendered at least 1 year of service, whether continuous or intermitent, with respect to the activity he performed and while such activity actually exists, must be deemed regular. - Following Article 280, whether one is employed as a project employee or not would depend on whether he was hired to carry out a "specific project or undertaking", the duration and scope of which were specified at the time his services were engaged for that particular project. Another factor that may be undertaken by the employee in relation to the usual trade or business of the employer, if without specifying the duration and scope, the work to be undertaken is usually necessary or desirable in the usual business or trade of the employer, then it is regular employment and not just "project" must less "casual" employment. - Thus, the nature of one's employment does not depend on the will or word of the employer. Nor on the procedure of hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employer's nature of business and the duration and scope of the work to be done. - Project could refer to 2 distinguishable types of activity. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct at separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. . . . Secondly, a project could refer to a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times . .

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- The plant where De Guzman was employed for only 7 months is engaged in the manufacturer of glass, an integral component of the packaging and manufacturing business of petitioner. The process of manufacturing glass requires a furnace, which has a limited operating life. SMC resorted to hiring project or fixed term employees in having said furnaces repaired since said activity is not regularly performed. Said furnaces are to be repaired or overhauled only in case of need and after being used continuously for a varying period of 5-10 years. In 1990, one of the furnaces of petitioner required repair and upgrading. This was an undertaking distinct and separate from SMC's business of manufacturing glass. For this purpose, SMC must hire workers to undertake the said repair and upgrading. De Guzman was, thus, hired by SMC on November 28, 1990 on a "temporary status for a specific job" for a determined period of approximately four months - Upon completion of the undertaking, or on April 30, 1991, DE Guzman's services were terminated. A few days, thereafter, two of SMC's furnaces required "draining/coolong down" and "emergency repair". De Guzman was again hired on May 10, 1991 to help in the new undertaking, which would take approximately 3 months to accomplish. Upon completion of the second undertaking, private respondent's services were likewise terminated. He was not hired a third time, and his two engagements taken together did not total one full year in order to qualify him as an exception to the exception falling under the cited proviso in the second paragraph of Art. 280 of the Labor Code. 2. NO - De Guzman was hired for a specific project that was not within the regular business of the corporation. For SMC is not engaged in the business of repairing furnaces. Although the activity was necessary to enable petitioner to continue manufacturing glass, the necessity therefor arose only when a particular furnace reached the end of its life or operating cycle. Or, as on the second undertaking, when a particular furnace required an emergency repair. In other words, the undertakings where he was hired primarily as helper/bricklayer have specified goals and purpose which are fulfilled once the designated work was completed. Moreover, such undertakings were also identifiably separate and distinct from the usual, ordinary or regular business operations of petitioner, which is glass manufacturing. These undertakings, the duration and scope of which had been determined and made known to private respondent at the time of his employment clearly indicated the nature of his employment as a project employee. Thus, his services were terminated legally after the completion of the project. - If NLRCs decision is upheld, it would amount to negating the distinction made in Article 280 of the Labor Code. It would shu nt aside the rule that since a project employee's work defends on the availability of a project, necessarily, the duration of his employment is coterminous with the project to which he is assigned. It would become a burden for an employer to retain an employee and pay him his corresponding wages it there was no project for him to work on. - 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 dispute will be automatically decided in favor of labor. Management has also rights, which, as such, are entitled to respect and enforcement in the interest of fair play. Although the SC has inclined more often than not toward the worker and has upheld has cause in his conflicts with the employer, such favoritism has no blinded the Court to the rule that justice is in avery case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. Disposition Petition is hereby GRANTED. The decision of respondent NLRC is hereby REVERSED, and the judgment of the Labor Arbiter REINSTATED.

TABAS V NLRC (CALIFORNIA MANUFACTURING) 169 SCRA 497 SARMIENTO; January 26, 1989

NATURE PETITION to review the decision and resolution of the National Labor Relations Commission.

FACTS - Petitioners were employees of Livi Manpower Services, Inc. (Livi). Livi subsequently assigned them to work as promotional merchandisers for California Manufacturing Co. (California) pursuant to a manpower supply agreement. The agreement provided the following, among others: (1) that California had no control/supervision over the petitioners with respect to how they accomplish their work; (2) that Livi is an independent contractor and that the relationship between Livi and California should not be construed to be of principal-agent or employer-employee; (3) that California is free and harmless (!?!) from any liability arising from such laws or from any accident that may befall the workers and employees of Livi while in the performance of their duties for California; (4) that the assignment of workers to California shall be on a seasonal and contractual basis; (5) that most of living allowance and the 10 legal holidays will be charged directly to California at cost; and (6) that the payroll for the preceding week shall be delivered by LIvi at Californias premises.

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- Petitioners were then made to sign employment contracts with durations of six months, upon the expiration of which they signed new agreements with the same period, and so on. Unlike regular California employees, who received not less than P2,823.00 a month in addition to a host of fringe benefits and bonuses, they received P38.56 plus P15.00 in allowance daily. - Petitioners filed complaints, demanding to have similar benefits as regular employees; but pending their claims, California notified them that they would not be rehired. California then amended their complaint charging California with illegal dismissal. Thereafter, Livi reabsorbed them into its labor pool on a wait-in or standby status. - Respondents claim: they are not the petitioners employer (Livi is, therefore, no employer-employee relationship between them) and that the "retrenchment" had been forced by business losses as well as expiration of contracts ( "unfavorable political and economic atmosphere coupled by the February Revolution.") - LA: no employer-employee relationship in the light of the manpower supply contract; California not liable for the money claims demanded. Livi also absolved from any obligation because retrenchment was allegedly beyond its control, but were to pay separation pay and attorneys fees. - NLRC: affirm labor arbiters deci

ISSUES 1. WON the petitioners are employees of California Manufacturing Company 2. WON the petitioners were illegally dismissed HELD 1. YES Ratio The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of agreement. The determination of whether or not there is an employer-employee relation depends upon four standards: (1) the manner of selection and engagement of the putative employee; (2) the mode of payment of wages; (3) the presence or absence of a power of dismissal; and (4) the presence or absence of a power to control the putative employee's conduct. Of the four, the right-of-control test has been held to be the decisive factor. Reasoning - IN RELATION TO THE MANPOWER SUPPLY AGREEMENT: The fact that the manpower supply agreement between Livi and California had specifically designated the former as the petitioners' employer and had absolved the latter from any liability as an employer, will not erase either party's obligations as an employer, if an employer-employee relation otherwise exists between the workers and either firm. At any rate, since the agreement was between Livi and California, they alone are bound by it, and the petitioners cannot be made to suffer from its adverse consequences. - Art. 106 of the Labor Code7 still imposes responsibility on both firms: Notwithstanding the absence of a direct employer-employee relationship between the employer in whose favor work had been contracted out by a "labor-only" contractor, and the employees, the former has the responsibility, together with the "labor-only" contractor, for any valid labor claims by operation of law. The reason, so we held, is that the "labor-only" contractor is considered "merely an agent of the employer," and liability must be shouldered by either one or shared by both. - Livi, as a placement agency, had simply supplied California with the manpower necessary to carry out Californias merchandizing activities, using the latters premises and equipment. - ON PETITIONERS BEING DIRECT EMPLOYEES OF LIVI: Not conclusive will not absolve California from liability imposed by law and relations of parties are not determined by their declarations

7 ART. 106. Contractor or subcontractor.-Whenever an employee enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the letter'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 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.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make 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, to prevent any violation or circumvention of any provisions 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 such person 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.

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- ON TEMPORARY OR SEASONAL BASIS HIRING: temporary or casual employee, under Article 218 of the Labor Code, becomes regular after service of one year, unless he has been contracted for a specific project. Merchandising is not a specific project, it is an activity related to the day-to-day operations of California. *The Court need not therefore consider whether it is Livi or California which exercises control over the petitioner vis-a-vis the four barometers reffered to earlier, since by fiction of law, either or both shoulder responsibility. -REASONING FOR DISMISSING THE TERMS AND CONDITIONS OF THE MANPOWER SUPPLY AGREEMENT: not illegal, under the Labor Code, genuine job contracts are permissible, provided they are genuine job contracts. But when such arrangements are resorted to "in anticipation of, and for the very purpose of making possible, the secondment"of the employees from the true employer, the Court will be justified in expressing its concern. For then that would compromise the rights of the workers, especially their right to security of tenure. 2. YES Ratio Retrenchment of workers, unless clearly warranted, has serious consequences not only on the State's initiatives to maintain a stable employment record for the country, but more so, on the workingman himself, amid an environment that is desperately scarce in jobs. Reasoning The 6-month contracts of the petitioners were renewed, and accordingly, under Article 281 (Labor Code), they had become regular employees of California and had acquired a secure tenure. Hence, they cannot be separated without due process of law. - ON VALIDITY OF RETRENCHMENT: California has not shown enough evidence that it had in fact suffered serious business reverses as a result alone of the prevailing political and economic climate; attribution to February Revolution as cause of alleged losses gratuitous and without basis in fact. Disposition petition is GRANTED. Judgment is hereby RENDERED: (1) SETTING ASIDE the decision, dated March 20, 1987, and the resolution, dated August 19, 1987; (2) ORDERING the respondent, the California Manufacturing Company, to REINSTATE the petitioners with fall status and rights of regular employees; and (3) ORDERING the respondent, the California Manufacturing Company, and the respondents, Livi Manpower Service, Inc. and/or Lily-Victoria A. Azarcon, to PAY, jointly and severally, unto the petitioners: (a) backwages and differential pays effective as and from the time they had acquired a regular status under the second paragraph, of Section 281, of the Labor Code, but not to exceed three (3) years, and (b) all such other and further benefits as may be provided by existing collective bargaining agreement(s) or other relations, or by law, beginning such time; and (4) ORDERING the private respondents to PAY unto the petitioners attorney's fees equivalent to ten (10%) percent of all money claims hereby awarded, in addition to those money claims.

PHILIPS SEMICONDUCTORS V FADRIQUELA 427 SCRA 408 CALLEJO, SR; April 14, 2004

FACTS - On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with petitioner Philips Semiconductors as a production operator, initially for 3 months. Because her performance constantly met petitioners ratings requirements, her contract was renewed several times, e xtending to 12 months. However, over the last few months, respondent incurred several absences for which she offered no valid justification despite a prompting to do so by the line supervisor. As a consequence, her performance rating dropped, and respondents contract was no longer renewed. - Respondent filed a complaint with the NLRC for illegal dismissal, claiming she had not been duly notified; she furthered that having rendered over 6 months of service, she was already a regular employee and could not be terminated without just cause. - Petitioner contended that respondent had not been dismissed; rather, her contract merely expired and was not renewed. - The Labor Arbiter dismissed the complaint for lack of merit but awarded her severance of 1 months pay. He stated that petitioner and its unions CBA required one to render 17 months of service to be considered regular. He also added that respondent could not complain of being deprived of notice and hearing as the line supervisor had asked her to explain her absences. An appeal with the NLRC yielded the same results. It was pointed out that as a contractual employee respondent was bound by the stipulations of her contract of employment, which in this case was a satisfactory performance rating. - Dissatisfied, respondent filed a petition for certiorari before the CA, which reversed the decisions of the NLRC and the Labor Arbiter. The appellate court argued that the NLRC and the Labor Arbiter employed inappropriate bases for their decisions, since the CBA did not apply to contractual employees like Fadriquela. The CA cited Art. 280 of the Labor Code which states that regardless of any written or oral agreements between employer and employee, an e mployment 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

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employer. Petitioners contention that employment was obtained as the need arose was illogical, as this would mean the emplo yee would never attain regular status. The CA further held that a less punitive penalty would suffice for absenteeism. Finally, it held that the dialogue between the respondent and line supervisor was insufficient as to amount to notice, and thus the former was deprived of due process. - Petitioner filed a motion for reconsideration in which petitioner claimed that its hiring policy was neither new nor prohibited and that it was a valid exercise of its management prerogative since demand for its semiconductors is cyclical in nature. It added that it had the prerogative to set reasonable standards of employment qualification as provided by law. The motion was denied, hence this petition for review.

ISSUES 1. WON the NLRC and Labor Arbiter erred in not finding respondent to be a regular employee 2. WON the CBA applies to respondent 3. WON respondent was deprived of due process 4. WON dismissal was a just penalty

HELD 1. YES - According to Article 280 of the Labor Code, there are 2 kinds of regular employees: (1) those 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 activities in which they are employed. The respondent obviously falls under the first type of regular employee. She had been working continuously for the petitioner for over a year, evidencing the necessity and indispensability of her services to the petitioners business. By operation of law, responde nt had attained regular status and was thus entitled to security of tenure as provided in Art. 279 of the code. The said article requires a just cause before termination, and entitles the employee to reinstatement and other privileges in absence of one. - Petitioners hiring policy for contract employees is contrary to the spirit of Articles 279 and 280 of the code; it is but an excuse to prevent regularization and circumvent the law on security of tenure. This is echoed in Sec. 3 Art XVI of the Constitution which deems security of tenure a State policy to guarantee social justice. The fact is that the operation of every business depends on supply and demandthe cyclical nature of ones trade cannot be invoked as a reason to place an employees status on shaky ground. - This is not to say that term employment is illegal outright. In Romares v NLRC it was said that term employment does not circumvent the law when the fixed period was knowingly and voluntarily agreed upon by both parties and that such agreement was made with no party holding moral dominance over the other. However, none of these requisites are present in the instant case. 2. NO - Petitioners reliance on the CBA is misplaced. The CBA constitutes the law between the employer and regular employees, but ca nnot be binding on contractual employees who are not represented by the bargaining union. The CBA provision requiring 17 months for regularization runs contrary to what is clearly stipulated in law, which provides that regularization requires only 1 year. 3. YES - Respondent was dismissed without the requisite notice and formal investigation. Dismissals must not be arbitrary and capricious; a mere dialogue between the respondent and line supervisor cannot possibly suffice as a substitute for actual notice and hearing. 4. NO - Dismissal is too harsh a penalty for mere absences, especially since the repeated renewal of resp ondents contract proves her efficiency as a worker. The SC mandates that where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visit ed with a consequence so severe. Disposition IN LIGHT OF ALL THE FOREGOING, the assailed decision of the appellate court is AFFIRMED. The petition at bar is DENIED.

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MAGSALIN V NATIONAL ORGANIZATION OF WORKING MEN (NOWM) 403 SCRA 199 VITUG; May 9, 2003

FACTS - Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as sales route helpers for a limited period of five months. After five months, respondent workers were employed by petitioner company on a day-to-day basis to substitute for regular sales route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an unusually high volume of work. The practice was for the workers to wait every morning outside the gates of the sales office of petitioner company. If thus hired, the workers would then be paid their wages at the end of the day. - Ultimately, respondent workers asked petitioner company to extend to them regular appointments. Petitioner company refused. - November 7, 1997 - twenty-three (23) of the temporary workers (herein respondents) filed with the National Labor Relations Commission (NLRC) a complaint for the regularization of their employment with petitioner company. The complaint was amended a number of times to include other complainants that ultimately totaled fifty-eight (58) workers. Claiming that petitioner company meanwhile terminated their services, respondent workers filed a notice of strike and a complaint for illegal dismissal and unfair labor practice with the NLRC. - 01 April 1998 - voluntary arbitration - 18 May 1998 - the voluntary arbitrator rendered a decision dismissing the complaint on the thesis that respondents (then complainants) were not regular employees of petitioner company. - 11 August 2000, the Court of Appeals reversed and set aside the ruling of the voluntary arbitrator ; (Petitioners were declared regular employees of Coca Cola Bottlers; dismissal illegal; ordered to reinstate the workers)

ISSUES 1. WON the nature of work of respondents in the company is of such nature as to be deemed necessary and desirable in the usual business or trade of petitioner that could qualify them to be regular employees 2. WON the quitclaims executed by the 36 individual respondents were valid

HELD 1. YES Ratio In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. Reasoning a. Intentionalist approach - Even while the language of law (Art 280)8 might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a regular

8 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 r espect to the activity in which he is employed and his employment shall continue while such activity exists.

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workers security of tenure, however, can hardly be doubted.

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b. Although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be regular with respect to such activity and while such activity exists. c. The postproduction activities done by sales route helpers are important. The nature of the work performed must be viewe d from a perspective of the business or trade in its entirety and not on a confined scope. d. The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company. e. A contract of employment is impressed with public interest. The 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. 2. YES Ratio While quitclaims executed by employees are commonly frowned upon as being contrary to public policy and are ineffective to bar claims for the full measure of their legal rights, there are, however, legitimate waivers that represent a voluntary and reasonable settlement of laborers claims which should be so respected by the Court as the law between the parties. Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking. Dire necessity is no t an acceptable ground for annulling the release, when it is not shown that the employee has been forced to execute it. Disposition Questioned decision of the Court of Appeals, is AFFIRMED with MODIFICATION in that the Release, Waiver and Quitclaim executed by the thirtysix (36) individual respondents are hereby declared VALID and LEGAL.

HACIENDA FATIMA V NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE 396 SCRA 518 PANGANIBAN; January 28, 2003

NATURE Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside CA Decision denying petition for certiorari the Decision of NLRC. NLRC set aside and vacated the Labor Arbiters finding that there was no illegal dismissal.

FACTS

- According to the Labor arbiter, the respondents refused to work and/or were choosy in the kind of jobs they wanted to perform. NLRC found that the record is replete with the workers persistence and determination of going back to work.
- When the union was certified as the collective bargaining representative in the certification elections, Hacienda Fatima under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a CBA. Moreover, the workers were not given work for more than one month. In protest, the Union staged a strike which was however settled upon the signing of a Memorandum of Agreement. - When Company again reneged on its commitment, Union filed the complaint. For all their persistence, the risk they had to undergo in conducting a strike, complainants now find themselves being accused of refusing to work and being choosy in the kind of work they have to perform.

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- The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal. Hence this Petition.

ISSUES 1. WON CA erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 2809 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year 2. WON CA committed grave abuse of discretion in upholding the NLRCs conclusion that private respondents were illegally dismiss ed, that petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages.

HELD 1. NO, the CA did not err when it held that respondents were regular employees. - The fact that respondents do not work continuously for one whole year but only for the duration of the 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. - 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. - The test of WON an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: - 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 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. (Abasolo v. National Labor Relations Commission) - 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. 2. NO - Factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme Court. Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis. - The NLRC found herein petitioners guilty of unfair labor practice. It ruled that from respondents r efusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their haciendaa clear interference in the right of the workers to selforganization. Disposition Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners.

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.
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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.

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MILLARES V NLRC (TRANS-GLOBAL MARITIME AGENCY, ESSO INTERNATIONAL SHIPPING COMPANY) 485 SCRA 307 KAPUNAN; July 29, 2002

FACTS - Petitioner Douglas Millares was employed by private respondent ESSO International Shipping Company LTD. (Esso Int.) through its local manning agency, private respondent Trans-Global Maritime Agency, Inc. (Trans-Global) as a machinist. In 1975, he was promoted as Chief Engineer. He was then receiving a monthly salary of US $1,939.00. On June 13, 1989, Millares applied for a leave of absence for the period July 9 to August 7, 1989. Trans-global approved it. He then informed Esso Int. of his intention to avail of the optional retirement plan under the Consecutive Enlistment Incentive Plan (CEIP) considering that he had already rendered more than twenty (20) years of continuous service. But the denied petitioner Millares request for optional retirement on the following groun ds, to wit: (1) he was employed on a contractual basis; (2) his contract of enlistment (COE) did not provide for retirement before the age of sixty (60) years; and (3) he did not comply with the requirement for claiming benefits under the CEIP, i.e., to submit a written advice to the company of his intention to terminate his employment within thirty (30) days from his last disembarkation date. He then requested for an extension of his leave of absence from August 9 to 24, 1989. But the company told him that they have promoted a First Assistant Engineer to his position as a result of his previous leave of absence which expired last August 8, 1989. The adjustment in said rank was required in order to meet manpower schedules as a result of his inability. Esso International told Millares that in view of his absence without leave, which is equivalent to abandonment of his position, he had been dropped from the roster of crew members effective September 1, 1989. - On the other hand, petitioner Lagda was employed by private respondent Esso International as wiper/oiler in June 1969. He was promoted as Chief Engineer in 1980, a position he continued to occupy until his last COE expired on April 10, 1989. He also filed for a leave of absence and informed the company of his intention to avail the early retirement. His request was denied on the same grounds and he too was dropped from work. - On October 5, 1989, petitioners Millares and Lagda filed a complaint-affidavit for illegal dismissal and non-payment of employee benefits against private respondents Esso International and Trans-Global, before the POEA. POEA dismissed it for lack of merit. NLRC affirmed. ISSUE WON the petitioners are contractual employees whose employment are terminated everytime their contracts expire HELD YES - it is clear that seafarers are considered contractual employees. They can not be considered as regular employees under Article 280 of the Labor Code. Their employment is governed by the contracts they sign everytime they are rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of 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. We need not depart from the rulings of the Court in the two aforementioned cases which indeed constitute stare decisis with respect to the employment status of seafarers. Petitioners make much of the fact that they have been continually re-hired or their contracts renewed before the contracts expired (which has admittedly been going on for twenty (20) years). By such circumstance they claim to have acquired regular status with all the rights and benefits appurtenant to it. - Such contention is untenable. Undeniably, this circumstance of continuous re-hiring was dictated by practical considerations that experienced crew members are more preferred. Petitioners were only given priority or preference because of their experience and qualifications but this does not detract the fact that herein petitioners are contractual employees. They can not be considered regular employees. Disposition IN VIEW OF THE FOREGOING, THE COURT Resolved to Partially GRANT Private Respondents Second Motion for Reconsideration and Intervenor FAMES Motion for Reconsideration in Intervention. The Decision of the National Labor Relations Commission dated June 1, 1993 is hereby REINSTATED with MODIFICATION. The Private Respondents, Trans-Global Maritime Agency, Inc. and Esso International Shipping Co.,Ltd. are hereby jointly and severally ORDERED to pay petitioners One Hundred Percent (100%) of their total credited contributions as provided under the Consecutive Enlistment Incentive Plan(CEIP).

PETROLEUM SHIPPING LIMITED V NLRC (TANCHICO) 491 SCRA 35 CARPIO; June 16, 2006

FACTS

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- On 6 March 1978, Esso International Shipping (Bahamas) Co., Ltd., ("Esso") through Trans-Global Maritime Agency, Inc. ("Trans-Global") hired Florello W. Tanchico ("Tanchico") as First Assistant Engineer. In 1981, Tanchico became Chief Engineer. - On 13 October 1992, Tanchico returned to the Philippines for a two-month vacation after completing his eight-month deployment. - On 8 December 1992, Tanchico underwent the required standard medical examination prior to boarding the vessel. The medical examination revealed that Tanchico was suffering from "Ischemic Heart Disease, Hypertensive Cardio-Muscular Disease and Diabetes Mellitus." Tanchico took medications for two months and a subsequent stress test showed a negative result. However, Esso no longer deployed Tanchico. Instead, Esso offered to pay him benefits under the Career Employment Incentive Plan. Tanchico accepted the offer. - On 26 April 1993, Tanchico filed a complaint against Esso, Trans-Global and Malayan Insurance Co., Inc. ("Malayan") before the Philippine Overseas Employment Administration (POEA) for illegal dismissal with claims for backwages, separation pay, disability and medical benefits and 13th month pay.

ISSUES 1. WON Tanchico is a regular employee of petitioners 2. WON Tanchico is entitled to 13th month pay, disability benefits and attorneys fees

HELD 1. NO - The Court squarely passed upon the issue in Millares v. NLRC17 where one of the issues raised was whether seafarers are regular or contractual employees whose employment are terminated everytime their contracts of employment expire. The Court explained: [I]t is clear that seafarers are considered contractual employees. They can not be considered as regular employees under Article 280 of the Labor Code. Their employment is governed by the contracts they sign everytime they are rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of Article 280 whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of 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. We need not depart from the rulings of the Court in the two aforementioned cases which indeed constitute stare decisis with respect to the employment status of seafarers. - The circumstance of continuous re-hiring was dictated by practical considerations that experienced crew members are more preferred. Petitioners were only given priority or preference because of their experience and qualifications but this does not detract the fact that herein petitioners are contractual employees. They can not be considered regular employees. 2. On 13th Month Pay - The Court of Appeals premised its grant of 13th month pay on its ruling that Tanchico was a regular employee. The Court of Appeals also ruled that petitioners are not exempt from the coverage of PD 851 which requires all employers to pay their employees a 13th month pay. - We do not agree with the Court of Appeals. Again, Tanchico was a contractual, not a regular, employee. Further, PD 851 does not apply to seafarers. - Tanchicos employment is governed by his Contract of Enlistment. The Contract has been approved by the POEA in accordance wit h Title I, Book One of the Labor Code and the POEA Rules Governing Employment. Hence, in the absence of any provision in his Contract governing the payment of 13th month pay, Tanchico is not entitled to the benefit. On Disability Benefits - Since Tanchico received compensation during his vacation, the Contract did not terminate on the day he returned to Manila. The Contract remained in force during Tanchicos vacation period. - However, the Court of Appeals erred when it ruled that Tanchico is entitled to disability benefits of 18 days for every year of service. The Court of Appeals ruled that Tanchicos employment was continuous and that his tenure with petitioners was for 14 years. Again, the Court of Appeals assumed that Tanchico was a regular employee. The Court of Appeals failed to consider that Tanchicos employment terminated with the end of each contract.

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- Indications that Tanchico was suffering from ischemia were detected on 8 December 1992 during Tanchicos vacation period. Thus, petitioners pa id him disability benefits for 18 days in accordance with the Contract. Tanchico cannot claim that he only acquired the illness during his last deployment since the Medical Report26 he submitted to the NLRC showed that he has been hypertensive since 1983 and diabetic since 1987. In the absence of concrete proof that Tanchico acquired his disability during his last deployment and not during his vacation, he is only entitled to disability benefits for 18 days.

SKIPPERS UNITED PACIFIC INC V NLRC (CA & ROSAROSO) 494 SCRA 66 AUSTRIA-MARTINEZ; July 12, 2006

NATURE Appeal from a decision of the CA

FACTS - Private respondent Gervasio Rosaroso was employed as a Third Engineer with Nicolakis Shipping, S.A., a foreign firm through its recruitment and manning agency, petitioner Skippers. The employment contract was for the period of one year beginning July 10, 1997 with a salary of $800 per month and other benefits. Rosaroso boarded M/V Naval Gent on July 15, 1997. He was however ordered to disembark in Bulgaria on August 7, 1997 and repatriated to the Philippines. - Soon after arrival in Manila, respondent filed a complaint for illegal dismissal and monetary claims. The Labor Arbiter found the respondent was in fact illegally dismissed and issued an order directing petitioner, Skippers, to pay Rosaroso separation pay of $2,4000 or the equivalent of P100,000, representing three months pay and unpaid salary for seven days of $186.69 or the equivalent of P7,840.98. Atorneys fees of P5,000 was also awar ded. The NLRC and the CA affirmed en toto the ruling of the Arbiter. - Hence this appeal to the SC.

ISSUE WON private respondent Rosaroso was illegal dismissed

HELD YES - The employer of Rosaroso did not provide the quantum of evidence needed to prove that dismissal was in fact for cause. The evidence presented was just a telefax coming from the alleged Chief Engineer of the vessel which the Arbiter up to the CA considered as mere hearsay. While the Master of the vessel was grated under Paragraph D of Section 17 of the Philippine Overseas employment Administration (POEA) Standard Employment condition governing the employment of Filipino Seafarers on Board Ocean Going Vessels the power to dismiss for just cause without furnishing the seafarer with a notice of dismissal if doing so will prejudice the safety of the crew and the vessel, the SC noted that the complete report on the circumstances of the dismissal was not forwarded to the manning agency as called for under the same provision. Minor issues - The award of backwages and separation pay in lieu of reinstatement as provided for in Article 279 of the Labor Code is not applicable in this case. The Seafarer is a contractual employee whose rights and obligations are governed by the POEA Employment Contract and by RA 8042 (1995). The Employment contract does not provide for the award of separation or termination pay. However, under Section 10 of RA 8042 the award of money claims in cases of illegal dismissal is

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allowed. Under this provision, an illegal dismissed seafarer is entitled to indemnity equivalent to his salary for the unexpired term of his employment contract or three months for every year of the unexpired term, whichever is less. - The award by the Arbiter of the peso equivalent of the dollar awards cannot be enforced as the same is contrary to law. The peso equivalent must be computed at the exchange rate computed at the time of payment as provided for by RA 8183. Disposition The questioned decision is affirmed with the modification that the dollar award should be payable in its peso equivalent computed at the prevailing rate of exchange at the time of payment.

PENTAGON INTERNATIONAL SHIPPING INC V ADELANTAR 435 SCRA 342 YNARES-SANTIAGO; July 27, 2001

NATURE Petition for review on certiorari of CA decision which modified an NLRC decision

FACTS - August 16, 1997 > William B. Adelantar was hired by Dubai Ports Authority of Jebel Ali under an employment contract (first contract) which provided for an unlimited period of employment with a monthly salary of Dhs 5,500. - September 3, 1997 > Adelantar and Pentagon International Shipping, Inc, for and in behalf of Dubai Ports Authority of Jebel Ali, entered into a Philippine Overseas Employment Administration (POEA) standard employment contract (second contract), this time providing for a 12-month period with basic monthly salary of US$380.00 and fixed overtime pay of US$152.00. - April 5, 1998 > Adelantars basic salary was increased to Dhs 5,890 and overtime pay was increased to Dhs 2,356 - June 11, 1998 > Dubai Ports barred Adelantar from entering the port due to a previous dispute with his superior. On the same date, he was given a letter as he was terminated for assaulting his superior officer, although he was promised employment in another company. - Adelantar filed a complaint for illegal dismissal with money claim against Pentagon with the NLRC - LABOR ARBITER: found the dismissal of Adelantar was illegal and ordered Pentagon to pay Adelantar the amount of Dhs 24,738.0 0 representing the latters three (3) months basic salary inclusive of overtime pay - NLRC: affirmed the Labor Arbiters decision and held that in Section 10 of RA8042 (Migrant Workers and Overseas Filipinos Act of 1995) an illegally dismissed contract worker is entitled to the salaries corresponding to the unexpired portion of his contract, or for three (3) months for every year of the unexpired term, whichever is less. They awarded backwages to Adelantar equivalent to three (3) months of his basic salary, but exclusive of overtime pay - CA: September 26, 2002, CA modified the amounts awarded by the Labor Arbiter and the NLRC and instead awarded full backwages computed from the time of the dismissal up to the finality of the decision because Section 10 of R.A. No 8042 is not applicable because said provision only contemplates a fixed period of employment and that A279 LC should apply considering that Adelantars first contract provided for an unlimited period of employmen t.

ISSUE WON A279 LC should apply given the first contract provided for an unlimited period of employment

HELD

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NO. Sec 10 RA 8042 should apply because the second contract (with POEA), which provided for a fixed period of 1 year as employment, is applicable at bar. Also, landmark case of Millares v NLRC applies Ratio It is clear that seafarers are considered contractual employees. They can not be considered as regular employees under A280 LC. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when the contract expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of A280 LC whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of 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. (Millares v NLRC) Reasoning - Coyoca v NLRC: Filipino seamen are governed by the Rules and Regulations of the POEA. The Standard Employment Contract governing the Employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA, particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a fixed period. In no case should the contract of seamen be longer than 12 months and any extension of the Contract period shall be subject to the mutual consent of the parties. - It should be stressed that whatever status of employment or increased benefits that the complainant may have gained while under the employ of Dubai Ports Authority, the undisputed fact remains that prior to his deployment, he agreed to be hired under a 12-month POEA contract, the duration of which is the basis for the determination of the extent of the respondents liability. - Moreover, it is an accepted maritime industry practice that employment of seafarers is for a fixed period only. Constrained by the nature of their employment which is quite peculiar and unique in itself, it is for the mutual interest of both the seafarer and the employer why the employment status must be contractual only or for a certain period of time. Seafarers spend most of their time at sea and understandably, they can not stay for a long and an indefinite period of time at sea. Limited access to shore society during the employment will have an adverse impact on the seafarer. The national, cultural and lingual diversity among the crew during the COE is a reality that necessitates the limitation of its period. Disposition Petition is partly GRANTED and CA decision is REVERSED and SET ASIDE. Petitioner Pentagon International Shipping, Inc. is ORDERED to pay private respondent William B. Adelantar the amount equivalent to the unexpired portion of the September 3, 1997 POEA Standard Contract of Employment plus ten percent (10%) of the award as attorneys fees.

LOPEZ V MWSS [PAGE 60] AUDION ELECTRIC CO INC V NLRC (MADOLID) 308 SCRA 340 GONZAGA-REYES; June 17, 1999

NATURE Petition for certiorari, seeking annulment of resolution of the NLRC (of which the presiding officer was our very own Dean Carale )

FACTS - Madolid was employed by Audion Electric Co. on June 30, 1976 as fabricator and continuously rendered service in different offices and projects as helper technician, stockman, and timekeeper. He rendered 13 years of service with a clean record. On August 3, Madolid received a letter informing him that he will be considered terminated after the turnover of materials, including companys tools and equipments not later than August 15, 1989. - Madolid claims that he was dismissed without justifiable cause and due process and that his dismissal was done in bad faith which renders the dismissal illegal. For this reason, he claims that he is entitled to reinstatement with full backwages, and moral and exemplary damages. He also includes payment of his overtime pay, project allowance, minimum wage increase adjustment, proportionate 13th month pay and attorney's fees.

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Audion rebuts his allegations by saying that the employment contract of Madolid was one that was co-terminus with the project, thus he should not be considered as a regular employee. Also, the company contends that it had paid all the alleged unpaid wages. - The Labor arbiter decided the case in favor of Madolid, ordering Audion to pay him backwages, OT pay, project allowances, min. wage increase adjustment, 13th month pay, and awarding him moral and exemplary damages and attorneys fees. Appeal to NLRC was dismissed.

ISSUES 1. WON Madolid was a regular employee, thus entitling him to backwages, etc. 2. WON Audion was denied due process with the award of all the claims of Madolid

HELD 1. YES Ratio Where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. Reasoning - (citing NLRCs decision): Audions assigning Madolid to its various projects did not make him a project worker. As found by the Labor Arbiter, it appears that complainant was employed by respondent xxx as fabricator and or projects as helper electrician, stockman and timekeeper.' Simply put, complainant was a regular non-project worker. - Madolids employment status was established by the Certification of Employment dated April 10, 1989 issued by Audion which certified that private respondent is a bonafide employee from June 30, 1976 up to the time of issuance on April 10, 1989. This showed that his exposure to their field of operation was as fabricator, helper/electrician, stockman/timekeeper. This proves that he was regularly and continuously employed by Audion in various job assignments from 1976 to 1989, for a total of 13 years. The alleged gap in employment service does not defeat his regular status as he was rehired for many more projects without interruption and performed functions which are vital, necessary and indispensable to the usual business of petitioner. - Audion could have presented substantial evidence to support its claim that Madolid was a project worker, like the employment contract (which stated the employees nature of employment) or reports of termination (which were required by DOLE upon termination of the project, and failure to submit this is an indication of regular status of an employee as held in cases), but it did not. 2. NO Ratio Due process is not denied when one is afforded the opportunity to be heard and present his case, but the same decided not to take the opportunity. Reasoning - Madolid clearly specified in his affidavit the specific dates in which he was not paid overtime pay, project allowances, 13 th month pay, and wage adjustments. The claim of Audion that it paid him such must be proved by evidence, which it did not do (despite of having the burden to prove the claim). - In fact, records show that the company did not appear in hearings, which the court took to be a waiver of its right to be heard. - However, award to moral and exemplary damages and attorneys fees are deleted for being devoid of moral basis. Disposition Petition denied, resolutions affirmed with modifications (deletion of award of damages and attorneys fees)

BETA ELECTRIC CORP V NLRC (BETA ELECTRIC EMPLOYEES ASSOCIATION, PETILLA) 182 SCRA 384 SARMIENTO; February 15, 1990
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NATURE Petition to review the decision of the National Labor Relations Commission affirming the judgment of the labor arbiter reinstating the private respondent with backwages.

FACTS - The petitioner hired the private respondent as clerk typist for one month, which appointment was extended five times in five months (one month /contract).Her appointments were covered by corresponding written contracts. On June 22, 1987, her services were terminated without notice or investigation. On the same day, she went to the labor arbiter on a complaint for illegal dismissal. Both the labor arbiter and the respondent National Labor Relations Commission ruled for her.Petioner claims the private respondents appointment was temporary and hence she may be terminated at will.

ISSUES WON the fact that private respondents employment has been a contract-to-contract basis alters the character of her employment as a regular employee

HELD NO Ratio. The fact that her employment has been a contract-to-contract basis can not alter the character of employment, because contracts can not override the mandate of law.. Reasoning - private employee was employed from December 15, 1986 until June 22, 1987 when she was ordered laid off. Her tenure having exceeded six months, she attained regular employment. - petitioner can not rightfully say that since the private respondent's employment hinged from contract to contract, it was ergo, "temporary", depending on the term of each agreement. Under the Labor Code, an employment may only be said to be "temporary" "where [it] has been fixed for a specific undertaking the completion of 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." Quite to the contrary, the private respondent's work, that of "typist-clerk" is far from being "specific" or "seasonal", but rather, one, according to the Code, "where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business." And under the Code, where one performs such activities, he is a regular employee, "[t]he provisions of written agreement to the contrary notwithstanding. Disposition Petition DISMISSED. Private respondent is ordered REINSTATED with backwages equivalent to three years with no qualification or deductions.

UNIVERSAL ROBINA CORPORATION V CATAPANG 473 SCRA 189 CALLEJO, SR; October 14, 2005

FACTS - Petitioner Universal Robina Corporation is a corporation duly organized and existing under the Philippine laws, while petitioner Randy Gregorio is the manager of the petitioner companys duck farm in Calauan, Laguna.

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- The individual respondents were hired by the petitioner company on various dates from 1991 to 1993 to work at its duck farm in Barangay Sto. Tomas, Calauan, Laguna. The respondents were hired under an employment contract which provided for a five-month period. After the expiration of the said employment contracts, the petitioner company would renew them and re-employ the respondents. This practice continued until sometime in 1996, when the petitioners informed the respondents that they were no longer renewing their employment contracts. - In October 1996, the respondents filed separate complaints for illegal dismissal, reinstatement, backwages, damages and attor neys fees against the petitioners. The complaints were later consolidated. On March 30, 1999, after due proceedings, the Labor Arbiter rendered a decision in favor of the respondents, which NLRC and the CA affirmed. - On appeal, the petitioners submit that the respondents are not regular employees. They aver that it is of no moment that the respondents have rendered service for more than a year since they were covered by the five-month individual contracts to which they duly acquiesced. The petitioners contend that they were free to terminate the services of the respondents at the expiration of their individual contracts. The petitioners maintain that, in doing so, they merely implemented the terms of the contracts. - The petitioners assert that the respondents contracts of employment were not intended to circumvent security of tenure. They point out that the respondents knowingly and voluntarily agreed to sign the contracts without the petitioners having exercised any undue advantage over them. Moreover, there is no evidence showing that the petitioners exerted moral dominance on the respondents.[\

ISSUE WON the respondent employees of the corporation are regular employees and therefore their termination for causes outside of the Labor Code is patently illegal

HELD YES Ratio An employee shall be deemed to be of regular status when he has been performing a job for at least one year even if the performance is not continuous and merely intermittent. Reasoning - In any case, we find that the CA, the NLRC and the Labor Arbiter correctly categorized the respondents as regular employees of the petitioner company. In Abasolo v. National Labor Relations Commission, the Court reiterated the test in determining whether one is a regular employee: - 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 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. - It is obvious that the said five-month contract of employment was used by petitioners as a convenient subterfuge to prevent private respondents from becoming regular employees. Such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees security of tenure in their jobs. Petitioners act of repeatedly and continuously hiring private respondents in a span of 3 to 5 years to do the same kind of work negates their contention that private respondents were hired for a specific project or undertaking only. - Further, factual findings of labor officials who are deemed to have acquired expertise in matters within their respective jurisdiction are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. Disposition petition is DENIED DUE COURSE. The Decision of the Court of Appeals is AFFIRMED.

MARAGUINOT V NLRC (DEL ROSARIO, VIVA FILMS)

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284 SCRA 539 DAVIDE; January 22, 1998

NATURE Special civil action for certiorari seeking to annul the decision of NLRC and its Resolution

FACTS - Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents as part of the filming crew. About 4 months later, he was designated Asst. Electrician. He was then promoted to the rank of Electrician. - Petitioner Paulino Enero claims that private respondents employed him as a member of the shooting crew. - Petitioners tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films warehouse, assisting in the fixing of the lighting system, and performing other tasks that the cameraman and /or director may assign. - Petitioners requested that private respondents adjust their salary in accordance with the minimum wage law. Petitioners were informed that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave then refused to take him back when he reported for work. Meanwhile, Maraguinot was dropped from the company payroll but was returned and again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services. Petitioners thus sued for illegal dismissal before the Labor Arbiter. - Private respondents claim that Viva Films is primarily engaged in the distribution and exhibition of movies, but not in the business of making movies; in the same vein, private respondent Vic del Rosario is merely an executive producer, i.e., the financier who invests a certain sum of money for the production of movies distributed and exhibited by VIVA; that they contract persons called producers -- also referred to as associate producers-- to produce or make movies for private respondents; and that petitioners are project employees of the associate producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents; that it was the associate producer of a film who hired Maraguinot.and he was released upon payment of his last salary, as his services were no longer needed; that Enero was hired for a movie, went on vacation and by the time he reported back to work the move had been completed. - The Labor Arbiter found that: -- complainants are the employees of the respondents. The producer cannot be considered as an independent contractor but should be considered only as a labor-only contractor and as such, acts as a mere agent of the real employer, the herein respondents. Also, it is an admitted fact that the complainants received their salaries from the respondents. It is very clear also that complainants are doing activities which are necessary and essential to the business of the respondents, that of movie-making. Complainant Maraguinot worked as an electrician while complainant Enero worked as a crew [member]. Hence, the complainants were illegally dismissed. - Private respondents appealed to the NLRC. In its decision, it said that: 1. Complainants were hired for specific movie projects and their employment was co-terminus with each movie project the completion/termination of which are pre-determined, such fact being made known to complainants at the time of their engagement. 2. Each shooting unit works on one movie project at a time. And the work of the shooting units, which work independently from each other, are not continuous in nature but depends on the availability of movie projects. 3. Further shown by respondents is the irregular work schedule of complainants on a daily basis. Maraguinot was supposed to report on 05 August 1991 but reported only on 30 August 1991, or a gap of 25 days. Complainant Enero worked on 10 September 1991 and his next scheduled working day was 28 September 1991, a gap of 18 days. 4. The extremely irregular working days and hours of complainants work explain the lump sum payment for complainants servic es for each movie project. Hence, complainants were paid a standard weekly salary regardless of the number of working days and hours they logged in. Otherwise, if the principle of no work no pay was strictly applied, complainants earnings for certain weeks would be very negligible. 5. Respondents also alleged that complainants were not prohibited from working with other movie companies.

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The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together, indicated that complainant s (herein petitioners) were project employees. Petitioners Claim To support their claim that they were regular (and not project) employees of private respondents, petitioners cited their performance of activities that were necessary or desirable in the usual trade or business of private respondents and added that their work was continuous, i.e., after one project was completed they were assigned to another project. Respondents Private respondents reiterate their version of the facts and stress that their evidence supports the view that petitioners are project employees; point to petitioners irregular work load and work schedule; emphasize the NLRCs finding that petitioners never controverted the allegation that they were not prohibited from working with other movie companies; and ask that the facts be viewed in the context of the peculiar characteristics of the movie industry. The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners raise questions of fact; and submits that petitioners reliance on Article 280 of the Labor Code to support their contention that they should be deemed regular employees is misplaced, as said s ection merely distinguishes between two types of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits. The OSG likewise rejects petitioners contention that since they were hired not for one project, but for a series of projects, they should be deemed regular employees. In closing, the OSG disagrees with petitioners claim that the NLRCs classification of the movie producers as independent contractors had no basis in fact and in law, since, on the contrary, the NLRC took pains in explaining its basis for its decision.

ISSUES 1. WON this is a proper action 2. WON an employer-employee relationship existed between the petitioners and private respondents or any one of them 3. WON petitioners were illegally dismissed

HELD 1. YES Ratio We rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the NLRC acted in total disregard of evidence material to or decisive of the controversy. In the instant case, petitioners allege that the NLRCs con clusions have no basis in fact and in law, hence the petition may not be dismissed on procedural or jurisdictional grounds. 2. YES Ratio The relationship between VIVA and its producers or associate producers seems to be that of agency, as the latter make movies on behalf of VIVA, whose business is to make movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer. The employer-employee relationship between petitioners and VIVA can further be established by the control test. While four elements are usually considered in determining the existence of an employment relationship, namely: (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, 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 same. These four elements are present here. Reasoning (On job contracting) It is settled that the contracting out of labor is allowed only in case of job contracting.10 - Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers must have tools, equipment, machinery, work premises, and other materials necessary to make

10

Section 8, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code describes permissible job contracting in this wise:

Sec. 8. Job contracting. -- There is job contracting 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.

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motion pictures.The associate producer did not have substantial capital nor investment in the form of tools, equipment and other materials necessary for making a movie. If private respondents insist that their associate producers are labor contractors, then these producers can only be labor-only contractors.11 - As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. Reasoning (On control test) - VIVAs control is evident in its mandate that the end result must be a quality film acceptable to the company. The means a nd methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the eyes and ears of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film. - Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. A sample appointment slip was offered by private respondents to prove that members of the shooting crew except the driver are project employees of the Ind ependent Producers. Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer wh o hired the crew members; moreover, it is VIVAs corporate name which appears on the heading of the appointment slip. What likewise tells against VIVA is that it paid petitioners sal aries as evidenced by vouchers, containing VIVAs letterhead, for that purpose. 3. YES Ratio A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; and 2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business or trade of the employer. However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment. - In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twenty-three (23) projects. Moreover, as petitioners tasks involved, among other chores, the loading, unloading and arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films warehouse, and assisting in the fixing of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or trade of the employer. As regards the underscored phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Reasoning - It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool; and, while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view of VIVAs conduct. - At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employers usual business or trade. Let it not be said that this decision coddles labor, for as Lao12 has ruled, project or work pool employees who have gained the status of regular employees are subject to the no work-no pay principle. - The Courts ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector, but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code
Art. 106. Contractor or subcontractor.-- x x x 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 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.
11

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of coddling labor at the expense of capital and at the same time enables the workers to attain the status of regular employees.
12

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and jurisprudence. Disposition instant petition is GRANTED.

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ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION V RAMIREZ 487 SCRA 9 CORONA; April 10, 2006

NATURE Appeal by certiorari

FACTS - Petitioner company was engaged in a construction business where respondents were hired on different dates from 1976 to 1992 either as laborers, road roller operators, painters or drivers. - In 1997, respondents filed 2 separate complaints for illegal dismissal against the company and its General Manager before the Labor Arbiter (LA). Petitioners allegedly dismissed them without a valid reason and without due process of law. The complaints also included claims for non-payment of the 13th month pay, five days service incentive leave pay, premium pay for holidays and rest days, and moral and exemplary damages. The LA later order ed the consolidation of the two complaints. - Petitioners denied liability and countered that respondents were project employees since their services were necessary only when the company had projects to be completed. Petitioners argued that, being project employees, respondents employment was coterminous with the proj. to which they were assigned. They werent regular employees who enjoyed security of tenure and entitlement to separation pay upon termination from work. - After trial, the LA declared respondents as regular employees because they belonged to a work pool from which the company d rew workers for assignment to different projects, at its discretion. He ruled that respondents were hired and re-hired over a period of 18 years, hence, they were deemed to be regular employees. He likewise found that their employment was terminated without just cause. Thus, in its judgment, the LA declared petitioner company guilty of illegal dismissal and ordered it to reinstate the respondents to their former positions with backwages and other benefits and that if reinstatement was not feasible, that separation pay be awarded. - Petitioners appealed to the NLRC which affirmed the LAs decision. They later filed a petition for review in the CA arguing that they wer e not liable for illegal dismissal since respondents services were merely put on hold until the resumption of their business oper ations. They also averred that they had paid respondents their full wages and benefits as provided by law, hence, the latter had no more right to further benefits. - The CA, taking note of the fact that petitioners previously used the defense that the respondents were project employees who were not entitled to security of tenure and now say that the respondents were not dismissed but their employment merely suspended, dismissed the appeal and dismissed the MFR as well.

ISSUES 1. WON the respondents were regular employees 2. WON respondents were illegally dismissed

HELD 1. YES Ratio In determining the nature of ones employment, length of service is not a controlling factor

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Reasoning

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- Jurisprudence: The SC ruled that respondents were regular employees but not for the reasons given by the LA (which both the NLRC and the CA affirmed). Citing Palomar, et al. v. NLRC, the SC held that contrary to the disquisitions of the LA, employees (like respondents) who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work. Length of time is not a controlling factor in determining the nature of ones employment. - Moreover, employees who are members of a work pool from which a company (like petitioner corp.) draws workers for deploymen t to its different projects do not become regular employees by reason of that fact alone. The Court has enunciated in the cases of Raycor Aircontrol Systems, Inc. v. NLRC, and ALU-TUCP v. NLRC, that members of a work pool can either be project employees or regular employees - The principal test for determining whether employees are project employees or regular employees is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed, is defined in an employment agreement and is made clear to the employees at the time of hiring. - Petitioners did not have that kind of agreement with respondents. Neither did they inform the respondents of the nature of their work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, we are constrained to declare them as regular employees - Furthermore, petitioners cannot belatedly argue that respondents continue to be their employees (so as to escape liability for illegal dismissal). Before the LA, petitioners staunchly postured that respondents were only project employees whose employment tenure was coterminous with th e projects they were assigned to. However, before the CA, they took a different stance by insisting that respondents continued to be their employees. Petitione rs inconsistent and conflicting positions on their true relation with respondents make it all the more evident that the latter were indeed their regular employees. 2. YES Ratio The law requires that the employer furnish the employee 2 written notices: (1) a notice informing them of the particular acts for which they are being dismissed and (2) a notice advising them of the decision to terminate the employment, before termination can be validly effected. Reasoning - In resolving the issue of illegal dismissal, the SC simply stated that petitioners failed to adhere to the two -notice rule, and said that respondents were never given such notices. Disposition Petition denied

ALU-TUCP V NLRC (NATIONAL STEEL CORP) 234 SCRA 678 FELICIANO; August 2, 1994

NATURE Petition for Certiorari to review the resolutions of the NLRC

FACTS - Petitioners claim that they have been employed by respondent National Steel Corporation (NSC) in connection with its Five Year Expansion Program (FAYEP I and II) for varying lengths of time when they were separated from NSCs service. - Petitioners filed separate complaints for unfair labor practice, regu larization and monetary benefits. The Labor Arbiter declared petitioners regular project employees who shall continue their employment as such for as long as such (project) activity exists, but entitled to the salary of a regular employee pursuant to the provisions in the collective bargaining agreement. It also ordered payment of salary differentials. - Both parties appealed. Petitioners argued they were regular, not project employees. NSC claimed petitioners are project employees as they were employed to undertake a specific project.

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- The NLRC modified the Labor Arbiters decision, affirming the holding that they were project employees since they were hired to perform work in a specific undertaking. It, however, set aside the award to petitioners of the same benefits enjoyed by regular employees for lack of legal and factual basis. - Petitioners appealed to the SC, arguing that they are regular employees of NSC because: (i) their jobs are necessary, desi rable and work-related to private respondents main business, steel-making; and (ii) they have rendered service for six (6) or more years to NSC.

ISSUE WON petitioners are properly characterized as project employees rather than regular employees of NSC SCs NOTE: The issue relates to an important consequence: the services of project employees are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. Regular employees, in contrast, are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code.

HELD YES petitioners are project employees. - The law governing the matter is Article 280 of the Labor Code: 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 service 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 exists. - As evident in Article 280 of the Labor Code, the principal test for determining whether particular employees are properly cha racterized 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. - In business and industry, project could refer to one or the other of at least two distinguishable types of activities. Firs tly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Secondly, the term project could also refer to a particular job or undertaking that is not within the regular business of the corporation. Such job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. - Whichever type of project employment is found in a particular case, a common basic requisite is that the designation of named employees as project employees and their assignment to a specific project, are effected and implemented in good faith, and not merely as a means of evading otherwise applicable requirements of labor laws. - The particular component projects embraced in the FAYEP, to which petitioners were assigned, were distinguishable from the regular or ordinary business of NSC, which is the production or making and marketing of steel products. During the time petitioners rendered services to NSC, their work was limited to one or another of the specific component projects which made up the FAYEP I and II. It is not shown that petitioners were hired for or assigned to other purposes. Re Length of Service - SC affirmed the Labor Arbiter and NLRCs basic finding that the length of service of a p[roject employee is not the controlli ng test of employment tenure but whether or not 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. - The simple fact that the employment of petitioners as project employees had gone beyond one year does not detract from, or legally dissolve, their status as project employees.

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Disposition Petition for Certiorari is dismissed. Resolutions of NLRC affirmed.

KIAMCO V NLRC (PNOC) 309 SCRA 424 BELLOSILLO; June 29, 1999

FACTS - Private respondent PHILIPPINE NATIONAL OIL COMPANY (PNOC) through its Energy Research and Development Division, hired petitioner Cisell Kiamco as a project employee in its Geothermal Agro-Industrial Plant Project in Valencia, Negros Oriental. The Contract of Employment1 stipulated among others that Kiamco was being hired by the company as a technician for a period of 5 months from July 1 1992 to Nov 30 1992, or up to the completion of the project, whichever would come first. - After the termination of the contract, a 2nd one was entered into by the parties containing basically the same terms and conditions. The period of employment was from Dec 1 1992 to April 30 1993. - Kiamco was again re-hired for 6 months (May 1 1993 to Nov 30 1993) - On Oct 20 1993 Kiamco received a Memorandum from the administration department demanding an explanation from him on certain infractions he allegedly committed: 1. Misconduct 2. Absence without official leave (AWOL) 3. Non-compliance of administrative reporting procedure on accidents 4. Unauthorized use of company vehicles - Kiamco tried to explain his side but private respondents found his explanation unsatisfactory. On Oct 28 1993 Kiamco received a Memorandum placing him under preventive suspension from Nov 1 1993 to Nov 30 1993 pending further investigation. No investigation however was ever conducted. Private respondents contended that an investigation was not necessary since Kiamco had ceased to be an employee ipso facto upon the expiration of his employment contract on Nov 30 1993. - On Dec 1 1993 Kiamco reported back to work but was prevented by security guards from entering the company premises. On May 27 1994 private respondent reported to the Department of Labor and Employment that petitioner Kiamco was terminated on Nov 1 1993 due to the expiration of his employment contract and the abolition of his position. - On April 25 1994 Kiamco filed before the NLRC Sub-Regional Arbitration Branch No. VII a Complaint for illegal suspension and dismissal against the PNOC. He prayed that he be reinstated to his former position and paid back wages. Labor Arbiter dismissed the complaint for lack of merit. According to the Labor Arbiter, the three (3) employment contracts were freely and voluntarily signed by Kiamco and the PNOC representatives. The contracts plainly stated that Kiamco was being hired for a specific project and for a fixed term. Therefore Kiamco could not question his dismissal since it was in accordance with his employment contract. - Kiamco appealed the decision of the Labor Arbiter to public respondent NLRC which on Sept 27 1996 reversed the Labor Arbiter and declared Kiamco as a regular employee of the respondents and to have been illegally dismissed by the latter. Ordering respondents to REINSTATE the complainant to his former position without loss of seniority rights and privileges with back wages from the date of his dismissal up to actual reinstatement less any income he may have earned during the pendency of the case. - Private respondents filed a MFR of the decision of the NLRC contending that it erred in holding that Kiamco was a regular employee and that the findings of the Labor Arbiter that Kiamco was a project employee should be affirmed. - NLRC modified its Sept 27 1996 Decision declaring that the complainant-appellant is declared a project employee at respondents Geothermal Plant and to continue with said employment until the full completion of the project but in the absence of proof to that effect, complainant is hereby awarded back wages for a period of 6 months or in the amount of P23,100.00. The order declaring the complainant-appellant as a regular employee of respondent PNOC, and for said company to reinstate the complainant with full back wages is hereby deleted. - In his petition for certiorari, Kiamco charges the NLRC with grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the questioned Resolution and prays that it be nullified and he reinstated to his former position. He also seeks payment of back wages, damages and attorneys fees.

ISSUES

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1. WON petitioner is a regular employee or a project employee

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2. WON petitioner is entitled to reinstatement without loss of seniority rights and privileges and to the payment of full back wages 3. WON petitioner is entitled to moral and exemplary damages.

HELD 1. Kiamco was correctly labeled by the NLRC as a project employee. -Article 280 of the Labor Code 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 service to be performed is seasonal in nature and the employment is for the duration of the season. - An employee 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 exists. - In Violeta v. NLRC [10 October 1997, 280 SCRA 520.] it was held 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. As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee. - Under Policy Instruction No. 20 of the Secretary of Labor, project employees are those employed in connection with a particular project. Non-project or regular employees are those employed without reference to any particular project. - The three Contracts of Employment entered into by Kiamco clearly established that he was a project employee because (a) he was specifically assigned to work for a particular project, which was the Geothermal Agro-Industrial Demonstration Plant Project of private respondents, and (b) the termination and the completion of the project or undertaking was determined and stipulated in the contract at the time of his employment. 2. YES - In Santos v. NLRC (154 SCRA 166) it was held The normal consequences of a finding that an employee has been illegally dismissed are, that the employee becomes entitled to reinstatement to his former position without loss of seniority rights and the payment of back wages. - Reinstatement restores the employee who was unjustly dismissed to the position from which he was removed, that is, to his status quo ante dismissal; while the grant of back wages allows the same employee to recover from the employer that which he had lost by way of wages as a result of his dismissal. - The argument of private respondents that reinstatement and payment of back wages could not be made since Kiamco was not a regular employee is apparently misplaced. As quoted above, the normal consequences of an illegal dismissal are the reinstatement of the aggrieved employee and the grant of back wages. These rights of an employee do not depend on the status of his employment prior to his dismissal but rather to the legality and validity of his termination. The fact that an employee is not a regular employee does not mean that he can be dismissed any time, even illegally, by his employer. 3. NO - Moral damages are recoverable only where the dismissal of the employee was attended with bad faith or fraud or constituted an act oppressive to labor or was done in a manner contrary to morals, good custom or public policy. Exemplary damages, on the other hand, may be awarded only if the dismissal was effected in a wanton, oppressive or malevolent manner. The evidence on record does not show any fraud, malice or bad faith on the part of private respondents that would justify payment to petitioner of moral and exemplary damages.

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PHIL. JAI-ALAI & AMUSEMENT CORP V CLAVE 126 SCRA 299 MELENCIO-HERRERA; December 21, 1983

NATURE Petition for Certiorari with Preliminary Injunction

FACTS - Petitioner is a corporation operating a jai-alai fronton for sport and amusement. - It has its own maintenance group for the upkeep of its premises. For the renovation of its main building, which work is not included in maintenance, it hired private respondents, Cadatal, Jr., a plumber, and Delgra, a mason, together with 30 other workers on February 2, 1976 for a period of one month, open to extension should the need for the arise in the course of the renovation. - Renovation was completed by October 1976. Management then decided to construct an annex to the building and private respondents worked on the fire escape. - November 27, 1976 Notice of termination given to the respondents effective November 29 but they still continued to work nonetheless. They worked until December 11 and were fully paid for the work they rendered up to that date. - December 13, 1976 - Petitioner filed with the former Department of Labor a report of termination of the services of private respondents and 30 others, listing them as casual emergency workers. Private workers alleged illegal termination. Assistant Minister Leogardo ordered the reinstatement of the workers with full backwages before petitioner could file a reply to the letter-complaint of the respondents. - Leogardo said that the respondents were already regular employees according to Art. 170 (now Art. 281) of the CC and that termination was unjust. - An appeal was filed which Clave, in his capacity as Presidential Executive Assistant, dismissed it. ISSUE WON private respondents are regular employees entitled to security of tenure

HELD NO Ratio Casual employees are engaged for a specific project or undertaking and fall within the exception provided for in Article 281 of the Labor Code, supra . Not being regular employees, it cannot be justifiably said that petitioner had dismissed them without just cause. They are not entitled to reinstatement with full backwages. Reasoning - A281 defines regular and casual employees. In the case at hand, the casual or limited character of private respondents' employment, therefore, is evident. - Private respondents were hired for a specific project - to renovate the main budding, where major repairs such as painting the main building, repair of the roof, cleaning of clogged water pipes and drains, and other necessary repairs were required. - It was made known, and so understood at the start of the hiring, that their services would last until the completion of the renovation. They rendered service from February 2 to December 11, 1976, almost 11 months, but less than a year.

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- There could be no other reason, however, than that the termination of private respondents was because their services were no longer needed and they had nothing more to do since the project for which they were hired had been completed. Disposition Order of public respondent Vicente Leogardo, Jr., dated December 24, 1976, and the Orders of the other public respondents dated July 13, 1977, January 25, 1979, March 19, 1979, and June 5, 1980, are hereby reversed and set aside. The Complaint for illegal dismissal against petitioner in Case No. R0412-11832-76 LS (Regional Office No. IV, Department of Labor) is dismissed, and the Temporary Restraining Order heretofore issued is hereby made permanent.

SANDOVAL V NLRC 136 SCRA 675 AQUINO; May 31, 1985

NATURE Appeal by certiorari

FACTS - 5 workers were assigned to the construction of the LCT Catamaran. After three months of work, the project was completed and the five workers were served a termination notice. The termination was reported to the Ministry of Labor. The workers filed a complaint for illegal dismissal. - The Labor Arbiter ordered the reinstatement of the workers with backwages. The NLRC affirmed. - 55 workers were assigned to work in the construction of a tanker. When the tanker was finished, the personel manager of Sandoval Shipyards terminated the services of the welders, helpers, and construction workers. The termination was duly reported to the Ministry of Labor. 17 workers filed a complaint for illegal dismissal. - The Director of the Ministrys Capital Region ordered the reinstatement of the complainants. The Deputy Minister of Labor affirmed. Hence this petition.

ISSUE WON private respondents were project employees whose work was coterminous with the project for which they were hired

HELD YES Ratio The public respondents in the instant two cases acted with grave abuse of discretion amounting to lack of jurisdiction in disregarding the precedents cited by the petitioners. Reasoning - Project Employees, as distinguished from regular or non-project employees, are mentioned in Article 281 of the Labor Code, as those 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. - The petitioner cited three of its own cases wherein the NLRC, Deputy Minister of Labor, and the Director of the National Capital Region held that the layoff of its project employees was lawful. - In the case of In Re: Sandoval Shipyards, Inc. Application for Clearance to Terminate Employees, it was held that: It is significant to note that the corporation does not construct vessels for sale or otherwise which will demand continuous productions of ships and will need permanent or regular workers

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The completion of their work or project automatically terminates their employment - The other two cases cited affirmed that the workers of the petitioner were project employees whose employment was terminated upon the completion of the project. - Respondent Deputy Minister himself affirmed such finding. He ruled that the complainants are project workers whose employmen ts are coterminous with the completion of the project, regardless of the number of projects in which they have worked, as provided under Policy Instructions No. 20 of the Ministry of Labor and Employment and as their employment is one for a definite period, they are not entitled to separation pay. Disposition REVERSED.

IMBUIDO V NLRC (LIBRANDO) 329 SCRA 357 BUENA; March 31, 2000
NATURE Petition for review on certiorari of the decision of the NLRC FACTS - Petitioner was employed as a data encoder by private respondent International Information Services, Inc., a domestic corporation engaged in the business of data encoding and keypunching, from August 26, 1988 until October 18, 1991 when her services were terminated due to "low volume of work". - Petitioner filed a complaint for illegal dismissal with prayer for service incentive leave pay and 13th month differential with NLRC alleging that her employment was terminated not due to the low volume of work but because she "signed a petition for certification election among the rank and file employees of respondents," thus charging private respondent with committing unfair labor practices. - Private respondent maintained that it had valid reasons to terminate petitioner's employment and disclaimed any knowledge of the existence or formation of a union among its rank-and-file employees at the time petitioner's services were terminated. Private respondent stressed that its business ". . . relies heavily on companies availing of its services. Its retention by client companies with particular emphasis on data encoding is on a project to project basis," usually lasting for a period of "two (2) to five (5) months." Private respondent further argued that petitioner's employment was for a "specific project with a specified period of engagement." According to private respondent, ". . . the certainty of the expiration of complainant's engagement has been determined at the time of its engagement (until 27 November 1991) or when the project is earlier completed or when the client withdraws," as provided in the contract. "The happening of the second event [completion of the project] has materialized, thus, her contract of employment is deemed terminated. ISSUE WON petitioner is a "project employee" and not a "regular employee" who has security of tenure HELD - We agree with the findings of the NLRC that petitioner is a project employee. The principal test for determining whether an employee is a project employee or a regular employee is whether the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee was engaged for that project. A project employee is one whose 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. In the instant case, petitioner was engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer, as admittedly, petitioner worked as a data encoder for private respondent, a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of employment contracts 32 between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment. - However, even as when petitioner is a project employee, according to jurisprudence "[a] project employee or a member of a work pool may acquire the status of aregular employee when the following concur: 1) There is a continuous rehiring of project employees even after the cessation of a project; and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. - The evidence on record reveals that petitioner was employed by private respondent as a data encoder, performing activities which are usually necessary or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years, from August 26, 1988 to October 18, 1991 and contracted for a total of thirteen (13) successive projects. We have previously ruled that "[h]owever, the length of time during which the employee was continuouslyre-hired is not controlling, but merely serves as a badge of regular employment." Based on the foregoing, we conclude that petitioner has attained the status of a regular employee of private respondent. - Being a regular employee, petitioner is entitled to security of tenure and could only be dismissed for a just or authorized cause, as provided in Article 279 of the Labor Code, as amended: 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.

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- The alleged causes of petitioner's dismissal (low volume of work and belatedly, completion of project) are not valid causes for dismissal under Articles 282 and 283 of the Labor Code. Thus, petitioner is entitled to reinstatement without loss of seniority rights and other privileges, and to her full backwages, inclusive of allowances, and to her other benefits or their monetary equivalent computed from the time her compensation was withheld from her up to the time of her actual reinstatement. However, complying with the principles of "suspension of work" and "no work, no pay" between the end of one project and the start of a new one, in computing petitioner's backwages, the amounts corresponding to what could have been earned during the periods from the date petitioner was dismissed until her reinstatement when private respondent was not undertaking any project, should be deducted. - With regard to petitioner's claim for service incentive leave pay, we agree with the labor arbiter that petitioner is entitled to service incentive leave pay, as provided in Article 95 of the Labor Code, which reads: Art. 95: Right to service incentive leave (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. - Having already worked for more than three (3) years at the time of her unwarranted dismissal, petitioner is undoubtedly entitled to service incentive leave benefits, computed from 1989 until the date of her actual reinstatement. Disposition Petition granted.

DE OCAMPO V NLRC 186 SCRA 360 DAVIDE JR; May 7, 2002

NATURE The petition seeks a reversal of the decision of the respondent NLRC (ordering respondent to reinstate, without back wages, the individual complainants who were regular employees except those who were officers of the union among them or paid separation pay at their option, equivalent to one month's pay or onehalf month's pay for every year of service, whichever is greater. )

FACTS - On September 30, 1980, the services of 65 employees of private respondent Makati Development Corporation were terminated on the ground of the expiration of their contracts. The said employees filed a complaint for illegal dismissal against the MDC on October 1, 1980; On October 8, 1980, as a result of the aforementioned termination, the Philippine Transport and General Workers Association, of which the complainants were members, filed a notice of strike on the grounds of union-busting, subcontracting of projects which could have been assigned to the dismissed employees, and unfair labor practice; that on October 14, 1980, the PTGWA declared a strike and established picket lines in the perimeter of the MDC premises - On November 4, 1980, the MDC filed with the Bureau of Labor Relations a motion to declare the strike illegal and restrain the workers from continuing the strike; that on that same day and several days thereafter the MDC filed applications for clearance to terminate the employment of 90 of the striking workers, whom it had meanwhile preventively suspended; that of the said workers, 74 were project employees under contract with the MDC with fixed terms of employment; and that on August 31, 1982, Labor Arbiter Apolinar L. Sevilla rendered a decision 1 denying the applications for clearance filed by the MDC and directing it to reinstate the individual complainants with two months back wages each. - This is the decision modified by the NLRC 2 which is now faulted by the petitioners for grave abuse of discretion. The contention is that the public respondent acted arbitrarily and erroneously in ruling that: a) the motion for reconsideration was filed out of time; b) the strike was illegal; and c) the separation of the project employees was justified

ISSUES 1. WON the strike held by the workers was legal 2. WON the contract workers are considered regular employees 3. WON the project workers are entitled to separation pay

HELD 1. YES

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- under the law then in force, to wit, PD No. 823 as amended by PD No. 849, the strike was indeed illegal. In the first place, it was based not on the ground of unresolved economic issues, which was the only ground allowed at that time, when the policy was indeed to limit and discourage strikes. Secondly, the strike was declared only after 6 days from the notice of strike and before the lapse of the 30-day period prescribed in the said law for a cooling-off of the differences between the workers and management and a possible avoidance of the intended strike. That law clearly provided Sec. 1. It is the policy of the state to encourage free trade unionism and free collective bargaining within the framework of compulsory and voluntary arbitration. Therefore all forms of strikes, picketing and lockout are hereby strictly prohibited in vital industries such as in public utilities, including transportation and communication, companies engaged in the manufacturer processing as well as in the distribution of fuel gas, gasoline and fuel or lubricating oil, in companies engaged in the production or processing of essential commodities or products for export, and in companies engaged in banking of any kind, as well as in hospitals and in schools and colleges. However, any legitimate labor union may strike and any employer may lockout in establishments not covered by General Order No. 5 only on grounds of unresolved economic issues in collective bargaining, in which case the union or the employer shall file a notice with the Bureau of Labor Relations at least 30 days before the intended strike or lockout. (Emphasis supplied) The Court ruled that the leaders of the illegal strike were correctly punished with dismissal, but their followers (other than the contract workers) were properly ordered reinstated, considering their lesser degree of responsibility. The penalty imposed upon the leaders was only proper because it was they who instigated the strike even if they knew, or should have known, that it was illegal. It was also fair to rule that the reinstated strikers were not entitled to backpay as they certainly should not be compensated for services not rendered during the illegal strike. In our view, this is a reasonable compromise between the demands of the workers and the rights of the employer. 2. The Court stress the rule in Cartagenas v. Romago Electric Co., that contract workers are not considered regular employees, their services being needed only when there are projects to be undertaken. 'The rationale of this rule is that if a project has already been completed, it would be unjust to require the employer to maintain them in the payroll while they are doing absolutely nothing except waiting until another project is begun, if at all. In effect, these stand-by workers would be enjoying the status of privileged retainers, collecting payment for work not done, to be disbursed by the employer from profits not earned. This is not fair by any standard and can only lead to a coddling of labor at the expense of management. However, this rule is not applicable in the case at bar. The record shows that although the contracts of the project workers had indeed expired, the project itself was still on-going and so continued to require the workers' services for its completion. There is no showing that such services were unsatisfactory to justify their termination. It is obvious that the real reason for the termination of their services-which, to repeat, were still needed-was the complaint the project workers had filed and their participation in the strike against the private respondent. These were the acts that rendered them persona non grata to the management. Their services were discontinued by the MDC not because of the expiration of their contracts, which had not prevented their retention or rehiring before as long as the project they were working on had not yet been completed. The real purpose of the MDC was to retaliate against the workers, to punish them for their defiance by replacing them with more tractable employees. 3. Noteworthy in this connection is Policy Instruction No. 20 of the Department of Labor, providing that "project employees are not entitled to separation pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the projects in which they had been employed by a particular construction company." This rule would entitle project employees to separation pay if the projects they are working on have not yet been completed when their services are terminated. And this should be true even if their contracts have expired, on the theory that such contracts would have been renewed anyway because their services were still needed. - Applying this rule, The Court held that the project workers who were separated even before the completion of the project at the New Alabang Village and not really for the reason that their contracts had expired, are entitled to separation pay. Considering the workers to have been separated without valid cause, the Court shall compute their separation pay at the rate of one month for every year of service of each dismissed employee, up to the time of the completion of the project. This is the most equitable way to treat their claim in light of their cavalier dismissal by the private respondent despite their long period of satisfactory service with it. Disposition The appealed decision of the NLRC is affirmed but with the modification that the contract workers are hereby declared to have been illegally separated before the expiration of the project they were working on and so are entitled to separation pay equivalent to one month salary for every year of service.

A.M. ORETA & CO INC V NLRC (GRULLA) 176 SCRA 218 MEDIALDEA; August 10, 1989

NATURE
Petition for certiorari

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FACTS
- Private respondent Grulla was engaged by Engineering Construction and Industrial Development Company (ENDECO) through A.M. Oreta and Co., Inc. as a carpenter in its project in Jeddah, Saudi Arabia. - The contract of employment, which was entered into on June 11, 1980 was for a period of 12 months. Respondent Grulla left the Philippines for Jeddah, Saudi Arabia on August 5, 1980. - On August 15, 1980, Grulla met an accident which fractured his lumbar vertebrae while working at the jobsite. He was rushed to the New Jeddah Clinic and was confined there for 12 days. - On August 27, 1980, Grulla was discharged from the hospital and was told that he could resume his normal duties after undergoing physical therapy for two weeks. - On September 18, 1980, respondent Grulla reported back to his Project Manager and presented to the latter a medical certificate declaring the former already physically fit for work. Since then, he stated working again until he received a notice of termination of his employment on October 9, 1980. - Grulla filed a complaint for illegal dismissal, recovery of medical benefits, unpaid wages for the unexpired ten (10) months of his contract and the sum of P1,000.00 as reimbursement of medical expenses against A.M. Oreta and Company, Inc. and ENDECO with the POEA. - The petitioner A.M. Oreta and Company, Inc. and ENDECO filed their answer and alleged that the contract of employment entered into between petitioners and Grulla provides, as one of the grounds for termination of employment, violation of the rules and regulations promulgated by the contractor; and that Grulla was dismissed because he has not performed his duties satisfactorily within the probationary period of three months. - POEA held that complainant's dismissal was illegal and warrants the award of his wages for the unexpired portion of the contract. - Petitioner appealed from the adverse decision to the respondent Commission. - Respondent Commission dismissed the appeal for lack of merit and affirmed in toto the decision of the POEA..

ISSUES
1. WON the employment of respondent Grulla was illegally terminated by the petitioner 2. WON Grulla is entitled to salaries corresponding to the unexpired portion of his employment contract.

HELD
1. YES - Article 280 (formerly Article 281) of the Labor Code, as amended, provides: "Article 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 employment or where the work or service to be performed is seasonal in nature and the employment is far 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." - Policy Instructions No. 12 of the then Minister of Labor (now Secretary of Labor and Employment) which provides: "PD 850 has defined the concept of regular and casual employment. What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. . . ."

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- A perusal of the employment contract reveals that although the period of employment of respondent Grulla is 12 months, the contract period is renewable subject to future agreement of the parties. It is clear from the employment contract that the respondent Grulla was hired by the company as a regular employee and not just a mere probationary employee. - On the matter of probationary employment, the law in point is Article 281 (formerly Article 252) of the Labor Code which provides in part: "Art. 281. Probationary Employment. - . . . . 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 regular employee." - The law is clear to the effect that in all cases involving employees engaged on probationary' basis, the employer shall make known to the employee at the time he is hired, the standards by which he will qualify as a regular employee. Nowhere in the employment contract executed between petitioner company and respondent Grulla is there a stipulation that the latter shall undergo a probationary period for three months before he can quality as a regular employee. There is also no evidence on record showing that the Grulla had been apprised of his probationary status and the requirements which he should comply in order to be a regular employee. In the absence of these requisites, there is justification in concluding that respondent Grulla was a regular employee at the time he was dismissed by petitioner. As such, he is entitled to security of tenure during his period of employment and his services cannot be terminated except for just and authorized causes enumerated under the Labor Code and under the emloyment contract. Granting, in gratia argumenti, that respondent is a probationary employee, he cannot, likewise, be removed except for cause during the period of probation. Although a probationary or temporary employee has limited tenure, he still enjoys security of tenure. During his tenure of employment or before his contract expires, he cannot be removed except for cause as provided for by law. - The alleged ground of unsatisfactory performance relied upon by petitioner for dismissing respondent Grulla is not one of the just causes for dismissal provided in the Labor Code. Neither is it included among the grounds for termination of employment under Article VII of the contract of employment executed by petitioner company and respondent Grulla. - Grulla was not, in any manner, notified of the charges against him before he was outrightly dismissed. Neither was any hearing or investigation conducted by the company to give the respondent a chance to be heard concerning the alleged unsatisfactory performance of his work. 2. YES - The dismissal of Grulla violated the security of tenure under the contract of employment which specifically provides that the contract term shall be for a period of twelve (12) calendar months. Consequently, the respondent Grulla should be paid his salary for the unexpired portion of his contract of employment which is ten (10) months.

Disposition Petition was dismissed


PURE FOODS CORPORATION V NLRC (CORDOVA, CRUSIS, ET AL) 174 SCRA 415 DAVIDE, JR; December 12, 1997
NATURE Petition for certiorari FACTS - Private respondents (numbering 906) were hired by Pure Foods Corporation (PFC) to work for a fixed period of five months at its tuna cannery plant in Tambler, General Santos City. After the expiration of their respective contracts of employment in June and July 1991, their services were terminated. They forthwith executed a "Release and Quitclaim" stating that they had no claim whatsoever against PFC. - 29 July 1991: private respondents filed before the NLRC Sub-Regional Arbitration Branch a complaint for illegal dismissal against PFC and its plant manager, Marciano Aganon. Labor Arbiter Arturo P. Aponesto dismissed the complaint on the ground that the private respondents were mere contractual workers, and not regular employees; hence, they could not avail of the law on security of tenure. The termination of their services by reason of the expiration of their contracts of employment was, therefore, justified. - On appeal, NLRC affirmed the Labor Arbiter's decision. But on MR, NLRC held that the private respondent and their co-complainants were regular employees. It declared that the contract of employment for five months was a "clandestine scheme employed by PFC to stifle private respondents' right to security of tenure" and should therefore be struck down and disregarded for being contrary to law, public policy, and morals. Hence, their dismissal on account of the expiration of their respective contracts was illegal. - Accordingly, the NLRC ordered PFC to reinstate the private respondents to their former position without loss of seniority rights and other privileges, with full back wages; and in case their reinstatement would no longer be feasible, PFC should pay them separation pay equivalent to one-month pay or one-half-month pay for every year of service, whichever is higher, with back wages and 10% of the monetary award as attorney's fees. - PFC's motion for reconsideration was denied. Hence, this petition.

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Purefoods Corp's Contention: that the private respondents are now estopped from questioning their separation from petitioner's employ in view of their express conformity with the five-month duration of their employment contracts; that the "Release and Quitclaim" private respondents had executed has unconditionally released PFC from any and all other claims which might have arisen from their past employment with PFC. OSG's Comment: the private respondents were regular employees, since they performed activities necessary and desirable in the business or trade of PFC. The period of employment stipulated in the contracts of employment was null and void for being contrary to law and public policy, as its purpose was to circumvent the law on security of tenure. The expiration of the contract did not, therefore, justify the termination of their employment. Also, private respondents' quitclaim was ineffective to bar the enforcement for the full measure of their legal rights. Private Respondent's Argument: contracts with a specific period of employment may be given legal effect provided, however, that they are not intended to circumvent the constitutional guarantee on security of tenure; the practice of PFC in hiring workers to work for a fixed duration of five months only to replace them with other workers of the same employment duration was apparently to prevent the regularization of these so-called "casuals," which is a clear circumvention of the law on security of tenure. ISSUES 1. WON employees hired for a definite period and whose services are necessary and desirable in the usual business or trade of the employer are regular employees 2. WON the private respondents' five-month contracts of employment are valid 3. WON the execution by the private respondents of a "Release and Quitclaim" precluded them from questioning the termination of their services HELD 1. YES - Art. 280 of the Labor Code defines regular and casual employment. Under this provision, there are two kinds of regular employees: (1) those who are 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 they are employed. - In the instant case, the private respondents' activities consisted in the receiving, skinning, loining, packing, and casing-up of tuna fish which were then exported by PFC. Indisputably, they were performing activities which were necessary and desirable in petitioner's business or trade. - not hired for a specific project or undertaking. The term "specific project or undertaking" under Article 280 of the Labor Code contemplates an activity which is not commonly or habitually performed or such type of work which is not done on a daily basis but only for a specific duration of time or until completion; the services employed are then necessary and desirable in the employer's usual business only for the period of time it takes to complete the project. 2. NO - None of the criteria, under which term employment cannot be said to be in circumvention of the law on security of tenure, had been met in the present case. -Brent School, Inc. v. Zamora ruling on the legality of fixed-term employment has 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. But, where from the circumstances it is apparent that the periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy and morals. -Criteria under which term employment cannot be said to be in circumvention of the law on security of tenure: a) 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 b) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. - It was shown that it was really the practice of the company to hire workers on a uniformly fixed contract basis and replace them upon the expiration of their contracts with other workers on the same employment duration. This scheme of PFC was apparently designed to prevent the private respondents and the other "casual" employees from attaining the status of a regular employee. It was a clear circumvention of the employees' right to security of tenure and to other benefits like minimum wage, cost-of-living allowance, sick leave, holiday pay, and 13th month pay. 3. NO - The execution by the private respondents of a "Release and Quitclaim" did not preclude them from questioning the termination of their services. Generally, quitclaims by laborers are frowned upon as contrary to public policy and are held to be ineffective to bar recovery for the full measure of the workers' rights. The reason for the rule is that the employer and the employee do not stand on the same footing. Disposition Petition dismissed. NLRC decision affirmed, subject to modification on the computation of the separation pay and back wages. Since reinstatement is no longer possible because PFC's tuna cannery plant had, admittedly, been close in November 1994, the proper award is separation pay equivalent to one month pay or one-half month pay for every year of service, whichever is higher, to be computed from the commencement of their employment up to the closure of the tuna cannery plant. The amount of back wages must be computed from the time the private respondents were dismissed until the time petitioner's cannery plant ceased operation.

LABAYOG V MY SAN BISCUITS INC 494 SCRA 486 CORONA; July 11, 2006

NATURE Petition for review on certiorari is the resolution of the Court of Appeals.

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FACTS

Labor Standards

Finals Case Digests

- 1992: petitioners entered into contracts of employment with respondent company as mixers, packers and machine operators for a fixed term. On the expiration of their contracts, their services were terminated. - April 15, 1993: petitioners filed complaints for illegal dismissal, underpayment of wages, non-payment of overtime, night differential and 13th month pay, damages and attorneys fees. The labor arbiter ruled their dismissal to be illegal on the ground that they had become regular employees who performed duties necessary and desirable in respondent companys business.. - On appeal to the National Labor Relations Commission (NLRC), the decision of the labor arbiter was set aside. - CA set aside the NLRC decision and reinstated the decision of the labor arbiter. However, on respondents motion for reconsideration , the CA reversed itself. The CA reasoned that, while petitioners performed tasks which were necessary and desirable in the usual business of respondent company, their employment contracts providing for a fixed term remained valid. No force, duress, intimidation or moral dominance was exerted on them. Respondents dealt with petitioners in good faith and within the valid parameters of management prerogatives.

ISSUE WON the contract with a fixed period is valid (therefore determining WON the workers were dismissed illegally).

HELD YES, contract is valid. Ratio Contracts of employment for a fixed period are not unlawful. What is objectionable is the practice of some scrupulous employers who try to circumvent the law protecting workers from the capricious termination of employment. Reasoning - Petitioners were not regular employees. While their employment as mixers, packers and machine operators was necessary and desirable in the usual business of respondent company, they were employed temporarily only, during periods when there was heightened demand for production. There could have been no illegal dismissal when their services were terminated on expiration of their contracts. ART. 280. (Labor Code) 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 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. Where the duties of the employee consist of activities which are necessary or desirable in the usual business of the employer, the parties are not prohibited from agreeing on the duration of employment. - Article 280 does not proscribe or prohibit an employment contract with a fixed period[11] provided it is not intended to circumvent the security of tenure. Two criteria validate a contract of employment with a fixed period: 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 on the employee and without any circumstances vitiating consent; (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. Disposition Resolution of CA is affirmed. (1)

CHUA V CA (SOCIAL SECURITY COMMISSION, SSS, PAGUIO ET AL) 440 SCRA 121 TINGA; October 6, 2004

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NATURE This is a petition for review of the Decision of the Court of Appeals in CA-G.R. CV No. 38269 dated 06 March 1996, and its Resolution dated 30 July 1996 denying petitioners Motion for Reconsideration, affirming the Order of the Social Security Commission (SSC) dated 1 February 1995 which held that private respondents were regular employees of the petitioner and ordered petitioner to pay the Social Security System (SSS) for its unpaid contributions, as well as penalty for the delayed remittance thereof. FACTS - On 20 August 1985, private respondents Andres Paguio, Pablo Canale, Ruel Pangan, Aurelio Paguio, Rolando Trinidad, Romeo Tapang and Carlos Maliwat (hereinafter referred to as respondents) filed a Petition with the SSC for SSS coverage and contributions against petitioner Reynaldo Chua, owner of Prime Mover Construction Development, claiming that they were all regular employees of the petitioner in his construction business. Private respondents alleged that petitioner dismissed all of them without justifiable grounds and without notice to them and to the then Ministry of Labor and Employment. They further alleged that petitioner did not report them to the SSS for compulsory coverage in flagrant violation of the Social Security Act. - On the other hand, the petitioner claimed that private respondents were project employees, whose periods of employment were terminated upon completion of the project. Thus, he claimed, no employer-employee relation existed between the parties. There being no employer-employee relationship, private respondents are not entitled to coverage under the Social Security Act. Moreover, petitioner invokes the defense of good faith, or his honest belief that project employees are not regular employees under Article 280 of the Labor Code. The SSC and CA ruled in favor of the respondents. ISSUE WON private respondents were regular employees of the petitioner HELD YES Ratio Elements of the control test: (a) selection and engagement of the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor. - Even though the employer does not admit, the existence of an employer-employee relationship between the parties can easily be determined by the application of the "control test, the elements of which are: (a) selection and engagement of the employee; (b) payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor. - There is no dispute that private respondents were employees of petitioner. Petitioner himself admitted that they worked in his construction projects, although the period of their employment was allegedly co-terminus with their phase of work. It is clear that private respondents are employees of petitioner, the latter having control over the results of the work done, as well as the means and methods by which the same were accomplished. Suffice it to say that regardless of the nature of their employment, whether it is regular or project, private respondents are subject of the compulsory coverage under the SSS Law, their employment not falling under the exceptions provided by the law. This rule is in accord with the Courts ruling in Luzon Stevedoring Corp. v. SSS to the effect that all employees, regardless of tenure, would qualify for compulsory membership in the SSS, except those classes of employees contemplated in Section 8(j) of the Social Security Act. - In Violeta v. NLRC, this Court ruled that to be exempted from the presumption of regularity of employment, the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved. This second requirement was not met in this case. - This Court has held that an employment ceases to be co-terminus with specific projects when the employee is continuously rehired due to the demands of the employers business and re-engaged for many more projects without interruption. The Court likewise takes note of the fact that, as cited by the SSC, even the National Labor Relations Commission in a labor case involving the same parties, found that private respondents were regular employees of the petitioner. - Another cogent factor militates against the allegations of the petitioner. In the proceedings before the SSC and the Court of Appeals, petitioner was unable to show that private respondents were appraised of the project nature of their employment, the specific projects themselves or any phase thereof undertaken by petitioner and for which private respondents were hired. He failed to show any document such as private respondents employment contracts an d employment records that would indicate the dates of hiring and termination in relation to the particular construction project or phases in which they were employed. Moreover, it is peculiar that petitioner did not show proof that he submitted reports of termination after the completion of his construction projects, considering that he alleges that private respondents were hired and rehired for various projects or phases of work therein - To be exempted from the presumption of regularity of employment, the agreement between a project employee and his employer must strictly conform to the requirements and conditions under Article 280 of the Labor Code. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 are to be achieved.

C.E. CONSTRUCTION CORP V CIOCO 437 SCRA 648 PUNO; September 8, 2004

NATURE Two (2) petitions for review of the Decision of the CA which reversed the NLRC, as well as its Resolution which denied the pa rties separate motions for reconsideration.

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Labor Standards

Finals Case Digests

FACTS - Cioco, et al. (WORKERS) were hired by C.E. Construction Corp. (COMPANY), a domestic corporation engaged in the construction business. They were hired as carpenters and laborers in various construction projects from 1990 to 1999, the latest of which was the GTI Tower in Makati. Prior to the start of every project, the WORKERS signed individual employment contracts. - Sometime in May and June 1999, the WORKERS, along with sixty-six (66) others, were terminated by the COMPANY on the ground of completion of the phases of the GTI Tower project for which they had been hired. Alleging that they were regular employees, the WORKERS filed complaints for illegal dismissal with the NLRC. Claims for underpaid wages and unpaid overtime pay, premium for holiday and rest days, service incentive leave pay, night shift differential, and 13th month pay were likewise demanded.

ISSUES 1. WON the WORKERS were regular employees of the COMPANY 2. WON the WORKERS were illegally dismissed

HELD 1. NO Ratio The Labor Arbiter, the NLRC, and the CA, unanimously found that the WORKERS were project employees of the COMPANY. This finding is binding on this Court. We again hold that the fact that the WORKERS have been employed with the COMPANY for several years on various projects, the longest being nine (9) years, did not automatically make them regular employees considering that the definition of regular employment in Article 280 of the Labor Code, makes specific exception with respect to project employment. The re-hiring of petitioners on a project-to-project basis did not confer upon them regular employment status. 2. NO Ratio The labor arbiter categorically found that the appropriate notices to the WORKERS and the corresponding reports were submitted by the COMPANY to the DOLE. The NLRC affirmed this finding of fact on appeal. The rule is that factual findings of administrative agencies, if supported by substantial evidence, are entitled to great weight. More importantly, no prior notice of termination is required if the termination is brought about by completion of the contract or phase thereof for which the worker has been engaged. Disposition The decision of the CA is MODIFIED. The termination of the WORKERS is declared valid and legal. The award of backwages is set aside.

MARAGUINOT V NLRC [PAGE 82]

AGUILAR V NLRC (ACEDILLO) 269 SCRA 596 ROMERO; March 13, 1997

NATURE

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Petition for certiorari

Labor Standards

Finals Case Digests

FACTS - Romeo Acedillo worked for the petitioner as a helper-electrician. He was dismissed from allegedly due to lack of available projects and excess in the number of workers needed. - He filed a case for illegal dismissal before the NLRC upon learning that the petitioner as hiring new workers and his request to be reinstated was denied. In reply, petitioner maintained that its need for workers varied, depending on contracts procured in the course of its business of contracting refrigeration and other related works. According to them, Acedillo was a contractual employee. - NLRC ruled in favor of Acedilo. It held that Acedillo was a regular employee, as seen from the nature of his job and the length of time he has served. The petitioner was also held liable for the monetary benefits being claimed by Acedillo since employees, whether regular or not, are entitled to such.

ISSUE WON Acedillo is a regular employee

HELD YES - definition of project employee: a project employee is one whose "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 - petitioner did not specify the duration and scope of the undertaking at the time Acedillo's services were contracted. Neither is there any proof that the duration of his assignment was made clear to him other than the self-serving assertion of petitioner that the same can be inferred from the tasks he was made to perform - Acedillos work clearly was an activity "necessary or desirable in the usual business or trade" of petitioner, since refrigeration requires considerable electrical work. This necessity is further bolstered by the fact that petitioner would hire him anew after the completion of each project, a practice which persisted throughout the duration of his tenure - Petitioners assertion that it held 2 sets of workers. This practice renders untenable petitioner's position that Acedillo is not a regular employee. Citing Philippine National Construction Corp v NLRC: "Members of a work pool from which a construction company draws its project employees, if considered employees of the construction company while in the work pool, are non-project employees or employees for an indefinite period. If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of (the) employer-employee relationship." Disposition Petition dismissed

ABESCO CONSTRUCTION AND DEVELOPMENT CO V RAMIREZ [PAGE 83]

PALOMARES V NLRC (NATIONAL STEEL CORPORATION) 277 SCRA 439 ROMERO; August 15, 1997

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FACTS - Palomares and Mutia was hired by respondent National Steel Corporation (NSC) by virtue of contracts of employment for its Five Year Expansion Program or FYEP, Phase I and II-4, for varying lengths of time. Palomares and Mutia asked for regularization, wage differential, CBA coverage and other benefits. Palomares, Mutia and four other complainants were adjudged as regular employees of NSC. The NLRC reversed the findings of the Labor Arbiter. Respondent Commission held that petitioners were project employees and that their assumption of regular jobs were mainly due to peakloads or the absence of regular employees during the latter's temporary leave. - Petitioners argue that as regards functions and duration of work, contracted employees should, by operation of law, be considered regular employees. Respondent NSC, on the other hand, maintains that petitioners are mere project employees, engaged to work on the latter's Five-Year Expansion Projects (FYEP), Phases I and II-A, hence, dismissible upon the expiration of every particular project. - Petitioners were employed for a specific project or projects undertaken by respondent corporation such as the Five Year Expansion Program include the setting up of a Cold Rolling Mill Expansion Project, establishing a Billet Steel-Making Plant, installation of a Five Stand TDM and Cold Mill Peripherals Project. - Petitioners were hired to work on projects for FYEP I and II-A as shown in the records. On account of the expiration of their contracts of employment and/or project completion, petitioners were terminated from their employment. They were, however, rehired for other component projects of the FYEP because they were qualified. Thus, the Court is convinced that petitioners were engaged only to augment the workforce of NSC for its aforesaid expansion program.

ISSUE WON petitioners should be considered regular employees of respondent corporation

HELD NO - They should not be. It should be noted that there were intervals in petitioners' respective employment contracts with NSC, thus bolstering the latter's position that, indeed, petitioners are project employees. Since its work depends on availability of such contracts or projects, necessarily the employment of its work force is not permanent but co-terminous with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer to retain them as permanent employees and pay them wages even if there are no projects to work on. The fact that petitioners worked for NSC under different project employment contracts for several years cannot be made a basis to consider them as regular employees, for they remain project employees regardless of the number of projects in which they have worked. Even if petitioners were repeatedly and successively re-hired on the basis of a contact of employment for more than one year, they cannot be considered regularized. Length of service is not the controlling determinant of the employment tenure of a project employee. As stated earlier, it is based on whether or not the employment has been fixed for a specific project or undertaking, the completion of which has been determined at the time of the engagement of the employee. Furthermore, the second paragraph of Article 280, providing that an employee who has rendered service for at least one (1) year, shall be considered a regular employee, pertains to casual employees and not to project employees such as petitioners . -The principal test for determining whether an employee is a project employee and not a regular employee is whether he was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time he was engaged for that project. Disposition instant petition is DISMISSED. The decision and resolution of the National Labor Relations Commission dated November 23, 1994 and March 23, 1995, respectively, are AFFIRMED.

FILIPINAS PRE-FABRICATED BUILDING SYSTEMS INC V PUENTE 453 SCRA 820 PANGANIBAN; March 18, 2005

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NATURE Petition for Review

Labor Standards

Finals Case Digests

FACTS - Respondent Puentes contention: > That he began working with Petitioner Filsystems, Inc., a corporation engaged in construction business, on June 12, 1989; that he was initially hired by [petitioner] company as an installer; that he was later promoted to mobile crane operator and was stationed at the company premises in Quezon City; that his work was not dependent on the completion or termination of any project; that since his work was not dependent on any project, his employment with the Filsystems was continuous and without interruption for the past 10 years; that on Oct. 1, 1999, he was dismissed from his employment allegedly because he was a project employee. He filed complaint for illegal dismissal against the petitioner. - Petitioner-companys claims > That complainant was hired as a project employee in the companys various projects; that his employment contracts showed that he was a project worker with specific project assignments; that after completion of each project assignment, his employment was likewise terminated and the same was correspondingly reported to the DOLE. Labor Arbiter dismissed complaint. NLRC affirmed. CA reversed LA and NLRC rulings holding that respondent was a regular employee of petitioners.

ISSUES 1. WON respondent Roger Puente is a project employee 2. WON he is entitled to reinstatement with full back wages

HELD 1. YES Ratio Provisions in the Labor Code and DOLE Order No. 19(1993) make it clear that a project employee is one whose employment has b een 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. It is a settled rule that the length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or und ertaking the completion or termination of which has been determined at the time of the engagement of the employee. Reasoning 1) The contracts of employment of Puente show that he was hired for specific projects. His employment was coterminous with the completion of the projects for which he had been hired. Those contracts expressly provided that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction projects. Also, petitioners regularly submitted to DOLE reports of the termination of services of project workers. Such compliance with the requirement confirms that respondent was a project employee 2) Evidently, although the employment contract did not state a particular date, it did specify that the termination of the parti es employment relationship was to be on a day certain -- the day when the phase of work termed Lifting & Hauling of Materials for the World Finance Plaza project would be completed. Thus, respondent cannot be considered to have been a regular employee. He was a project employee. 3) That he was employed with Filsystems for 10 yrs. in various projects did not ipso facto make him a regular employee, considering that the definition of regular employment in Art.280 of the Labor Code makes a specific exception with respect to project employment. The mere rehiring of respondent on a project-toproject basis did not confer upon him regular employment status. The practice was dictated by the practical consideration that experienced construction workers are more preferred. It did not change his status as a project employee. 2. YES

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Ratio In termination cases, the burden of proving that an employee has been lawfully dismissed lies with the employer. Employers who hire project employees are mandated to state and, once its veracity is challenged, to prove the actual basis for the latters dismissal. Reasoning - There is no allegation or proof, however, that the World Finance Plaza project -- or the phase of work therein to which respondent had been assigned -- was already completed by Oct.1, 99, the date when he was dismissed. The inescapable presumption is that his services were terminated for no valid cause prior to the expiration of the period of his employment; hence, the termination was illegal. Reinstatement with full back wages, inclusive of allowances and other benefits or their monetary equivalents -- computed from the date of his dismissal until his reinstatement -- is thus in order. If reinstatement no longer possible due to the completion of the project during the pendency of this case, he must be entitled to salary and benefits of the unexpired portion of his employment. Disposition Petition is PARTLY GRANTED.

Philippine Telegraph and Telephone Company vs. NLRC Grace De Guzman (PET)

Employed by REP. as a reliever for a fix period ( 1990 1991)

For Several times was to be reliever on the same basis

Sept. 2, 1991, asked again as a probationary EE fro 150 days

- Filled Out farn as single and civil status

- throughly got married on may 1991

Upon knowledge a marriage, resp. sent a memorandum reminding her of no marriage policy. (for women)

Replied she was unaware

Jan 1992, dismissed

Filed complaint of illegal dismissal on NATL labor relations commission in baguio city.

At preliminary conference, de Guzman admitted failed remittance. Promi

LABOR

Guilty of illegal dismissal

Ground of dismissal insufficient and discrimination

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Finals Case Digests

NCRC

Affirmed with MADI

Suspended for 3 months for her acts of dishonesty

Motion for reco denied.

RULINGS

1.

state recognizes rule of women in nation-building and ensure equality bet men and women

2.

corrective labor and social laws

leads to art. 136 of labor code prohibits discri by reason marriage of a female EE.

3.

petitioner outright violation of labor laws and consti against discri

4.

dismissal due to concealment of status remittance and not bec. of marriage

matter of remittance deemed settled in the promi made

made clear in the memo

Gained regular status when performed activities necessary and essential to the usual made and business

3 month sus. Would be unfair to return without sanction ( back wage minus 3 months)

5.

contends verbal agreement. Terminate once married

the variables is sex, without makes it discri and unlawful

why not woman all women - irrelevant

6.

assaults good morals, policy and freedom of women and strikes at the very essence of marriage, its having and purpose

DISPO

PET Dismissed Double cost against petitioner

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Bonifacio vs. Government Service Insurance System

Petition for review of Certiorari FACTS

PET. =

Spouse of Lourdes Bonifacio a classroom teacher in catanduanes from aug. 1965

concentrated carcinoma of the breast with me stases to the gastro-intestinal tract and lungs which caused her death on oct. 5, 1978

Filed Claim death benefits to the GSIS.

GSIS

Denied claim Disease of the decedent is not an occupational disease, nor the increased of contracting the same Increased by her working conditions.

APPEAL ECC Affirmed GSIS Decision

ISSUES

1.

The respondent commission affirmance of the denial; by the respondent system totally ignored the supreme courts pronouncemen t on compensation cases. the contention is with in the scope of the labor, and the rulings under the old law no longer control.

Under the Old law the claim for compensation under the workmens compensation act. It is not necessary For the claimant to carry the burden of proof to establish this case. It is not necessary to prove that employment was die sole cause of the death of the EE. once the disease has been shown to have been arisen in the course of employment, it is presumed by law, in the absence of substantial evidence to the contrary, that is arose out of it.

Under the present labor code, the burden of proof showing causation has shifted back to the EE particularly to dive cases of sickness of injuries which are not accepted or listed in the occupational diseased by ECC. Which the petitioner failed to satisfactorily discharge.

2.

In case of doubt in the interpretation and implementation of the provisions of the labor code, the same shall be shall be rescued in favor of the laborer. The court ruled that it has no dispute to the contention however, the same has not application since the pertinent provisions of the labor code leave no room for doubt either in their interpretation or application.

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Finals Case Digests

DISPOSITION

Petition Dismissed. Decisions appealed are affirmed. No Codes

Bravo vs. Employees Compensation Comission

FACTS

Bravo vs. Employees Compensation Commission May 1959

Evelio bravo - Employed at bureau of coast and geodetic survey as a cartographer I. Has been promoted several times until became a supervising cartographer engineer.

His work was involved n drafting and plate printing, processing negatives And supervising formulation of lithographic chemicals

1979

Complained of irregular bowel movement, constipation and abdominal pain. Also began losing weight and appetite

1980

Admitted to st. lukes hospital. Diagnosed with sigmoid c colons dukes c and chi tonic Peri-appendicitis .

Aug 1980 -

after his discharge from hospital, did not return to work and retired at the age of 48. received retirement gratuity from GSIS. filed claim for disability benefits in GSIS.

GSIS

Denied Claim. Adenocarcinoma of the sigmoid and peri-appendicitis are not occupational diseased And his working conditions not increased the risk of contracting then. Appealed to ECC.

Evelio bravo Died on aug,. 20, 1981 His widow, angeles, pursued his appeal. ECC Affirmed GSIS.

Ma. Cecelia Timbal

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Labor Standards

Finals Case Digests

ISSUES

1.

Whether or not under risk theory, bravos ailments are compensable disease bec. of his exposure to chemicals and stressful demands of work. SC:

A claimant who depends on the theory of increased risk must present substantial proof to show that his ailment Contracted during his employment.

Petitioner failed to submit convincing proofs.

Petitioner contented that on resolution # 2677, its modified guidelines on cancer, stating that prolonged Exposure to chemicals that predispose someone to contracting the same. And that reasonable work-connection of the disease is insufficient.

Petitioners argument is based on a ruling where body cla imants submitted proofs of the condition of their employment, in the instant case, petitioner only enuger the chemicals he was exposed and relied on the probability that his working conditions could have increased the risk of contracting the disease if not caused by it. Under that labor code, the scheme and theory of employees compensation requires medical basis for claim to succeed. A finding of ECC medical experts has been given great weight.

Neither can resolutions 2610 and 2677 bolster bravos claim. They are to be applied prospectively. But even if applied, petitioner still failed to submit formal requirements required by the resolutions.

We cannot adopt and sweeping interpretation of the law in favor of labor lest we engage in social legislation.

DISPO

ECC Decision Affirmed

Philippine Airline, Inc. vs. NLRC

FACTS Aug. 1967 - dismissed by PAL on the basis fact finding panel

Also recommended crim. Prosecution - On account of estafa

oscar, irineo Rogelio danian Antonio rabasco

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Jacinto macatol (jesus saba) Not party in the accomplice proceeding Trial court Convicted the 5 after due trial (1976)

Upon nation for reco only macatol was granted and later on absolved. (1978)

The 3 appealed

Nacatol filed for illegal dismissal after 12 years.

Dismissed by labor arbiter due to prescription

1983, intermediate appellate court

Affirmed decision only on Rogelio danian

And absolved irineo and rabasco on grounds of reasonable grounds.

1984, irineo filed for illegal dismissal against PAL 17 years after his dismissal.

Labor arbiter ruled for irineo and ask for reinstatement, back wages, moral damages which loss of seniority rights

On accounts of prescription, termination by PAL is only suspension

It contrast with macatol, this issue was not raised.

PAL appealed to NCRC

Affirmed arbiters reso

ISSUES 1. Termination of pal amounts only to suspension plain and categorical to think so is illogical and ludicrous

2.

Strained theory dismissal qua suspension. By referring to order by the court not to dismiss EE without court authority.

Only in relation to labor dispute Ended when parties entered CBA Upon termination, CIR injupetion no longer relevant

3.

PAL rules that he be only on suspension, thus illegally dismissed After 17 years only means he slept on his right Thus, must be rejected as time-barned and being unpardonably tardy.

DISPO

Grand petition for certiorari nullify and set aside NCRC order making permanent TRO and dismissing private respondents comp laint

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Finals Case Digests

No cost

Radio Communications of the Phils., Inc. vs. Court of Appeals

FACTS: Francisco Beneficio A.K.A. lazaro benedicto in his passport

Hired by a foreign firmed, Abdul sis and no marred Aljomaih co. through its phillipine representative, manning international corp. as a truck rower In Riyadh Saudi Arabia.

Left on Dec. 1, 1980 , with a stipulated term of 2 years.

Met a vehicular accident several months before end of his contract

Lost both of his legs

Repatriated on aug. 1982

Failed complaint for recovery of his salary for the un expired portion of his contract, insurance benefits And projected cost of medical expenses.

Manning INTLCorp. Did FCT file a position paper despite summons

Ruling / Dispo: - Dismissed claim for salary to the unexpired portion of employment (legally terminated)

Awarded workmens compensation benefits, permanent disability benefits, and actual medical expenses incurred

Filed for motion for reconsideration and now trial to NCRC.

NLRC

Denied motion and affirmed decision.

May 27, 1985 -

judgment became executory Benedicto moved for computation of the amounts due him. Respondent objected that the receipt referred to lazaro benedicto

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Overruled the same person.

thereafter, benedicto protested limitation for medical expenses for 120 days filed for motion for partial reconsideration

NLRC

- Granted motion

Entazed a new judgment and approved payment for reimbursement of actual medical expenses from sept. 1992 Up to January 1985.

ISSUES

1.

whether or not the new judgment reddened by NCRC is valid

A.

the court ruled that once a judgment has been final and executory it becomes immutable and unalterable. The only exceptions are correction of clerical error or a nunc pro entry swon not being the case, NCRC judgment is void as ini.

B.

That judgment rest on consideration of equity and social justice. Is impermissible. Such cannot prevail over expressed provision of the labor code.

DISPOSITION

NCRC descision set aside. POEA reinstated and affirmed .

Reliance Surety & Insurance Co., Inc vs. NLRC

FACTS RESP: -

Petition for certiorari Reliance surety union

Nov. 21, 1986, company changed seating arrangement Molina, rubio, macapagal and cansino protested Alleged that change is to harass union and without prior notice Headed discussion with the man. Occurred Refused to stay at designated placed and still leveled insults to those who testified. Was placed on preventive suspension. Then dismissed.

Union filed for illegal dismissal and ULP with NL-RC While complaint pending, filed notice for strike DOLE. March 12,1987 Began strike before initial conference could take place, march 17, 1987 Picketed in the bldg Harassed ESS

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March 31, 1987 company filed for declaration of illegal strike with NCRC

Labor

- Strike illegal

PCRC

- Upon appeal, affirmed

But ordered reinstatement of striking officers without loss of seniority. But without back wages.

Dismissal of the 4, upheld. But ordered payment of 1 month sal. With benefits.

ISSUE I. Whether or not strikers who have been found staged an illegal strike may be reinstated.

A.

Strike is illegal no question 3 Reqs: 1. 15 days prior notice 2. 2/3 vote by secret ballot 3. Submission of vote to dept of labor at least 7 days prior strike

B. C.

To reinstate officers who staged strike in bad faith is to reward an act against public policy Ferrer and almira cases. - Both strikes were not illegal and carried out in good faith Ferrer defective strike Almira violent strike doesnt make it illegal, and ground for dismissal

D.

Rubio admitted valid dismissal by accepting the sum of 2,448

DISPO

Petition granted

Rosario Brothers Inc. vs. Ople

FACTS:

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Petitioner: Rosario Bros Inc. Respondents: tailors, pressers, stit__chers and similar workers Some worked since 1969 until separation 1928.

Sept 1977 Respondent filed complaint for 13th pay and emergency allowance with dept. of labor ( now ministry ) Dec. 1977 Labor arbiter dismissed complaint upon finding that complaints are not EES. Jan 1978 Respondent were dismissed respondent filed for illegal dismissal with ministry of labor NCRC Affirmed decision of labor arbiter and dismissed complaint. Minister of labor upon appeal reversed NCRC decision: complaints are EES Petitioner-respondent-to pay 13th month pay and emergency allowances. Thereafter, respondent filed for issuance of writ of execution of the decision of minister of labor which was granted and partially implemented. Labor arbiter issued an order to compute the balance of priv. respondents. March 4, 1980. a report was submitted pursuant thereto Thereafter, a writ of execution was issued for the satisfaction of the said amount. Hence, petition for certiorari, praying, among the others, to annul and set aside the decision of minister of labor and to dismiss the claims of the priv. respondents.

ISSUES: 1. Whether or not petition was filed too late. the decision of minister of labor has already become final decision has already been partially implemented

[Merits: Devoid of merit]

2. a. b. c. d. e. 3.

whether or not there exist an employer- employee rel. elements to determine its existence: Selection and engagement of the EE. hiring is the done by PET, through the master cutter payment wages received weekly salaries on piece-work basis power dismissal violation of memoranda ground of dismissal Jan 2, 1998 resps were dismissed power to control employees conduct required to work mon sat worked on job orders observer cleanliness subj. to quality control Were allowed to register with GSIS as employees of petitioner Findings of administrative agencies which have acquired expertise bec. Their jurisdiction are confined to specific matters are generally accorded respect and finality.

DISPO

PET. Dismissed for lack of merit

Vinoya vs. National Labor Relation Commission

FACTS:

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Labor -

Vinoya applied and was accepted onmay 1990, as a sales representative by RFC on the same date was issued an i.d vinoya alleges that he was under direct control and supervision plant manager and senior salesman of PRC. On july 1991, vinoya was transferred by RFC to PMCI, an agency which provides RFC with additional contractual workers pursuant to a contract for supply of manpower services after his transfer. He was re assigned to RFC as sales representative. Subsequently on nov. 1991, he was informed by RFC that his services were terminated and he was asked to surrender his i.d. card. Dec, 1991, vinoya filed a case of illegal dismissal and non.payment of 13th moth pay before the labor arbiter. PMCI was initial imp leaded as one of the respondents, but vinoya withdrew his charge against PMCI and bought/pursued his claim solely against RFC. Subsequently, RFC filed a 3rd party complaint against PMCI. RFC is guilty of illegal dismissal but denied 13th m. pay RFC is the employer PMCI is an independent contractor, guilty of illegal dismissal. Ordered payment of 13th month pay.

NLRC ISSUES: I. A.

Whether petitioner was an employment of RFC or PMCI. Status of PMCI (whether it is a independent contractor or labor-only contractor Elements of labor-only 1. Have substantial capital to perform the job work or service on its own acct. and responsibility 1,000,000 stock 75,000 in paid = not enough

2. 3. 4. 5. C. Workers assigned by PMCI to RFC, the ______ has the control Doesnt perform and specific job or service Merely supplies RFC with EES Sales reps are directly related to the business of RFC Granting PMCI is an independent contractor Petitioner is not included in the list to be assigned to RFC RFC carried out the 4 _____ test. 1.) Power to hire I.D. issued is sufficient for a proof PET is with RFC prior contract 2.) Payment of wages funds came from RFC although coursed through PMCI 3.) Power of control RFC admitted - PET is under the direct control of RFC personnel 4.) Power to Dismiss II. Contract states that RFC has the power to dismiss Whether petitioner was illegally dismissed?

Due to his length of service, acquired _ tams of reg EE. Thus may only be dismissed upon compliance of legal reqs: for dismissal. Two fold reqs: 1. Substantial 2. Procedural

1.

Expiration of contracts is not one of the The grounds allowed by law

2.

No notice of impending dismissal

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DISPO

Decision and reso of NLRC are annulled and set aside Labor arbiter decision is reinstated

Insular Life Assurance Co., Ltd vs. NLRC

FACTS:

ISSUE:

July 1968. Basiao and insular life insurance entered into a contract. Contains relations of the parties, duties of the agent, acts prohibited to him and termination. April 1972. both entered into another contract agency managers contract. To implement his end Basiao organized an agency, wh ich he named Basiao and associates , while also fulfilling the first contract 1979 company ended managers contract. Basiao filed for civil action. Then he was terminated. Basiao filed to MOLE a complaint sought to recover commissions. Allegedly unpaid. Labor arbiter ruled in favor of basiao there is employer > __ RFC NLRC affirmed hence, petition for certiorari <- prohibition.

Whether basiao is an employee. Thereby placing the case in jurisdiction of labor arbiter or an independent contractor, whose claim was thus ______ by regular courts.

Petitioner contends that control is the most critical feature in determining an emp loyer. EE rel and the contract states the rules and regulation he is subjected to.

Ruling: A line must be drawn between the rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means and methods to be employed in attaining it, and those that control party or fix the methodology and ____ or restrict the party hired to the used of such means. The first which aim only to promote the result, create no employer-EE relationship unlike the second which address both the result and the means used to achieve it.

It is usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what is requires or prohibits. None of these really invades the agents contractual prerogative to adapt his own selling methods or to sell in his own time and convenience

DISPO Appealed Reso, set aside Complaint dismissed

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Clemente vs. Government Service Insurance System

FACTS: Petitioner Wife of late pedro clemente 10 years janitor of doh, assigned in ilocos norte skin clinic Nov 3-14 1976 hospitalized due to nephritis Later found out also suffering from portal cirrhosis and leprosy, AKA Hansens dis ease Nov. 14, 1976, died of uremia due to nephritis. Wife / PET. Filed for employees compensation under labor code to GSIS Denied Bec. Ailment is not occupational disease and not the least causally related to his duties and condi of work. Motion for reco. Denied forwarded claim to ECC

GSIS GSIS -

ECC Rulings 1. not listed in occupational diseases 2. no evidence of casual connection 3. had acquired the disease prior employment art 167 labor code: For sickness and the resulting disability and death be compensable : 1.) Sickness must be listed in the occupational diseases. 2.) Proof that risk of contracting the disease is increased by working conditions.

PET. Invokes theory of increased risk ECC: GSIS: ISSUES 1. Whether or not there is sufficient evidence to sustain theory of increased risk. exposed as janitor diseased was to diff. carriers of viral and bacterial diseases , the EE most exposed to dangerous concentration of infected materials and the least likely to know how to avoid infection. it is unreasonable to not conclude that the working conditions definitely increased the risk of contract f the disease. Resps posture is against / inconsistent with the liberal of the labor code which favor the workers. __ disease was caused by his employment it was only a recurrence of an existing disease aggravated by nature of work prayed to be dropped as party respondent in this case

2. there have been aggravation of existing ailment but such aggravation is not in the present law. no evidence deceased was hired in state of having an existing disease _____ to become worse.

3. GSIS, to be dropped as party in the case DISPO no merit, the fact that the court required GSIS to comment is an indication that it is a necessary party

Decision appealed is set aside. respondent GSIS ordered to pay. 1. 2. P12,000 death benefits P1,200 Attys fee

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Philippine National Construction Corporation vs. National Labor Relation Commission

Private Respondent

(4)

Phil. National Construction Corporation (Govt ________ Corp.) POEA Decided on the first two issues on the affirmative and negative as to the rest. Pay the difference of 350 260 Appeal NCRC -Affirmed POEA Hence, Petition for certiorari Respondent were deployed by PETS at Iraq as security guards. April 12, 1985 monthly salary of 350 usd and validated on April 22, 1985 May 12, 1985 substituted contract which states of 200 USD monthly salary for a period of two years. Was accepted by respondents. Upon period lapsed, resps filed resignation on Aug. 31 1987. to avail more benefits under retirement plan of PNCC. Aug. 17 1987 , filed complaint before POEA, among others a.) non-payment of promotional pay increase b.) underpayment of salaries OT, bonuses, night differential, SL and UL benefits c.) assigning Friday overtime duties to non-guards.

ISSUES 1. Whether or not NCRC committed grave abuse of discretion. Its ________ of art. 34. Judicial review through certiorari may annul admin decisions showing grave abuse of discretion. Not in the case. Based decision on the confirmation letters and admission of PNCC Upon claim of PET. That it was only a notice employment and not signed by resps In case of doubt , labor contracts shall be construed in favor of the working man.

DISPO

Decision affirmed PET. Dismissed

Abella vs. National Labor Relations Commission

FACTS petition for certiorari

Petitioner Rosalina abella Leased land known as hacienda danao Ramona on june 27,1960 at negros accidental , for a period of 10 years. Aug. 1970 extended contract for another 10 years. During existence of the lease employed respondents Ricardo dionele Romeo quitco - farm worker since, 1949 promoted cabo 1963 - a regular since 1968 also become cabo same year

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DISPO:

upon termination of lease dismissed Resps Oct. 1981 turned overland to owners and when continue cultivation and management. Nov. 1981 filed complaint against PET. For illegal dismissal, reinstatement and back wages (MOLE) dismissal is warranted but granted separation pay

Appeal to NLRC: affirmed MOLE decision dismissed Motion for reco: Denied MAIN ISSUE: whether or not __ respondent are entitled to sep pay. 1. 2. not liable for sep pay. Nor for reinstatement as closure of business is a just cause for employment termination. labor arbiter agreed that dismissal is justified. But invokes art 284. which provided rights of employees under circumstances. provision is against the non-impairment of obligation and contract, its payment of sep pay is not contemplated in the lease agreement. the purpose of art. 284 is to provide protection to employees terminated due to entrenchment or closure of establishment. No showing that the new management took over the responsibilities of the former employer resps will be new EES, thus at the years of service would be nothing. Consti prohibi is in reference to the rights of the parties and not to the non-parties Interpretation of the provisions of the labor code should favor the labor Contract cannot an effect annulling subsequent legislation designed to protect the interest of labor.

DISPO

Labor decision Affirmed

PNOC-Energy Development Corp. vs. NLRC

FACTS

Petition for certiorari to set aside resolution

Danilo Mercado employed by PNOC EDC on 1979 From clerk to shipping clerk at cebu office

transferred to dumaguete, negros oriental 1984

6/30/85 dismissed on 1985

1. 2. 3.

due to serious act of dishonesty committed: shingles 1,680 = 1000 rubber stamps 28.66 80.00 discount given by supplier 70.00 = not repaved

7/23/85 complaint for illegal dismissal

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March 1986 after both parties submitted their position papers labor arbiter ruled in favor of Mercado ISSUES NLRC dismissed appeal for lack of merit

1.

whether or not matters of employment affecting PNOC-EDC are within labor and NLRC jurisdiction.

PET ____ that the decision was rendered when the 1973 consti was in effect. Which states that gout owned ___ are within civil service law.1 Supplanted by the new constitution. Thus, PNOC EDC being incorporated under gen. corp. law is subj. to labor code Even if the 1973 was still in effect NLRC still has jurisdiction, bec. It is 1987 consti that is in place at time of the decision.

2. -

assuming the affirmative, whether or not NLRC is justified with its order. ground of dishonesty = without basis denial of __ process = without merit both submitted position papers

court ruled that agencies which acquired expertise accorded respect and finality. Courts do not review suffiency of evi. But is limited to issues of jurisdiction or grave abuse of discretion.

DISPO

Petition denied. NLRC resolution affirmed

National Mines and Allied Workers Union vs. San indelfonso College-RVM Sisters Administration

FACTS PET NAMAWU Natl Mines and allies workings union certified bargaining agent of the rank and file employees of resp. Juliet arrovo - pres. of SICAFP. Affiliate of NAMAWU resp. san indelfonso college rum sisters administration

Feb 1991

- arrovo tencired teacher asked to beach on full basis again, not allowed. Due to failure to make use privilege

Aug 1991 other individual petitioners, notified of non-renewal of contracts April 1991 SICAFP formalized into a labor union affiliated to NAMAWU April 1991 NAMAWU was chosen as the bargaining agent May 1991 individual petitioners wrote to private resp. indicating desire to work, but private resp refused to take them back. Due to no amicable settlement, pets filed complaint ( to labor arbiter) CONTENTIONS: PET: that they were regular EE for having rendered service for more than a year, and entitled annual renewal of contract.

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RESP: except for arrovo individual PETS are either probationary or part time. And rendered less than 3 years. She lst her status when she requested to be on part time to complete masters degree. college _____ on its rights and thus not guilty of illegal dismissal. LABOR ARBITER: 5 did not sign complaints thus not include as complainants ruling: DISPO guilty of ____ and illegal dismissal. Contracts are not bilateral agreement but by appointment Teachers were not given opportunity to explain their side Those on probation, were not given their ratings Timely, in the formation of the union and affiliating to NAMAWU. Computation made by resp erroneous Computed on basis, should be on monthly Guilty of illegal dismissal _____

NLRC RULING OSG ISSUES 1. 2. ULP? no. there was no substantial evidence showing PETS were prevented to exercise right to self-organization. Certification for election was not even opposed by the college. whether or not individual PETS were permanent EE. manual regulations for private schools, and not labor code , is applicable UST V. NLRC held to acquire permanent status, 3 reqs a. full time basis b. 3 consecutive years c. Satisfactory service Moves for dismissal of case except as to arrovo. All were legally dismissed except as to arrovo College computed correctly. _____ not counted. agreed with OSG reverse decision and dismissed complaint

to be permanent __ may only be acquiring by a full-time EE with 3 years of good service except arrovo, all were on part time / probationary arrovo failure to procedure degree, breach of trust which is a valid ground for dismissal analyn jesusa not a proper party, a secretary computation, upheld colleges computation absolved resps from ___. It was not clearly established that PETS were dismissed due to union activities. Motion for reco, denied. Thus petition.

3. 4.

11 of the PETS were full time, only 2 rendered 3 consecutive years. However, no showing that during those 3 years they were on full time and had satisfactory service. Thus not one acquired permanent status. Arrovo It is absurd that by teaching on part time, after obtaining permission to take masters, arrovo relinquished her permanent status. Failed to show that masters is a prerequisite for arrovos position Not afforded due process. Failed twin notices req. by labor code only received a letter in replu to her request the same served as notice of termination minimum wage affirms NLRC

DISPO affirms NLRC with modification. Arrovo reinstatement, back wages which loss of seniority.

Cabrera vs. NLRC (Third division)

Petitioners Dismissed by NLRC

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1980 filed complaint to ministry of labor and employment Labor arbiter ordered reinstatement, backwages of 2 years and other benefits Appeal 1st division of NLRC affirmed 1983 Petitioners moved for issuance of writ of exec. NASECO opposed due to copy of order not furnished denied reco. Denied appealed to 3rd division of NLRC Declaring itself without jurisdiction Dismissed case on 1987 thus, petition

ISSUE

1. -

whether or not NASECO is governed by labor laws or by civil service law. NLRC applied 1973 consti which states that civil service embraces every branch. Instrumentality, subd. And agency of the gov t. The court ruled that the law in application is the 1987 const. which states that civil service embrace only those with original charters. NASECO being without orig. charter. NASECO is _______ challenging jurisdiction Having accepted it while the case was in progress, until 1987. Grave abuse of discretion not charged in the certiorari

DISPO NLRC decision reversed and set aside Decision of labor and NLRC 1st division reinstated no cost.

Ebro III vs. National Labor Relations Commission

FACTS: ICMC international catholic migration commission

non-profit agency engaged in international humanitarian and voluntary work. Jose Ebro III employed by ICMC on June 1985 after six months upon employment, was give a notification of termination effective Dec 21, 1985. Filed complaint of illegal dismissal on 1986 ICMC answering complaint, complainant filled to qualify for regular employment, and was given necessary wages.

1989 -

Private respondent submitted memorandum which among others things, invokes immunity on basis of ___ signed on 1988 BET. Phil. Govt ICMC.

Labor arbiter decided against immunity NLRC deprivation of due process and violation of contract of employment. Also, not an act of congress. Reinstatement 1 yr back wages other benefits and atty;s fees Both appealed to NLRC Case dismissed immunity upheld

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Motion for reco Denied

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Hence, Petition for certiorari to set aside NLRC reso

BASIC ISSUE: whether or not MOA gave ICMC immunity

ISSUES 1. 2. 3. 4. Whether or convention of united nations. Not moa is an act of congress? convention has the force and effect of law as out constipation adapts the generally accepted principles of international law. MOA carries out PHILs obligation under the convention immunity give reproductive waived? no. the scope of the immunity in the convention is instructive. The convention provides immunity as estoppels does not operate to give instructive. The convention provides immunity from every form of legal process. immunity waived? convention, requires waive be expressed . neither ICMC be estopped from claiming immunity as estopped does not operate to give jurisdiction to and tribunal that has none overcause of action. immunity deprives due to process? no Govt may withdraw privileges and immunity if it sees that there has been an abuse, as the convention provides.

DISPO

Petition Dismissed for lack of Merit.

Standard Chartered bank Employees UNION (NUBE) vs. Confesor

Standard chartered bank-intl bank (resp) Standard chartered bank employee union ( petitioner ) exclusive bargaining agent of the bank file EES aug. 1990 the bank and the signed a 5 year CBA. With a provision to renegotiate on the 3rd year. Prior expiration of the 3rd year, the union initiated the negotiation Feb 18, 1993 through its. Pre. Edie Divina Garcia union sent a letter containing its proposals covering political provisions. With the list of the members of the panel. Feb 24, 1993 petal harris, banks country manager, sent counter-proposal in non-economic provisions and also attached list of the member of its panel. Before commencement of the negoti ation, union ( __ divina Garcia ) suggested to banks HR man. And head of negotiating panel ( diokno ), that bank lawyers should be excluded from the negotiating team. bank acceded. Diokno suggested that umali be excluded. (dube pres.) however umali was retained thereof. March 12, 1993 , parties met and set ground rules for the NEG. diokno suggested to keep it a family affair there were provisions in non-economic both parties did not agree both agree to put a notation of deferred/ deadlocked may 18, 1993 - NEG commenced - union suggested economic provi

Next MTG. ___ made same presentation. Umali asked bank to validate unions guest mated and _____ banks insufficiency of cou nter proposal. June 19, 1993 union suggested that if bank wont make necessary changes it would seek 3rd party. bank made its revised counter- panel except for the signing bonus and uniform provisions of the CBA, both did not agree on the remaining economic provisions.

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June 21, 1993 union declared deadlocked and filed notice for strike Bank filed for ULP against the union charges: 1. violated its duty to bargain 2. violated no strike no lockout 3. ask for damage Sec. labor and employment (SOLE) Assured jurisdiction and consolidated complaint

Labor Standards

Finals Case Digests

Oct 29, 1993 sole released order dismissing cases against for both parties. And gave economic awards Both filed for motion for reco. SOLE denied both. March 22, 1994 both signed CBA April 28, 1994, union filed petition for certiorari Bank prayed for dismissal, that union was estopped as it signed the CBA SOL. GEN. suggested PFT. Be dismissed

ISSUES 1. whether or not union was able to substantiate its claim of ULP from banks alleged interference surface bargaining making bad faith proposals and refusal to furnish relevant data a. interference suggestion made by diokno not anti-union b. surface bargaining can be seen in the totality of ____ not present. Moreover duty to bargain doest not compel either part to agree or make a concession. c. Bad faith provisions no basis. Many were to be retained d. Refusal to furnish data (guest mates) union did not put into written as required by labor law. grave abuse of SOLE part. no merit. No showing acted in capricious or arbitrarily. Even if public interest is not a requisite in ULP. union being estopped from filling suit/ ILP when it signed CBA. approval of __ doesnt mean union waived its ULP claim against the bank during the pas negotiations. union engaged in blue-sky bargaining bank failed to prove that proposals by the union were exaggerated and unreasonable.

2. 3. 4. -

DISPO

Decision Affirmed. Petition Dismissed.

Dumlao vs. De Guzman

FACTS: Petitioner: LVN PICTURES INC. AND SAMPAGUITA Respondent: Philippine Musician Guild

Petition for review by certiorari of an order of the court of industrial relations certifying the guild as the SOLE and exclusive bargaining agency of all the musicians working with said companies, including premiere productions. contends that they have no musicians as employees and that. The musical numbers of the films are furnished by independent contractors.

PETS:

Court of industrial relation: sustained said theory motion for reconsideration denied by court and bank. ISSUES 1. whether or not petition for certification cannot be entertained when existence of employer employee relationship between the parties is contested. not supported by any authority or legal provision so long as, after due hearing the parties are found to bear such relationship, it is proper to pass upon the merits for certifaication. 2. whether or not certification is improper in the present case bec. A.) the petition does not alleged and no evidence was presented that the allege musicians. Employees of the respondent constitute a proper bargaining unit. B.) and that the said musicians-EES represent a majority of the other numerous employees of the film companies. absence of express allegation is not fatal in certification as it is not a litigation in its common term, but merely an inv estigation as to ascertain the desires of the employees as to the matter of their representation

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it is alleged in the petition that the guild is a duly registered labor organization and 96% of the musicians playing for the musical recordings for film companies member of the guild. More over, court of industrial relations has a wide discretion to determine upon an appropriate bargaining unit. And such decision has almost complete finality, unless action s arbitrary or capricious.

MAIN ISSUE I. whether or not the musicias in question re employee of the film companies. The relation BET. The business of the petitioners and musicians are not casual. As the work of the musicians is an integral part of the entire motion picture. The ____ for employer employee relationship is where the person for whom the services are performe d reserves a right to control not only the end but also the means to be used in reaching such end. It may exist not withstanding the intervention of an alleged independent contractor who may hire and fire its workers.

DISPO

Order appealed affirmed Cost against petitioners.

Tabas vs. California Manufacturing Co., Inc.

FACTS PET. Prior to stint with California manufacturing Comp. were employees of livi manpower services, subsequently assigned to fo rmer as promotional merchandisers. Pursuant to manpower supplies agreement. Assignment is contractual 6 months of contract Filed for benefits as they become regular EE Thereafter, due to retrenchment and end of manpower supply agreement was informed not to be rehired Filed for illegal dismissal LIVI put EE Mel BET reps and cali. Livi absolved form obligation due to retrenchment

ISSUES 1. ART 106 employer- employee a question of law, not sure subject to agreement the fact that in the agreement, cali had specifically designated livi as the employer, will not erase obligation of either parties agreement is BET. LIVI and CALi , thus, petitioner cannot be made to suffer.

if contractor cannot pay , responsibility is shared BET contractor and employee. In labor-only contracts the employer, together with the labor-only contractor. For any valid labor claims.

2.

what us the liability of either LIVI or CALI? A. establish is the fact PET. Is an employee, and a regular. One to 1 year service. B. termination due to retrenchment? Can failed to show enough evidence

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DISPO

Petition granted

Appealed order set aside cali to pay both resps to jointly pay a.) b.) c.) Back wages, Differentials Other benefits Attorneys fees

Maximo Calalang, petitioner vs. A. D. Williams, ET Al., respondents

FACTS: NTC recommended to the director of public works and to the secretary of public works and communications that animal-drawn vehicle be prohibited from passing along the rosario street and along rizal avenue, for a period of one year from the date of the opening of the colgante bridge to traffic. The measure protosed in the resolution was pursuance to commonwealth act no. 548 which authorizes said director of public works, with the approval of the secretary of public works and communications, to promulgate rules and regulations to regulate and control the use of and traffic on national roads. The secretary of public works and communications in his second endorsement approved the said recommendation the mayor of manila and the acting chief of police of manila enforced and caused to be enforced the rules to be enforced the rules and regulations thus adopted. Maximo calalang, in his capacity as a private citizen and taxpayer of manila, brought the petition for a writ of prohibition against the respondents.

ISSUE

I.

Whether the commonwealth act. No. 548 is constitutional due to undue delegation of legislative power upon the director of public works and the secretary of public works and communications. The authority conferred upon them is not to determine what public policy demands but merely to carry out the legislative policy laid down by the national assembly. The delegated power if at all is not the determination of what the law shall be, but merely the ascertainment of the facts and circumstances upon which the application of said law is to be predicated.

II. III. DISPO

whether commonwealth act no. 548 constitute an unlawful interference with legitimate business or trade and abridge the right to personal liberty and freedom of locomotion. the commonwealth act no. 548 was passed by the national assembly in the exercise of police power. The said act aims to promote safe transit upon and avoid obstruction on national roads, in interest and convenience of the public. Persons and property may be subjected to all kinds of restraints and burdens, in order to secure the general comfort health and prosperity of the state. whether the rules and regulations complained of infringe upon the constitutional precept regarding the promotion of social justice to insure the well being and of all the people social justice means the promotion of the welfare of all the people, the adoption by the government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equiblirium.

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Writ Denied

DY KEH BENG vs. INTERNATIONAL LABOR

FATCS: A charge of unfair labor practice was filed against DY KEH BENG, proprietor of a basket factory, for discriminatory acts by dismissing carlos sovano and Ricardo tudla for their union activities a case was filed in the court of industrial relations for in behalf of the international labor and marine union of the Philippines and two of its members. DY KEH BENG contends that he did not know tudla and that Solano was not his employee because the latter came to the establishment only when there was work which did on pakiaw basis, and worked on piece basis. Hearing examiner found that Solano and that tudla became employees of DY KEH BENG from may 1953 and july 1955, respectively, and that both worked with establishment continuously although compensated on piece basis. This report was adopted in toto by the court of industrial relations. The court of industrial relations found DY KEH BENG guilty of unfair labor practice and was affirmed by the court and bank. RULING: 1. whether or not there exist an employee-employer relationship on the control test. petitioner contends that there was no evidence to show that petitioner had the right to direct the manner and method of respondents work. Moreover, that Solano worked on pakiaw basis and stayed in the establishment only when there was work. The court ruled that it should be borne in mind that the control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. Moreover, some control would necessarily exercised by DY as the making of the kaing would be subject to DYs specification. whether or not Solano was an employee because he worked on basis. the court aggress with the hearing examiner that circumstanc es must be construed to determine indeed if payment by piece is just a method of compensation and does not define the essence of the rel ation. Moreover the court noted that judicial notice of the fact that the so -called pakyaw system mentioned in this case as generally practiced in our country, is in fact a labor contract between employers and employees between capitalist and laborers. as to the other assignments of errors section 6, republic act 875 provides that in unfair labor practice cases, the factual findings of the court of industrial relations are conclusive on the supreme court, if supported by substantial evidence. award of backwages the court ruled that it is fitting to apply in this connection the formula for backwages worked out by justice teehankee in cases not terminated sooner. The formula calls for fixing the award of backwages without qualification and deduction to three years, s ubject to the deduction where there are mitigating circumstances in favor of the employer but subject to increase by way of exemplary damages where there are aggravating circumstances. Considering there are no such circumstances in this case, there in no reason why the court should not apply the above-mentioned formula in this case.

2.

3. 4.

DISPO

Award of backwages granted is modified to an award of backwages for three years.

Manila Golf Country Club INC. vs. IAC

Ma. Cecelia Timbal

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PET: Manila Golf Country Club Inc. Priv. Resp: (caddies) Fermin _________

1.) 2.) 3.) SSC -

the caddies filed 3 separate proceeding Certification election filed in labor relations filed by PTTCEA. Resolved in favor of the PETS club. Affirmed by the director Compulsory arbitration filed by the same org. with arbitration branch of the ____ of labor. dismissed for lack of merit affirmed by NLRC petition for coverage and availment of benefitrs under the social security act. (present case) ( social security coverage ) ( wamar and jomok filed ) Dismissed case for lack of merit

RESP/ PET are not are not employees absent 2 elements 1. payment of wage 2. control ( by the union of llmar and jomok ) Before decision jomok withdrew Reversed sec decision Passed the control test Appeal on iac 2 errors assigned by resp/PET. 1. ISSUES 1. That the decision of med-arbiter on certification on certification case had never become final. IAC not to be faulted for ignoring 4 reqs of res adjudicate 1. there must be final judgment 2. based on merits 3. court must have jurisdiction over the matter and parties 4. there must be bet 2 cases, identify of parties, subj matter and cause of action certification proceeding is not a litigation in the sense it is commonly understood Refusing to suspend decision to await judgment of labor in the issue of employer-employee rel.

2.

Whether or not wamar is an EE of PET. does not observe working hours free to leave or stay suggestion on fee shows n control of compensationGRP. Rotation system assurance of fair distribution of work and not measure to control EE

DISPO

IAC decision, reversed and set aside. Resp. is not an EE of PET.

Sonza vs. ABS-CBN broadcasting Corporation

FACTS: ABS-CBN and MJMDC entered into a contract on may 1994. ABS-CBN was represented by its officers while MJMDC was represented by sonza, as president and general manager and mel tiangco, as EVP and treasurer referred to in the agreement as agent, MJDC agreed to provide sonzas services exclusively ABS -CBN as talent for radio and television. The agreement listed the services sonza would plender. On april 1996, sonza wrote a letter to ABS-CBNs president in regard to his resignationin view of the events concerning his programs and career. April 30,1996, sonza filed a complaint against the ABS-CBN before the DOLE. Sonza complained that the ABS-CBN did not pay his salaries, separation pay, service incentive, leave pay, signing bonus, travel allowances and amounts due under the employee stock option plan (ESOP).

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On july 10 1996, ABS-CBN filed a motion to dismiss on the ground that there is no employer-employee relationship. Sonza filed an opposition to the motion on July 19, 1996. Meanwhile, ABS-CBN opened a account to continually remit sonza fees under the agreement. Labor arbiter denied the motion to dismiss, however in his decision labor arbiter dismissed the complaint for lack of jurisdiction and that there is not employer-employee relationship. On appeal, the NLRC affirmed the decision of the labor arbiter. The same was also denied upon the motion for reconsideration. ISSUE I. Whether or not sonza is an employee or independent contractor

the existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of the labor arbiter and the NLRC not only respect but also finality when supported by substantial evidence. Court does not substitute its own judgment for that of tha tribunal in determining where the weight of evidence lies or what evidence is credible. II. Essential elements of employer-employee relationship A. B, Selection and engagement of employer. 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 independent contractual relationship. Payment of wages whatever benefits sonza enjoyed arose from contract and not because of an employer-employee relationship. The power to bargain the talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive of independent contractual relationship.

C. Power of dismissal. Sonza failed to show that ABS-CBN could terminate his service 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 the court held that sonza is not an employee but an independent contractor. The control test being the most important test our courts apply in distinguishing an employee from an independent contactor. ABS-CBN did not exercise control over the means and methods of performance of sonzas work. Moreover a radi o broadcast specialist who works under minimal supervision is an independent contractor lastly, in broadcast industry exclusively is not necessarily the same as control. IV. nature of sonzas claim sonzas claims are all based on the may agreement and stock op tion plan and not in the 1994 labor code. Clearly the present case does not call for an application of the labor code. In effect sonzas cause of action is for breach of contract which is intrinsically a civil dis pute cognizable by the court.

DISPOSITION

Petition denied Assailed decision is affirmed

La Suerte Cigar & Cigarette Factory vs. Director of the Bureau of Labor Relations

April 7, 1979 the la suerte cigar and cigarette factory provincial (Luzon ) metro manila sales where local union and force association has applied and granted a chapter status by natl associate trade unions (NATU)

April 16, 1979 -

Local union members withdrew membership in NATU

April 18, 1989 - Local union and NATU filed for certification election.

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That it has 48/60 sales personnel of the comp. were members of local union Supported by ni less than 75% of sales personnel Company Filed to dismiss petition for certification Not supported by 80% of the members of the proposed bargaining unit. 31/48 withdrew 14 of alleged local union members were not EES. Med arbiter - dismissed certification Director of bureau of labor relations (union appealed) reversed and set aside order of dismissal comp. filed for motion for reco NATU legal counsel withdrew from the case Thereafter, NATU, thorough its pres. And legal counsel withdrew from the case dir. Of bureau of labor relations denied motion for reco.

Jan 1980 May 1980

Nov 1980

ISSUES I. whether or not 14 dealers are EE. Or independent contractors. court resolved to follow the rule in mafinco case, that is to determine if EES or independent contractors should be resolved in the light of their fiddling contracts. In prefatory statement = factory has accepted applicant and appoint him as a dealer No words to hire or employ No mention as to wages Court ruled, that the terms and stipulation of the dealership agreement leave no reason for doubt, whereby the distributor/seller or dealer assumes the status of an independent contractor. a. there is a difference bet. The dealership agreement and that in actual practice. if so, certiorari is not a proper proceeding b. agreement is legal clear to hide employer EE rel. whether or not the withdrawal of 31 local union members affected the PET. For certi insofar as the 30% reqt is reqt 31 withdrew prior petition. If otherwise which is withdrawn after petition, then be presumed not free or voluntary After petition names become known thus it is not unexpected for the opposing party to use foul means -

II.

DISPO Director orde, reversed and set aside

Martinez vs. NLRC

FACTS: Private respondent worked for raul martinez as drivers raul martinez was an operator of 2 taxicab units under the business name PAMA TX and 2 additional units under the name P.J. TIGER TX. Respondents alleged that they have been regular drivers of raul martinez since 1989 and not once did they receive a 13th month pay. Raul martinez died on march 18 1992 leaving behind his mother, petitioner nelly acta martinez. Petitioner took over the management and operation of the business on or about june 22, 1992 she informed the respondents that he was selling the units together with their franchises. However, petitioner did not proceed with her plan;instead she assigned the units to other drivers on july 14 1992 respondents filed a complaint against raul martinez and petitioner before labor arbiter for violation of p.o. 851 and illegal dismissal (p.o. 851: requiring all employers to pay their employees a 13 month pay.) Petitioner contends that the claim is personal and did not survive the death of her son and that respondents were not employees of her son. But instead lessees. August 1993 labor arbiter dismissed the case on the following grounds. (a.) claims being were extinguished upon the death of raul martinez; (b) petitioner lack competence to manage the business ; (c) there was no employer-employee relationship.

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On January 1994. respondent NLRC set aside the appealed decision and as alternative to reinstatement, ordered petitioner to grant respondent separation pay. According to NLRC (a.) respondents were regular drivers because of the payment of wages, (b) management on business was passed on to petitioner and (c.) claims survived the death of raul martinez considering business did not cease operation outright. Motion for reconsideration was denied. Hence the petition. On October 11, 1995 the court issued a temporary restraining order enjoining the execution of the assailed decision of NLRC petitioner imputes grave abuse of discretion of NLRC reversing the decision of the labor arbiter, and that is acted as a probate court when it assumed jurisdiction over the estate of the deceased.

RULING: 1. whether or not the claiming being personal were extinguished upon the death of raul martinez. the court stated that the rule is settled that unless expressly assumed, labor contracts are not enforceable against the transferee of an enterprise. the reason for the rule is that labor contracts are in person am ( against the person ), and that claims for back wages earned from the former employer cannot be filed against the new owners of an enterprise. Nor is the new operator of a business liable for claims for retirement pay of employees. Thus the claim of private respondents should have been filed instead in the intestate proceedings involving the estate of raul martinez. whether or not there was an employer employee relationship between raul martinez and private respondents, in national labor union vs. dinanglasan, this court ruled that the relationship between jeepney owners/ operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. Therein we explained that in the leased f chattels the lesser loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The fact that the drivers do not received fix wages but get only that in excess of the so-called boundary they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. The doctrine is applicable by analogy to the present case. Thus, private respondents were employers of paul martinez because they had been engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer. do private respondents, being then employees of raul martinez, necessarily continue to be employees of the petitioner as the new operator of the business? In the affirmative, were they illegally dismissed? the factual findings of quasi-judicial agencies such as respondent NLRC, which have acquired expertise in matters entrusted to their jurisdiction, are accorded by this court not only respect but also finality if they are supported by substantial evidence or that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. As NLRC found the business was passed on to petitioner before her son died, and despite the information she gave that she will sell the business and extend separation benefits to complainants, no such thing occurred. However, the above findings were culled from mere allegations is not an evidence. It is a basic rule in evidence that each party must prove his affirmative allegation. Clear, such finding emanates from grave abuse of discretion.

2. -

3. -

DISPO

Petition is granted NLRC decision is set aside. The decision of labor arbiter is reinstated.

Kapisanang Manggagawang Pinagyakap vs. National Labor Relation Commission

FACTS: That the negotiated daily wage increase of P1.33 granted and embodied in the parties collective bargaining agreement could be credited to and deducted from the P60.00 monthly or P2.00 daily living allowance. Required by PO. 1123 which in effect nullified the hard earned daily wage increase in their CBA. The labor arbiter in rendering the decision relied primarily on section 1 (k) of the labor departments rule and regulation implementin g P.D. 1123. on appeal, the NLRC dismissed the appeal on the ground that the adverse party was not furnished with a copy of its memorandum of appeal.

ISSUE

I.

II.

Whether sec. I (k) of the rules implementing P.D. 1123 contravenes the statutory authority granted the secretary of labor issued a set of rules which exements not only distressed employers but also those who have granted in addition to the allowance under P.D. 525, at least P60 monthly wage increase, provided that these who paid less than this amount shall pay the difference. Clearly the inclusion of paragraph k contravenes the statutory authority granted to the secretary of labor, and the same therefore is void. Whether or not the failure to serve a copy of memorandum of appeal would warrant the dismissal of the petition, it would be inconsistent with the requirement of social justice and with the constitutional mandate on protection to labor to warrant the dismissal of the appeal on mere grounds of techinicality.

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Phillippine Association of Service Exporters, Inc vs. Drilon

FACTS That on may 1988, the government lifted the deployment ban on 5 countries, which was impose by the DOLE. Due to maltreatment on Filipino women workers in several countries the petitioner a recruitment firm for overseas placement, assails the dept. order # 1 right to travel, invalid exercise of law making power, violates non-impairment of contracts.

ISSUE

Whether or not dept. order # 1 is valid

I.

Equality before the law does not import identity of rights there is valid classification where 1.) it rest on substantial distinctions 2. Are germane to the purposes of law 3.) are not confined to existing conditions of law 3.) They apply equally to all members of the same class. Discrimination is valid. The same situation does not happen to men. It is germane to its purposes as it is for the protection of Filipino workers abroad that it does not narrowly to existing conditions exist. Not applicable to all females abroad. Not all have similar circumstances.

II. III. IV.

Right to travel is not absolute it is subject to requirements, such as public safety , as may be provided by law. It is true that police power is the domain of the legislature, but it does not mean that it may not be lawfully delegated. The labor code itself vises the dole with rule making powers. The rights granted for workers participation and the non -impairment clause, again, must submit to the demands and necessities of the states power of regulation. What concerns the constitution more is that employment be just and humane.

DISPO

Petition dismissed.

Sime Darby Pilipinas inc. vs. NLRC ( 2nd Division)

FACTS: SIME DARBY PILIPINAS, petitioner , is a manufacturer of automotive products that on aug. 1992, petitioner issued a memorandum for monthly salaried employees (except those in the warehouse and Q.A department ) changing the schedule from 7:45 am 3: 45 p with 30 min paid lunch to 7:45 am 4 45:pm with one hour lunch break

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Private respondent filed a complaint in labor arbiter for unfair labor practice, discrimination and evasion of liability. Pursuant to SIME DARBY vs. NLRC the labor arbiter dismissed the complaint and held that the previous DARBY case was not applicable . upon appeal the same was sustained and dismissed by NLRC. However, upon motion for reconsideration the NLRC with 2 new commissioner revered the decision and applied the previous DARBY case.

ISSUE

I.

whether or not petitioner committed unfair labor practice. no. the right to fix the work schedules of the employees rest principally on their employer even as law is solutious of the welfare of the employees it must also protect the right of an employer to exercise what are clearly management prerogatives. Management also has rights which as such, are entitled to respect and enforcement in the interest of simple fair play. there was no diminution of benefits as the 1-hour is undisturbed. Thus, need not be compensated earlier DARBY case is not applicable the previous case was about depriving certain employees of their lunch which constitutes discrimination. The present case does not pertain to an issue of discrimination but whther the change of work schedule constitutes ULP.

II. III.

DISPO

Petition granted NLRC decision is set aside labor arbiter decision dismissing the complaint is affirmed.

Globe Mackay Cable and Radio Corporation vs. NLRC

FACTS: Private respondent, Imelda Salazar, was employed by globed-mackay cable and radio corporation as general system analyst. Also employed by the petitioner was delfin saldivar and manager for technical support operations support with whom private respondent was allegedly very close. Sometime 1984, conducted an investigation on saldivars activities the report indicated that saldivar entered into a partnership with a supplier of petitioner of ten recommended by saldivar. The report also disclosed that saldivar was in possession of several air conditioned units owned by the company. The report likewise showed that Salazar violated company regulations by involving into activities in conflict with the compan ys interest. Moreover, it showed that Salazar signed as a witness in the partnership entered by saldivar and also had knowledge of the loss of the air conditioner units and failed to report to the employer. Consequently, Salazar was placed under preventive suspension and was asked for an explanation but instead of submitting an explanation. Private respondent filed a complaint for illegal dismissal after petitioner notified her into writing that she was dismissed for failure to refute and disprove these findings. Labor arbiter ordered petitioner to reinstate Salazar to her former and equivalent position and to ay full backwages and other benefits plus P50.000 for moral damages. NLRC affirmed the decision with respect to reinstatement but limited the backwages to two yerars.

ISSUE I. preventive suspension was the proper remedial recourse available to the company pending salazars investigation it does not signify that the company has adjudge the employee guilty of the charges. Such disciplinary measure is resorted to for the protection of the companys property pending investigation of any alleged malfeasance or misfeasan ce committed by the employee. Whether private respondent was illegally dismissed petitioner has predicated its dismissal of Salazar on loss of confidence. While loss of confidence or breach of trust is a valid ground for termination, it must rest on some basis which must be convincingly established an employee may not be dismissed on mere presumptions or suppositions.

II.

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III. Employees illegally dismissed entitled to reinstatement and full backwages the intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is to restore the employee of her status before she lost her job and to give her back the income lost during the period of unemployment. Both remedies, looking to the past, would perforce make her whole. The principle of strained relations cannot be applied indiscriminately. Here it has not been proven that the position of the private resp ondent as system analyst may be characterized as a position of trust and confidence such that if reinstated, it may well lead to strained relations between employer and employee

DISPO

NLRC decision affirmed

Tan vs. Lagrama

FACTS: Petitioner Rolando tan is the president of supreme theater corporation and the general manager of crown and empire theater i n butuan city. Private respondent leovildo lagrama is a painter, making ad billboards and murals for the motion pictures shown at the empress, supreme and crown theaters for more than 10 years from September 1, 1988 to October 17 1998. On October 17, 1998 lagrama was summoned and was scolded for urinating on his work area and was asked not to draw anymore. Lagrama denied the charged against him. He claimed that he was not the only one who entered the drawing are and that even if the charge was true, it was a minor infraction to warrant his dismissal. However everytime he spoke. Tan showed at him to get out, leaving him no choice but to leave the premises. Lagrama filed a complaint with the sub-regional arbitration branch no. x of the NLRC in butuan city. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages. Tan denied that lagrama was his employee. He asserted that lagrama was an independent contractor. On june 1999, labor arbiter found tan guilty of illegal dismissal and grand petition. Upon appeal to the NLRC fifth division, cagayan de oro city which rendered a decision finding lagrama to b an independent contractor,and for this reason reversing the decision of the labor arbiter. NLRC denied motion for reconsideration A. petition for certiorari was filed before the court of appeals which found that tan exercises control over lagramasit is a method of computing compensation, not a basis for determining the existence or absence of employer-employee relationship. In the case at bar petitioner did not present the payroll to support his claim that lagrama was not his employee B. the primary standard for 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. In this case there is such a connection between the job of lagrama painting billboards and murals and the business of the petitioned. C. the fact the lagrama was not reported as an employee to the SSS is not conclusive on the question of whether he was an employee of petitioner. Otherwise an employer would be rewarded for his failure or even neglect to perform his obligation. D. neither does the fact that lagrama painted for other persons affect or alter his employment. Relationship with petitioner.That he did 50 only during weekends has not been denied by petitioner. E. lagrama had been employed by petitioner since 1988.under the law, therefore, he is deemed a regular employee and is thus entitled to security of tenure, as provided in art. 279 of labor code. This court has held that if the employee has been performing the job for at least one year, even if he not continuously but intermittently, the repeated and continuing need for its performance is sufficient evidence of the necessity, if not indispensability, of that activity to the business of his employermence the employment is also considered regular although with respect only to such activity and while such activity exists. F. whether or not lagrama abandoned his work. There is no evidence to show this abandonment. Requires two elements: 1. the failure to report for work or absence without valid or justifiable reason and 2. a clear intention to server the employer-employee relationship , with the second element as the more determinative factor and being manifested by some overacts. Mere absence is not sufficient, and the burden is on the part of the employer to show a deliberate and unjustified refusal on the part of the employee to resume his employment without any intention of returning the court affirmed the court of appeals ruling that, private respondent (herein petitioner ) has not established clear

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proof of the intention of the petitioner to abandon his job or to sever the employment relationship between him and the private respondent. On the contrary, it was the private respondent who told that he did not want the latter to draw for him and thereafter refused to give him work to do or any mural or billboard to paint or drawn on. II. whether or not private respondent lagrama was illegally dismissed. to begin, the employer has the burden of proving the lawfulness of his employees dismissal. Labor code provides that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. In this case, by his refusal to give lagrama work to do and ordering lagrama to get out of his sight as the latter tried to explain his side, petitioner made it plain that lagrama was dismissed. Urinating in a work place other than the one designated for the purpose constitutes valid g___ for dismissal. However, there is no evidence that lagrama did urinate in a place other than the rest room in the premises of his work. III. the grant of separation pay in LIEU of reinstatement is appropriate because the relationship between the employer and employee has been so strained that reinstatement would no longer serve any purpose. IV. the bureau of working conditions classifies workers paid by results into two groups, namely 1. those whose time and performance is supervised by the employer and 2. those whose time or performance is unsupervised by the employer. The first involves an element of control and supervision over the manner the work is to be performed, while the second does not. If a piece worker is supervised, there is an employer-employee relationship. As in this case. However such an employee is not entitled to service incentive leave pay since he is paid a fixed amount for work done. Regardless of the time he spent in accomplishing such work.

DISPO: Petition is denied. Decision of labor arbiter is affirmed with modification that the back wages and other benefits awarded to private respondent should be computed from the time of his dismissal up to the time of the finality of this decision, without any deduction and qualification. However, the service incentive leave pay awarded to him is deleted.

21. Ocean agency Corp vs. NLRC FACTS: On September 28, 1991, respondent Capt. Pepito M. Gucor was hired by petitioner Ocean East Agency Corp. (Ocean East), the manning agent of herein co-petitioner European Navigation, Inc. (ENI), as master of M/V "Alpine" for a period of one (1) year with a monthly salary of US$840.00. Sometime in February 1992, while the M/V "Alpine" was anchored at the Port of Havana, Cuba, respondent was informed of his repatriation for his subsequent transfer to another vessel. Perceiving the transfer as an insult to his professional competence, Capt. Gucor signified that, unless his full benefits are accorded him, he shall refuse to leave the vessel knowing the cause for his repatriation to be unreasonable. In an effort to assuage his fears, petitioners Ocean East and ENI advised him that his services were not terminated at all, the repatriation being solely for documentation purposes. On February 29, 1992, after his demands were fully settled, respondent agreed to be repatriated. Petitioner alleged that in view of respondent's earlier refusal to be repatriated and to man the newly-acquired MV "Havre de Grace," it was compelled to assign another master to the said vessel. Thereafter, the company decided to assign him to MV "Eleptheria-K," whose master was going on leave on February 27, which, however, respondent likewise missed for failure to disembark when ordered to do so. On the ground of serious misconduct or willful disobedience, petitioner terminated the services of respondent. In a complaint for illegal dismissal, on December 1, 1993, Philippine Overseas Employment Administration (POEA), through Administrator Felicisimo O. Joson, dismissed the said complaint for lack of merit finding respondent's apprehension as premature and that petitioners were merely acting in the exercise of their management prerogative. On appeal, this decision was reversed by the National Labor Relations Commission (NLRC) in its decision dated November 29, 1994. ISSUE: WON the intended transfer of Capt. Gucor to another vessel was in effect an alteration of his original contract which could not be done without the approval of the Secretary of Labor. HELD: Standard Employment Contract: The CREWMEMBER agrees to be transferred at any port to any vessel owned or operated, manned or managed by the same employer provided it is accredited to the same manning agent and provided further that the rating of the crewmember and the rate of his wages and terms of service are in no way inferior and the total period of employment shall not exceed that originally agreed upon. Article 34(i) of the Labor Code, on the other hand, reads: (i) It shall be unlawful for "any individual, entity, licensee or holder of authority to substitute or alter employment contract approved and verified by the Department of labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor.

Apparently, there is no inconsistency between Article 34(i) of the Labor Code and the transfer clause under the SEC. On the contrary, the latter even complements the other by way of resolving the complex demands of seafarers whose services may entail occasional transfer from one vessel to another. Obviously, the transfer clause is not without limitations. Thus, a transfer is sanctioned only if it is to any vessel owned or operated, manned or managed by the same employer provided it is accredited to the same mantling agent and that the rating of the crewmember, his wages and terms of service are in no way inferior and the total period of employment shall not exceed that originally agreed upon. In the instant case, respondent's assignment to another vessel owned by European Navigation and accredited to the same manning agent, therefore, under no circumstance, violated Article 34(i) of the Labor Code. The transfer clause is deemed incorporated into the original contract; hence, the approval of the Secretary of Labor is no longer necessary.

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Accordingly, we conclude that petitioners merely availed of what the employment contract allows. Indeed, it was nothing more than an application of the subject provision.

22. Serrano Vs. Gallant maritime services Facts: Petitioner was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. (respondents) under aPOEA-approved Contract of Employment. On March 19, 1998, the date of his departure, petitioner was constrained toaccept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, uponthe assurance and representation of respondents that he would be made Chief Officer by the end of April. However,respondents did not deliver on their promise to make petitioner Chief Officer. Hence, petitioner refused to stay on as SecondOfficer and was repatriated to the Philippines on May. Petitioner's employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, butat the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract,leaving an unexpired portion of nine (9) months and twenty-three (23) days. Petitioner filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims. LA rendered the dismissal of petitioner illegal and awarding him monetary benefits.Respondents appealed to the NLRC to question the finding of the LA. Likewise, petitioner also appealed to the NLRC onthe sole issue that the LA erred in not applying the ruling of the Court in

11. People vs. Chowdury [G.R. No. 129577-80 February 15, 2000] Facts: Bulu Chowdury was charged with the crime of illegalrecruitment in large scale by recruiting Estrella B. Calleja, Melvin C. Miranda and Aser S. Sasis for employment in Korea. Evidence shows that accused appellant interviewed private complainant in 1994 at Craftrades office. At that time, he was an interviewer of Craftrade which was operating under temporary authority given by POEA pending the renewal of license. He was charged based on the fact that he was not registered with the POEA as employee of Craftrade and he is not in his personal capacity, licensed to recruit overseas workers. The complainants also averred that during their applications for employment for abroad, the license of Craftrade was already expired. For his defense Chowdury testified that he worked as interviewer at Craftrade from 1990 until 1994. His primary duty was to interview jobapplicants for abroad. As a mere employee, he only followed the instructions given by his superiors, Mr. Emmanuel Geslani, the agency's President and General Manager, and Mr. UtkalChowdury, the agency's Managing Director. Issue: Whether or not accused-appellant knowingly and intentionally participated in the commission of the crime charged. Held: No, an employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown that he actively and consciously participated in illegal recruitment. In this case, Chowdury merely performed his tasks under the supervision of its president and managing director. The prosecution failed to show that the accused-appellant is conscious and has an active participation in the commission of the crime of illegal recruitment. Moreover, accused-appellant was not aware of Craftrade's failure to register his name with the POEA and the prosecution failed to prove that he actively engaged inrecruitment despite this knowledge. The obligation to register its personnel with the POEA belongs to the officers of the agency. A mere employee of the agency cannot be expected to know the legalrequirements for its operation. The accused-appellant carried out his duties as interviewer of Craftrade believing that the agency was duly licensed by the POEA and he, in turn, was duly authorized by his agency to deal with the applicants in its behalf. Accused-appellant in fact confined his actions to his job description. He merely interviewed the applicants and informed them of the requirements for deployment but he never received money from them. Chowdury did not knowingly and intentionally participated in the commission of illegal recruitment being merely performing his task and unaware of illegality of recruitment. 12. People of the Philippines v Jamilosa: FACTS: In May 1996, Lourdes Valenciano, claiming to be an employee of Middle East International Manpower Resources, Inc., went with one Susie Caraeg to the house of Agapito De Luna, and told him he could apply for a job in Taiwan. A week later, De Luna went to Valencianos house, there to be told to undergo a medical examination, with the assurance that if there were a job order abroad, he would be able to leave. He was also told that the placement fee for his employment as a factory worker in Taiwan was PhP 70,000. After passing the medical examination, De Luna paid Valenciano at the latters residence the following amounts: PhP 20,000 on June 21, 1996; PhP 20,000 on July 12, 1996; and PhP 30,000 on August 21, 1996. The first and last payments were turned over by Valenciano to Teresita Imperial, who issued the corresponding receipts, and the second payment was turned over by Valenciano to Rodante Imperial, who also issued a receipt. Also in May 1996, Valenciano visited the house of Allan De Villa, accompanied by Euziel N. Dela Cuesta, Eusebio T. Candelaria, and De Luna, to recruit De Villa as a factory worker in Taiwan. De Villa was also asked for PhP 70,000 as placement fee. He paid Valenciano the following amounts: PhP 20,000 on May 16, 1996 at Valencianos residence; PhP 20,000 onMay 30, 1996 at the Rural Bank of Calaca, Batangas;

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PhP 20,000 on July 8, 1996 at Valencianos residence; and PhP 10,000 on August 14, 1996, also at her residence. Valenciano turned over the amounts to either Teresita or Rodante. Teresita issued receipts for the May 16, July 8, and August 14, 1996 payments, while Rodante issued a receipt for the payment made onMay 30, 1996. On May 20, 1996, Valenciano, accompanied by Rodante and Puring Caraeg, went to the house of Dela Cuesta to recruit her for employment as a factory worker in Taiwan. Dela Cuesta paid Valenciano PhP 20,000 as initial payment on May 20, 1996. On May 30, 1996, she paid Valenciano another PhP 20,000. On August 12, 1996, she paid PhP 15,000, and onAugust 21, 1996, she paid PhP 7,000. Valenciano turned the May 20 and 30, 1996 payments over to Rodante, who issued receipts for these payments. The payments made on August 12 and 21, 1996 were turned over to Teresita, who also issued receipts for them. These payments were to cover the placement fee and other expenses for the processing of the requirements for the employment of Dela Cuesta in Taiwan. On May 1, 1996, Valenciano, with Rodante, Teresita, and Rommel Imperial, went to Lian, Batangas to recruit workers for employment abroad. Candelaria applied for a job as a factory worker in Taiwan when Valenciano went to his residence in Lian. Valenciano asked him for an initial payment of PhP 20,000. On May 30, 1996, Candelaria paid Valenciano PhP 20,000 when she returned to Lian. He then paid PhP 20,000 on June 24, 1996 and PhP 29,000 on July 17, 1996 at Valencianos residence in Manila. These payments were to cover the placement fee and the expenses for the processing of his passport and other papers connected with his application for employment as a factory worker in Taiwan. The payments made on May 30 and July 17, 1996 were turned over to Rodante, who issued a receipt for the said payments. The payment made on June 24, 1996 was turned over by Valenciano to Teresita. After the payments were made, Valenciano brought the prospective workers to the office of Middle East International Manpower Resources, Inc. in Pasay City, where they were made to fill out application forms for their employment as factory workers in Taiwan. The complainants were introduced to Romeo Marquez, alias Rodante Imperial, Teresita Marquez, alias Teresita Imperial, and Rom mel Marquez, alias Rommel Imperial, whom Valenciano made to appear as the owners of the employment agency. She assured the prospective workers that they could leave for Taiwan within one month from the filing of their applications. During the period material, they have not yet found employment as factory workers in Taiwan. Valenciano, Rodante, Teresita, and Rommel were charged with the offense of illegal recruitment in large scale, as defined under Article 13(b) of Presidential Decree No. (PD) 442, otherwise known as the Labor Code of the Philippines, as amended, in relation to Art. 38(a), and penalized under Art. 39(c) of the Code, as amended by PD 1920 and PD 2018. The RTC found accused-appellant guilty, is also ordered to indemnify complainants Agapito R. de Luna, Allan Ilagan de Villa, Euziel N. dela Cuesta and Eusebio T. Candelaria the amounts of P70,000.00, P70,000.00, P62,000.00 and P69,000.00, respectively, as reparation of the damage caused. Accused-appellant appealed to this Court, but the case was transferred to the CA through a Resolution dated September 6, 2004. ISSUE: 1) the lower court gravely erred in not acquitting accused-appellant on reasonable doubt; and (2) the lower court gravely erred in holding that a conspiracy exists between accused-appellant and her co-accused. HELD: The appeal is without merit. In her defense, accused-appellant claims that she was an ordinary employee of Middle East International Manpower Resources, Inc., where her other co-accused were the owners and managers. She also denies receiving payment from the complainants; that had she promised employment in Taiwan, this promise was made in the performance of her duties as a clerk in the company. She denies too having knowledge of the criminal intent of her co-accused, adding that she might even be regarded as a victim in the present case, as she was in good faith when she made the promise. The claim of accused-appellant that she was a mere employee of her other co-accused does not relieve her of liability. An employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown that the employee actively and consciously participated in illegal recruitment. As testified to by the complainants, accused-appellant was among those who met and transacted with them regarding the job placement offers. In some instances, she made the effort to go to their houses to recruit them. She even gave assurances that they would be able to find employment abroad and leave for Taiwan after the filing of their applications. Accused-appellant was clearly engaged in recruitment activities, notwithstanding her gratuitous protestation that her actions were merely done in the course of her employment as a clerk. Accused-appellant cannot claim to be merely following the dictates of her employers and use good faith as a shield against criminal liability. As held in People v. Gutierrez: Appellant cannot escape liability by claiming that she was not aware that before working for her employer in the recruitment agency, she should first be registered with the POEA. Illegal recruitment in large scale is malum prohibitum, not malum in se. Good faith is not a defense. The claim of accused-appellant that she received no payment and that the payments were handed directly over to her co-accused fails in the face of the testimony of the complainants that accused-appellant was the one who received the money. In spite of the receipts having been issued by her co-accused, the trial court found that payments were directly made to accused-appellant, and this finding was upheld by the CA. Nothing is more entrenched than the rule that where, as here, the findings of fact of the trial court are affirmed by the CA, these are final and conclusive upon this Court. And even if it were true that no money changed hands, money is not material to a prosecution for illegal recruitment, as the definition of recruitment and placement in the Labor Code includes the phrase, whether for profit or not. We held in People v. Jamilosa that it was sufficient that the accused promises or offers for a fee employment to warrant conviction for illegal recruitment. Accused-appellant made representations that complainants would receive employment abroad, and this suffices for her conviction, even if her name does not appear on the receipts issued to complainants as evidence that payment was made.

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The RTC found accused-appellant to have undertaken recruitment activities, and this was affirmed by the CA. A POEA certification was submitted stating that accused-appellant was not authorized to recruit applicants for overseas employment, and she did not contest this certification. In the present case, there are four complainants: De Luna, De Villa, Dela Cuesta, and Candelaria. The three essential elements for illegal recruitment in large scale are present. Thus, there can be no other conclusion in this case but to uphold the conviction of accusedappellant and apply the penalty as imposed by law. 13. Executive Secretary vs. The Court of Appeals Facts: Republic Act 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, took effect on 15 July 1995. The Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipino Act of 1995 was, thereafter, published in the 7 April 1996 issue of the Manila Bulletin. However, even before the law took effect, the Asian Recruitment Council Philippine Chapter, Inc. (ARCO-Phil.) filed, on 17 July 1995, a petition for declaratory relief under Rule 63 of the Rules of Court with the Regional Trial Court of Quezon City to declare as unconstitutional Section 2, paragraph (g), Section 6, paragraphs (a) to (j), (l) and (m), Section 7, paragraphs (a) and (b), and Sections 9 and 10 of the law, with a plea for the issuance of a temporary restraining order and/or writ of preliminary injunction enjoining The Executive Secretary, the Secretary of Justice, the Secretary of Labor and Employment, the Secretary of Foreign Affairs, OWWA Administrator, and POEA Administrator from enforcing the assailed provisions of the law. In a supplement to its petition, the ARCO-Phil. alleged that RA 8042 was selfexecutory and that no implementing rules were needed. It prayed that the court issue a temporary restraining order to enjoin the enforcement of Section 6, paragraphs (a) to (m) on illegal recruitment, Section 7 on penalties for illegal recruitment, and Section 9 on venue of criminal actions for illegal recruitments. On 1 August 1995, the trial court issued a temporary restraining order effective for a period of only 20 days therefrom. After the Executive Secretary, et al. filed their comment on the petition, the ARCO-Phil. filed an amended petition, the amendments consisting in the inclusion in the caption thereof 11 other corporations which it alleged were its members and which it represented in the suit, and a plea for a temporary restraining order enjoining the Executive Secretary, et al. from enforcing Section 6 subsection (i), Section 6 subsection (k) and paragraphs 15 and 16 thereof, Section 8, Section 10, paragraphs 1 and 2, and Sections 11 and 40 of RA 8042. Arco-Phil averred that the provisions of RA 8042 violate Section 1, Article III of the Constitution (i.e. discrimination against unskilled workers, discrimination against licensed and registered recruiters, among others) In their answer to the petition, the Executive Secretary, et al. alleged, inter alia, that (a) Acro-Phil has no cause of action for a declaratory relief; (b) the petition was premature as the rules implementing RA 8042 not having been released as yet; (c) the assailed provisions do not violate any provisions of the Constitution; and, (d) the law was approved by Congress in the exercise of the police power of the State. After the respective counsels of the parties were heard on oral arguments, the trial court issued on 21 August 1995, an order granting Acro-Phils plea for a writ of preliminary injunction upon a bond of P50,000. Acro-Phil posted the requisite bond and on 24 August 1995, the trial court issued a writ of preliminary injunction enjoining the enforcement of Section 2, subsections (g) and (i, 2nd par.); Section 6, subsections (a) to (m), and pars. 15 & 16; Section 7, subsections (a) & (b); Section 8; Section 9; Section 10; pars. 1 & 2; Section 11; and Section 40 of RA 8042, pending the termination of the proceedings. The Executive Secretary, et al. filed a petition for certiorari with the Court of Appeals assailing the order and the writ of preliminary injunction issued by the trial court. They asserted that Acro-Phil is not the real party-in-interest as petitioner in the trial court, as it was inconceivable how a non-stock and non-profit corporation, could sustain direct injury as a result of the enforcement of the law. They argued that if, at all, any damage would result in the implementation of the law, it is the licensed and registered recruitment agencies and/or the unskilled Filipino migrant workers discriminated against who would sustain the said injury or damage, not Acro-Phil. On 5 December 1997, the appellate court came out with a four-page decision dismissing the petition and affirming the assailed order and writ of preliminary injunction issued by the trial court. The appellate court, likewise, denied the Executive Secretary, et al.s motion for reconsideration of the said decision. They thus filed a petition for review on certiorari. Issue: Whether ACRO-Phil has locus standi. Held: PARTLY YES. ACRO-Phil has locus standi to file the petition in the RTC in representation of the 11 licensed and registered recruitment agencies impleaded in the amended petition. The modern view is that an association has standing to complain of injuries to its members. This view fuses the legal identity of an association with that of its members. An association has standing to file suit for its workers despite its lack of direct interest if its members are affected by the action. An organization has standing to assert the concerns of its constituents. In Telecommunications and Broadcast Attorneys of the Philippines v. Commission on Elections, the Court held that standing jus tertii would be recognized only if it can be shown that the party suing has some substantial relation to the third party, or that the right of the third party would be diluted unless the party in court is allowed to espouse the third partys constitutional claims. Herein, ACRO-Phil filed the petition for declaratory relief under Rule 64 of the Rules of Court for and in behalf of its 11 licensed and registered recruitment agencies which are its members, and which approved separate resolutions expressly authorizing ACRO-Phil to file the said suit for and in their.behalf. The Court note that, under its Articles of Incorporation, ACRO-Phil was organized for the purposes inter alia of promoting and supporting the growth and development of the manpower recruitment industry, both in the local and international levels; providing, creating and exploring employment opportunities for the exclusive benefit of its general membership; enhancing and promoting the general welfare and protection of Filipino workers; and, to act as the representative of any individual, company, entity or association on matters related to the manpower recruitment industry, and to perform other acts and activities necessary to accomplish the purposes embodied therein. ACRO-Phil is, thus, the appropriate party to assert the rights of its members, because it and its members are in every practical sense identical. ACRO-Phil asserts that the assailed provisions violate the constitutional rights of its members and the officers and employees thereof. ACRO-Phil is but the medium through which its individual members seek to make more effective the expression of their voices and the redress of their grievances. However, ACROPHIL has no locus standi to file the petition for and in behalf of unskilled workers. The Court notes that it even failed to implead any unskilled workers in its petition. Furthermore, in failing to implead, as parties-petitioners, the 11 licensed and registered recruitment agencies it claimed to represent, ACRO-Phil failed to comply with Section 2 of Rule 63 of the Rules of Court. Nevertheless, since the eleven licensed and registered recruitment agencies for which ACRO-Phil filed the suit are specifically named in the petition, the amended petition is deemed amended to avoid multiplicity of suits.

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14. Romero vs People FACTS: PRIVATE respondent Romulo Padlan went to petitioner Delia D. Romero to inquire about securing a job in Israel. Convinced by petitioners words of encouragement and inspired by the potential salary of US$700 to US$1,200 a month, respondent raised the amount of US$3,600, which he gave to petitioner so that his papers could be processed. Respondent left for Israel and secured a job with a monthly salary of US$650. Unfortunately, after two and a half months, he was caught by Israels immigration police and deported for lack of a working visa. On his return, respondent demanded from petitioner the return of his money but the later refused. ISSUE: Will the accused be held liable for Illegal recruitment? Ruling: Yes. Article 13 (b) of the Labor Code defines recruitment and placement as: any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, that any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement. The crime of illegal recruitment is committed when two elements concur, namely: (1) the offender has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers; and (2) he undertakes either any activity within the meaning of recruitment and placement defined under Article 13 (b), or any prohibited practices enumerated under Article 34 of the Labor Code. xxx Thus, the trial court did not err in considering the certification from the Department of Labor and Employment-Dagupan District Office stating that petitioner has not been issued any license by the POEA nor is a holder of an authority to engage in recruitment and placement activities. xxx From the above testimonies, it is apparent that petitioner was able to convince the private respondents to apply for work in Israel after parting with their money in exchange for the services she would render. The said act of the petitioner, without a doubt, falls within the meaning of recruitment and placement as defined in Article 13 (b) of the Labor Code

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