FRANCISCO vs.

NLRC
Facts: Pettoner was hred by Kase Corporaton durng the ncorporaton stage. She was desgnated as
accountant and corporate secretary and was assgned to hande a the accountng needs of the company.
She was aso desgnated as Lason Omcer to the Cty of Mana to secure permts for the operaton of the
company. In 1996, Pettoner was desgnated as Actng Manager. She was assgned to hande recrutment of
a empoyees and perform management admnstraton functons. In 2001, she was repaced by Lza Fuentes
as Manager. Kase Corporaton reduced her saary to P2,500 per month whch was unt September. She asked
for her saary but was nformed that she was no onger connected to the company. She dd not anymore
report to work snce she was not pad for her saary. She ed an acton for constructve dsmssa wth the
Labor Arbter. The Labor Arbter found that the pettoner was egay dsmssed. NLRC amrmed the decson
whe CA reversed t.
Issue: Whether or not there was an empoyer-empoyee reatonshp.
Ruling: The court hed that n ths |ursdcton, there has been no unform test to determne the exstence of
an empoyer-empoyee reaton. Generay, courts have reed on the so-caed rght of contro test where the
person for whom the servces are performed reserves a rght to contro not ony the end to be acheved but
aso the means to be used n reachng such end. In addton to the standard of rght-of-contro, the exstng
economc condtons prevang between the partes, ke the ncuson of the empoyee n the payros, can
hep n determnng the exstence of an empoyer-empoyee reatonshp.
The better approach woud therefore be to adopt a two-tered test nvovng: (1) the putatve empoyers
power to contro the empoyee wth respect to the means and methods by whch the work s to be
accompshed; and (2) the underyng economc reates of the actvty or reatonshp.
In Seva v. Court of Appeas, the court observed the need to consder the exstng economc condtons
prevang between the partes, n addton to the standard of rght-of-contro ke the ncuson of the
empoyee n the payros, to gve a cearer pcture n determnng the exstence of an empoyer-empoyee
reatonshp based on an anayss of the totaty of economc crcumstances of the worker.
Thus, the determnaton of the reatonshp between empoyer and empoyee depends upon the
crcumstances of the whoe economc actvty, such as: (1) the extent to whch the servces performed are an
ntegra part of the empoyers busness; (2) the extent of the workers nvestment n equpment and factes;
(3) the nature and degree of contro exercsed by the empoyer; (4) the workers opportunty for prot and
oss; (5) the amount of ntatve, sk, |udgment or foresght requred for the success of the camed
ndependent enterprse; (6) the permanency and duraton of the reatonshp between the worker and the
empoyer; and (7) the degree of dependency of the worker upon the empoyer for hs contnued empoyment
n that ne of busness. The proper standard of economc dependence s whether the worker s dependent on
the aeged empoyer for hs contnued empoyment n that ne of busness.
By appyng the contro test, there s no doubt that pettoner s an empoyee of Kase Corporaton because
she was under the drect contro and supervson of Se| Kamura, the corporatons Technca Consutant. It s
therefore apparent that pettoner s economcay dependent on respondent corporaton for her contnued
empoyment n the atters ne of busness.
There can be no other concuson that pettoner s an empoyee of respondent Kase Corporaton. She was
seected and engaged by the company for compensaton, and s economcay dependent upon respondent
for her contnued empoyment n that ne of busness. Her man |ob functon nvoved accountng and tax
servces rendered to Respondent Corporaton on a reguar bass over an ndente perod of engagement.
Respondent Corporaton hred and engaged pettoner for compensaton, wth the power to dsmss her for
cause. More mportanty, Respondent Corporaton had the power to contro pettoner wth the means and
methods by whch the work s to be accompshed.
JOSE SONZA vs. ABS-CBN BROADCASTING CORORATIONG.R. N!. "#$%&" June "%' (%%)
FACTS: In May 1994, ABS-CBN sgned an agreement wth the Me and |ay Management and Deveopment
Corporaton (M|MDC). ABS-CBN was represented by ts corporate omcers whe M|MDC was represented by
Sonza, as Presdent and genera manager, and Tangco as ts EVP and treasurer. Referred to n the agreement
as agent, M|MDC agreed to provde Sonzas servces excusvey to ABS-CBN as taent for rado and teevson.
ABS-CBN agreed to pay Sonza a monthy taent fee of P310, 000 for the rst year andP317, 000 for the
second and thrd year. On Apr 1996, Sonza wrote a etter to ABS-CBN's Presdent, Eugeno Lopez III, where
he rrevocaby resgned n vew of the recent events concernng hs program and career. The acts of the
staton are voatve of the Agreement and sad etter w serve as notce of rescsson of sad contract. The
etter aso contaned the waver and renuncaton for recovery of the remanng amount stpuated but
reserves the rght to seek recovery of the other benets under sad Agreement. After the sad etter, Sonza
ed wth the Department of Labor and Empoyment a compant aegng that ABS-CBN dd not pay hs
saares, separaton pay, servce ncentve pay, 13th month pay, sgnng bonus, trave aowance and amounts
under the Empoyees Stock Opton Pan (ESOP). ABS-CBN contended that no empoyee-empoyer reatonshp
exsted between the partes. However, ABS-CBN contnued to remt Sonzas monthy taent fees but opened
another account for the same purpose. The Labor Arbter dsmssed the compant and found that there s no
empoyee-empoyer reatonshp. The LA rued that he s not an empoyee by reason of hs pecuar sk and
taent as a TV host and a rado broadcaster. Unke an ordnary empoyee, he was free to perform hs servces
n accordance wth hs own stye. NLRC and CA amrmed the LA. Shoud there be any compant, t does not
arse from an empoyer-empoyee reatonshp but from a breach of contract.
ISS*E: Whether or not there was empoyer-empoyee reatonshp between the partes.
+ELD: There s no empoyer-empoyee reatonshp between Sonza and ABS-CBN. Petton dened. |udgment
decson amrmed. Case aw has consstenty hed that the eements of an empoyee-empoyer reatonshp are
seecton and engagement of the empoyee, the payment of wages, the power of dsmssa and the
empoyers power to contro the empoyee on the means and methods by whch the work s accompshed.
The ast eement, the so-caed "contro test", s the most mportant eement.
JA,IER v FL- ACE CORORATION
FACTS: On May 23, 2008, |aver ed a compant before the NLRC for underpayment of saares and other
abor standard benets. He aeged that he was an empoyee of Fy Ace snce September 2007, performng
varous tasks at the respondents warehouse such as ceanng and arrangng the canned tems before ther
devery to certan ocatons, except n nstances when he woud be ordered to accompany the companys
devery vehces, as pahnante; that he reported for work from Monday to Saturday from 7:00 ocock n the
mornng to 5:00 ocock n the afternoon; that durng hs empoyment, he was not ssued an dentcaton
card and pay sps by the company; that on May 6, 2008, he reported for work but he was no onger aowed
to enter the company premses by the securty guard upon the nstructon of Ruben Ong, hs superor; that
after severa mnutes of beggng to the guard to aow hm to enter, he saw Ong whom he approached and
asked why he was beng barred from enterng the premses; that Ong reped by sayng, "Tanungn mo anak
mo;" that he then went home and dscussed the matter wth hs famy; that he dscovered that Ong had been
courtng hs daughter Annayn after the two met at a esta ceebraton n Maabon Cty; that Annayn tred to
tak to Ong and convnce hm to spare her father from troube but he refused to accede; that thereafter, |aver
was termnated from hs empoyment wthout notce; and that he was nether gven the opportunty to refute
the cause/s of hs dsmssa from work. Fy Ace averred that t was engaged n the busness of mportaton and
saes of groceres. Sometme n December 2007, |aver was contracted by ts empoyee, Mr. Ong, as extra
heper on a pakyaw bass at an agreed rate of P 300.00 per trp, whch was ater ncreased to P 325.00 n
|anuary 2008. Mr. Ong contracted |aver roughy 5 to 6 tmes ony n a month whenever the vehce of ts
contracted hauer, Mmar Haung Servces, was not avaabe. On Apr 30, 2008, Fy Ace no onger needed
the servces of |aver. Denyng that he was ther empoyee, Fy Ace nssted that there was no ega dsmssa.
Fy Ace submtted a copy of ts agreement wth Mmar Haung Servces and copes of acknowedgment
recepts evdencng payment to |aver for hs contracted servces bearng the words, "day manpower
(pakyaw/pece rate pay)" and the atters sgnatures/ntas. LA dsmssed the compant. |aver faed to
present proof that he was a reguar empoyee of Fy Ace. |no ID,documents, paysps. Fy Ace s not engaged
n truckng busness but n the mportaton and saes of groceres. Snce there s a reguar hauer to dever ts
products, we gve credence to Respondents cam that companant was contracted on "pakao"bass. NLRC It
was of the vew that a pakyaw -bass arrangement dd not precude the exstence of empoyer-empoyee
reatonshp." Payment by resut x x x s a method of compensaton and does not dene the essence of the
reaton. It s a mere method of computng compensaton, not a bass for determnng the exstence or
absence of an empoyer-empoyee reatonshp." The NLRC further averred that t dd not foow that a worker
was a |ob contractor and not an empoyee, |ust because the work he was dong was not drecty reated to the
empoyers trade or busness or the work may be consdered as "extra" heper as n ths case; and that the
reatonshp of an empoyer and an empoyee was determned by aw and the same woud preva whatever
the partes may ca t. Fndng |aver to be a reguar empoyee, the NLRC rued that he was entted to a
securty of tenure. For fang to present proof of a vad cause for hs termnaton, Fy Ace was found to be
abe for ega dsmssa of |aver who was kewse entted to backwages and separaton pay n eu of
renstatement. CA renstated dsmssa of compant. |aver faed to prove by substanta evdence er-ee
reatonshp. Dd notpass the contro test.
ISS*E: WON |aver was reguar empoyee of Fy Ace. NO, onus proband was on |aver and he faed to
provde substanta evdence.
R*LING: In an ega dsmssa case, the onus proband rests on the empoyer to prove that ts dsmssa of
an empoyee was for a vad cause. However, before a case for ega dsmssa can prosper, an empoyer-
empoyee reatonshp must rst be estabshed. Exstence of an empoyer-empoyee reatonshp between
hm and Fy Ace s essentay a queston of fact. In deang wth factua ssues n abor cases, " substanta
evdence-that amount of reevant evdence whch a reasonabe mnd mght accept as adequate to |ustfy a
concuson -s sumcent."
-./!ng vs. ABS-CBN G.R. N!. "$)$$&
Facts: Pettoner Ernesto G. Ymbong started workng for ABS-CBN Broadcastng Corporaton (ABS-CBN) n
1993 at ts regona staton n Cebu as a teevson taent, co-anchorng Hoy Gsng and TV Patro Cebu. Hs
stnt n ABS-CBN ater extended to rado when ABS-CBN Cebu aunched ts AM staton DYAB n 1995 where he
worked as drama and voce taent, spnner, scrptwrter and pubc ahars program anchor. Lke Ymbong,
Leandro Patanghug aso worked for ABS-CBN Cebu. Startng 1995, he worked as taent, drector and
scrptwrter for varous rado programs ared over DYAB. On |anuary 1, 1996, the ABS-CBN Head Omce n
Mana ssued Pocy No. HR-ER-016 or the "Pocy on Empoyees Seekng Pubc Omce." The pertnent portons
read:
1. Any empoyee who ntends to run for any pubc omce poston, must e hs/her etter of
resgnaton, at east thrty (30) days pror to the omca ng of the certcate of canddacy ether for natona
or oca eecton. x x x x
3. Further, any empoyee who ntends to |on a potca group/party or even wth no potca amaton
but who ntends to openy and aggressvey campagn for a canddate or group of canddates (e.g. pubcy
speakng/endorsng canddate, recrutng campagn workers, etc.) must e a request for eave of absence
sub|ect to managements approva. For ths partcuar reason, the empoyee shoud e the eave request at
east thrty (30) days pror to the start of the panned eave perod.
Because of the mpendng May 1998 eectons and based on hs mmedate recoecton of the pocy at that
tme, Dante Luzon, Assstant Staton Manager of DYAB ssued the foowng memorandum:
TO : ALL CONCERNED
FROM : DANTE LUZON
DATE : MARCH 25, 1998
SUB|ECT : AS STATED
Pease be nformed that per company pocy, any empoyee/taent who wants to run for any poston n the
comng eecton w have to e a eave of absence the moment he/she es hs/her certcate of canddacy.
The servces rendered by the concerned empoyee/taent to ths company w then be temporary suspended
for the entre campagn/eecton perod.
For strct compance.
After the ssuance of the March 25, 1998 Memorandum, Ymbong got n touch wth Luzon. Luzon cams that
Ymbong approached hm and tod hm that he woud eave rado for a coupe of months because he w
campagn for the admnstraton tcket. It was ony after the eectons that they found out that Ymbong
actuay ran for pubc omce hmsef at the eeventh hour. Ymbong, on the other hand, cams that n
accordance wth the March 25, 1998 Memorandum, he nformed Luzon through a etter that he woud take a
few months eave of absence from March 8, 1998 to May 18, 1998 snce he was runnng for councor of Lapu-
Lapu Cty. As regards Patanghug, Patanghug approached Luzon and advsed hm that he w run as
councor for Naga, Cebu. Accordng to Luzon, he cared to Patanghug that he w be consdered resgned
and not |ust on eave once he es a certcate of canddacy. Later, Ymbong and Patanghug both tred to
come back to ABS-CBN Cebu. Accordng to Luzon, he nformed them that they cannot work there anymore
because of company pocy. Ths was stressed even n subsequent meetngs and they were tod that the
company was not aowng any exceptons. ABS-CBN, however, agreed out of pure beraty to gve them a
chance to wnd up ther partcpaton n the rado drama, Nagbabagang Langt, snce t was ratng we and to
avod an abrupt endng. The agreed wndng-up, however, dragged on for so ong promptng Luzon to ssue
to Ymbong the memorandum dated September 14, 1998 automatcay termnatng them.
Issue: 1. whether Pocy No. HR-ER-016 s vad
2. whether the March 25, 1998 Memorandum ssued by Luzonsuperseded Pocy No. HR-ER-016
3. whether Ymbong, by seekng an eectve post, s deemed to have resgned and not dsmssed by
ABS-CBN.
+el0: 1. ABS-CBN had a vad |ustcaton for Pocy No. HR-ER-016. Its ratonae s emboded n the
pocy tsef, to wt: Ratonae: ABS-CBN BROADCASTING CORPORATION strongy beeves that t s to the best
nterest of the company to contnuousy reman apotca. Whe t encourages and supports ts empoyees to
have greater potca awareness and for them to exercse ther rght to suhrage, the company, however,
prefers to reman potcay ndependent and unattached to any potca ndvdua or entty. Therefore,
empoyees who |ntend| to run for pubc omce or accept potca appontment shoud resgn from ther
postons, n order to protect the company from any pubc msconceptons. To preserve ts ob|ectvty,
neutraty and credbty, the company reterates the foowng pocy gudenes for strct mpementaton. We
have consstenty hed that so ong as a companys management prerogatves are exercsed n good fath for
the advancement of the empoyers nterest and not for the purpose of defeatng or crcumventng the rghts
of the empoyees under speca aws or under vad agreements, ths Court w uphod them. In the nstant
case, ABS-CBN vady |usted the mpementaton of Pocy No. HR-ER-016. It s we wthn ts rghts to
ensure that t mantans ts ob|ectvty and credbty and freeng tsef from any appearance of mpartaty so
that the condence of the vewng and stenng pubc n t w not be n any way eroded. Even as the aw s
soctous of the wefare of the empoyees, t must aso protect the rght of an empoyer to exercse what are
ceary management prerogatves. The free w of management to conduct ts own busness ahars to
acheve ts purpose cannot be dened.
It s worth notng that such exercse of management prerogatve has earned a stamp of approva from no ess
than our Congress tsef when on February 12, 2001, t enacted Repubc Act No. 9006, otherwse known as
the "Far Eecton Act." Secton 6.6 thereof reads:
6.6. Any mass meda coumnst, commentator, announcer, reporter, on-ar correspondent or
personaty who s a canddate for any eectve pubc omce or s a campagn vounteer for or
empoyed or retaned n any capacty by any canddate or potca party sha be deemed resgned, f
so requred by ther empoyer, or sha take a eave of absence from hs/her work as such durng the
campagn perod: Provded, That any meda practtoner who s an omca of a potca party or a
member of the campagn stah of a canddate or potca party sha not use hs/her tme or space to
favor any canddate or potca party. |Emphass and underscorng supped.|
(. The CA correcty rued that though Luzon, as Assstant Staton Manager for Rado of ABS-CBN, has
pocy-makng powers n reaton to hs prncpa task of admnsterng the networks rado staton n the Cebu
regon, the exercse of such power shoud be n accord wth the genera rues and reguatons mposed by the
ABS-CBN Head Omce to ts empoyees. Ceary, the March 25, 1998 Memorandum ssued by Luzon whch ony
requres empoyees to go on eave f they ntend to run for any eectve poston s n absoute contradcton
wth Pocy No. HR-ER-016 ssued by the ABS-CBN Head Omce n Mana whch requres the resgnaton, not
ony the ng of a eave of absence, of any empoyee who ntends to run for pubc omce. Havng been
ssued beyond the scope of hs authorty, the March 25, 1998 Memorandum s therefore vod and dd not
supersede Pocy No. HR-ER-016.
Aso worth notng s that Luzon n hs Sworn Statement admtted the naccuracy of hs recoecton of the
company pocy when he ssued the March 25, 1998 Memorandum and stated theren that upon doube-
checkng of the exact text of the pocy statement and subsequent conrmaton wth the ABS-CBN Head
Omce n Mana, he earned that the pocy requred resgnaton for those who w actuay run n eectons
because the company wanted to mantan ts ndependence. Snce the omcer who hmsef ssued the sub|ect
memorandum acknowedged that t s not n harmony wth the Pocy ssued by the upper management, there
s no reason for t to be a source of rght for Ymbong.
3. As Pocy No. HR-ER-016 s the subsstng company pocy and not Luzons March 25, 1998
Memorandum, Ymbong s deemed resgned when he ran for councor.
We nd no mert n Ymbongs argument that "|hs| automatc termnaton x x x was a batant |dsregard| of
|hs| rght to due process" as he was "never asked to expan why he dd not tender hs resgnaton before he
ran for pubc omce as mandated by |the sub|ect company pocy|." Ymbongs overt act of runnng for
councor of Lapu-Lapu Cty s tantamount to resgnaton on hs part. He was separated from ABS-CBN not
because he was dsmssed but because he resgned. Snce there was no termnaton to speak of, the
requrement of due process n dsmssa cases cannot be apped to Ymbong. Thus, ABS-CBN s not duty-
bound to ask hm to expan why he dd not tender hs resgnaton before he ran for pubc omce as mandated
by the sub|ect company pocy. Petton dened
L!csin ,S Nissan Lease 1ils..' Oct!/e2 (%'(%"%
Facts: Locsn was eected Executve Vce Presdent and Treasurer (EVP/Treasurer) of NCLPI. As EVP/Treasurer,
hs dutes and responsbtes ncuded: (1) the management of the nances of the company; (2) carryng out
the drectons of the Presdent and/or the Board of Drectors regardng nanca management; and (3) the
preparaton of nanca reports to advse the omcers and drectors of the nanca condton of NCLPI.6 Locsn
hed ths poston for 13 years, havng been re-eected every year snce 1992, unt |anuary 21, 2005, when he
was nomnated and eected Charman of NCLPIs Board of Drectors.A speca meetng was caed. One of the
tems of the agenda was the eecton of a new set of omcers. Unfortunatey, Locsn was nether re-eected
Charman nor renstated to hs prevous poston as EVP/Treasurer.8 Aggreve, Locsn ed a compant for
ega dsmssa wth prayer for renstatement, payment of backwages, damages and attorneys fees before
the Labor Arbter aganst NCLPI and Banson, who was then Presdent of NCLPI. On |uy 11, 2007, nstead of
ng ther poston paper, NCLPI and Banson ed a Moton to Dsmss,10 on the ground that the Labor Arbter
dd not have |ursdcton over the case snce the ssue of Locsns remova as EVP/Treasurer nvoves an ntra-
corporate dspute. On August 16, 2007, Locsn submtted hs opposton to the moton to dsmss, mantanng
hs poston that he s an empoyee of NCLPI.
On March 10, 2008, Labor Arbter Concepcon ssued an Order denyng the Moton to Dsmss, hodng that her
omce acqured "|ursdcton to arbtrate and/or decde the nstant compant ndng extant n the case an
empoyer-empoyee reatonshp."11NCLPI, eevated the case to the CA through a Petton for Certorar under
Rue 65 of the Rues of Court.12 The CA Decson - Locsn was a corporate omcer; the ssue of hs remova as
EVP/Treasurer s an ntra-corporate dspute under the RTCs |ursdcton. The CA reversed and set asde the
Labor Arbters Order denyng the Moton to Dsmss and rued that Locsn was a corporate omcer. The
poston of Executve Vce-Presdent/Treasurer s speccay ncuded n the roster of omcers provded for by
the (Amended) By-Laws of pettoner corporaton, hs dutes and responsbtes, as we as compensaton as
such omcer are kewse set forth theren.14 Hence ths petton.
Issue: Whether or not the Labor Arbter has |ursdcton over the aeged ega dsmssa, renstatement,
payment of backwages, and damages.
+el0: The petton acks mert. Prefatory, we agree wth Locsns submsson that the NCLPI ncorrecty
eevated the Labor Arbters dena of the Moton to Dsmss to the CA. Locsn s correct n postng that the
dena of a moton to dsmss s unappeaabe. As a genera rue, an aggreved partys proper recourse to the
dena s to e hs poston paper, nterpose the grounds reed upon n the moton to dsmss before the abor
arbter, and actvey partcpate n the proceedngs. Thereafter, the abor arbters decson can be appeaed
to the NLRC, not to the CA.
As a rue, we strcty adhere to the rues of procedure and do everythng we can, to the pont of penazng
voators, to encourage respect for these rues. We take excepton to ths genera rue, however, when a strct
mpementaton of these rues woud cause substanta n|ustce to the partes.
We see t approprate to appy the excepton to ths case for the reasons dscussed beow; hence, we are
compeed to go beyond procedure and rue on the merts of the case. In the context of ths case, we see
sumcent |ustcaton to rue on the empoyer-empoyee reatonshp ssue rased by NCLPI, even though the
Labor Arbters nterocutory order was ncorrecty brought to the CA under Rue 65.
x x x The NLRC rue proscrbng appea from a dena of a moton to dsmss s smar to the genera rue
observed n cv procedure that an order denyng a moton to dsmss s nterocutory and, hence, not
appeaabe unt na |udgment or order s rendered |1 Fera and Noche, Cv Procedure Annotated 453 (2001
ed.)|. In the abor aw settng, a pan, speedy and adequate remedy s st open to the aggreved party when
a abor arbter denes a moton to dsmss. Ths s Artce 223 of Presdenta Decree No. 442, as amended
(Labor Code), 34 whch states:
ART. 223. APPEAL
Decsons, awards, or orders of the Labor Arbter are na and executory uness appeaed to the Commsson
by any or both partes wthn ten (10) caendar days from recept of such decsons, awards, or orders. Such
appea may be entertaned ony on any of the foowng grounds:
(a) If there s prma faceevdence of abuse of dscreton on the part of the Labor Arbter; x x x |Emphass
supped.|
A strct mpementaton of the NLRC Rues and the Rues of Court woud cause n|ustce to the partes because
the Labor Arbter ceary has no |ursdcton over the present ntra-corporate dspute. The CA correcty rued
that no empoyer-empoyee reatonshp exsts between Locsn and Nssan. Locsn was undenaby Charman
and Presdent, and was eected to these postons by the Nssan board pursuant to ts By-aws.39 As such, he
was a corporate omcer, not an empoyee. The CA reached ths concuson by reyng on the submtted facts
and on Presdenta Decree 902-A, whch denes corporate omcers as "those omcers of a corporaton who are
gven that character ether by the Corporaton Code or by the corporatons by-aws." Lkewse, Secton 25 of
Batas Pambansa Bg. 69, or the Corporaton Code of the Phppnes (Corporaton Code) provdes that
corporate omcers are the presdent, secretary, treasurer and such other omcers as may be provded for n the
by-aws. Even as Executve Vce-Presdent/Treasurer, Locsn aready acted as a corporate omcer because the
poston of Executve Vce-Presdent/Treasurer s provded for n Nssans By-Laws. Artce IV, Secton 4 of these
By-Laws speccay provdes for ths poston. Gven Locsns status as a corporate omcer, the RTC, not the
Labor Arbter or the NLRC, has |ursdcton to hear the egaty of the termnaton of hs reatonshp wth
Nssan. We have hed that a corporate omcers dsmssa s aways a corporate act, or an ntra-corporate
controversy whch arses between a stockhoder and a corporaton. So that the RTC shoud exercse
|ursdcton based on the foowng ega reasonng:
Pror to ts amendment, Secton 5(c) of Presdenta Decree No. 902-A (PD 902-A) provded that ntra-corporate
dsputes fa wthn the |ursdcton of the Securtes and Exchange Commsson (SEC):
Sec. 5. In addton to the reguatory and ad|udcatve functons of the Securtes and Exchange Commsson
over corporatons, partnershps and other forms of assocatons regstered wth t as expressy granted under
exstng aws and decrees, t sha have orgna and excusve |ursdcton to hear and decde cases nvovng:
x x x x
c) Controverses n the eecton or appontments of drectors, trustees, omcers or managers of such
corporatons, partnershps or assocatons.
Subsecton 5.2, Secton 5 of Repubc Act No. 8799, whch took ehect on 8 August 2000, transferred to
regona tra courts the SECs |ursdcton over a cases sted n Secton 5 of PD 902-A:
5.2. The Commssons |ursdcton over a cases enumerated under Secton 5 of Presdenta Decree No. 902-
A s hereby transferred to the Courts of genera |ursdcton or the approprate Regona Tra Court.
RE-ES v. RTC OF 3A4ATI GR NO."5&6))
FACTS: Zenth Insurance Corp. and Rodrgo Reyes ed a dervatve sut aganst hs brother Oscar to obtan
an accountng of the funds and assets of the corporaton that were arbtrary and frauduenty approprated
by Oscar for hmsef. Oscar moved to decare the compant as a nusance and harassment sut and shoud be
dsmssed accordng to the Interm Rues of Procedure for Intra-Corporate Controverses. RTC of Makat,
desgnated as a speca commerca court: dened the moton and decared that the compant s a proper
dervatve sut. Oscar went to the CA on a petton for certorar, prohbton, and mandamus and prayed that
the RTC Order be annued and set asde and that the tra court be prohbted from contnung wth the
proceedngs. CA: amrmed the RTC Order and dened the petton. Oscar now comes before the SC on appea
through a petton for revew on certorar under Rue 45 of the Rues of Court.
ISS*ES: WON charges of fraud were propery supported by the requred factua aegatons.
+ELD: NO. Whe the compant contaned aegatons of fraud purportedy commtted by Oscar, these
aegatons are not partcuar enough to brng the controversy wthn the speca commerca court's
|ursdcton; they are not statements of utmate facts, but are mere concusons of aw: how and why the
aeged appropraton of shares can be characterzed as "ega and frauduent" were not expaned nor
eaborated on. Aegatons of decet, machnaton, fase pretenses, msrepresentaton, and threats are argey
concusons of aw that, wthout supportng statements of the facts to whch the aegatons of fraud refer, do
not sumcenty state an ehectve cause of acton.(2) In ordnary cases, the faure to speccay aege the
frauduent acts does not consttute a ground for dsmssa snce such defect can be cured by a b of
partcuars. In cases governed by the Interm Rues of Procedure on Intra-Corporate Controverses, however, a
b of partcuars s a prohbted peadng. It s essenta, therefore, for the compant to show on ts face what
are camed to be the frauduent corporate acts f the companant wshes to nvoke the court's speca
commerca |ursdcton. Twce n the course of ths case, Rodrgo had been gven the opportunty to study the
proprety of amendng or wthdrawng the compant, but he consstenty refused. The court's functon n
resovng ssues of |ursdcton s mted to the revew of the aegatons of the compant and, on the bass of
these aegatons, to the determnaton of whether they are of such nature and sub|ect that they fa wthn
the terms of the aw denng the court's |ursdcton.
O4OL vs. SLI33ER7s 8ORLD' Dece./e2 ""' (%%9
Facts: Respondent Smmers Word Internatona operatng under the name Behavor Modcatons, Inc.
(Smmers Word) empoyed pettoner Lese Oko (Oko) as a management tranee on 15 |une 1992. She rose
up the ranks to become Head Omce Manager and then Drector and Vce Presdent from 1996 unt her
dsmssa on 22 September 1999.
On 28 |uy 1999, pror to Okos dsmssa, Smmers Word preventvey suspended Oko. The suspenson
arose from the sezure by the Bureau of Customs of seven Precor eptca machnes and seven Precor
treadms beongng to or consgned to Smmers Word. The shpment of the equpment was paced under
the names of Oko and two customs brokers for a vaue ess than US$500. For beng undervaued, the
equpment were sezed.
On 2 September 1999, Oko receved a memorandum that her suspenson had been extended from 2
September unt 1 October 1999 pendng the outcome of the nvestgaton on the Precor equpment
mportaton. On 17 September 1999, Oko receved another memorandum from Smmers Word requrng her
to expan why no dscpnary acton shoud be taken aganst her n connecton wth the equpment sezed by
the Bureau of Customs. However, Smmers Word found Okos expanaton to be unsatsfactory. Letter sgned
by ts presdent Ronad |oseph Moy (Moy), Smmers Word termnated Okos empoyment.
Oko ed a compant3 wth the Arbtraton branch of the NLRC aganst Smmers Word, for ega suspenson,
ega dsmssa, unpad commssons, damages and attorneys fees, wth prayer for renstatement and
payment of backwages.
Respondents ed a Moton to Dsmss4 the case wth a reservaton of ther rght to e a Poston Paper at the
proper tme. The abor arbter granted the moton to dsmss. The abor arbter rued that Oko was the vce-
presdent of Smmers Word at the tme of her dsmssa. Snce t nvoved a corporate omcer, the dspute was
an ntra-corporate controversy fang outsde the |ursdcton of the Arbtraton branch. Oko ed an appea
wth the NLRC. 6 The NLRC reversed and set asde the abor arbters order.
Respondents ed a Moton for Reconsderaton wth the NLRC. However, the NLRC not ony decded the case
on the merts but dd so n the absence of poston papers from both partes. The NLRC dened the moton for
ack of mert.
Respondents then ed an appea wth the Court of Appeas, the appeate court set asde the NLRCs
Resouton The Court of Appeas rued that the case, beng an ntra-corporate dspute, fas wthn the
|ursdcton of the reguar courts pursuant to Repubc Act No. 8799.10 The appeate court added that the
NLRC had acted wthout |ursdcton n gvng due course to the compant and deprved respondents of ther
rght to due process n decdng the case on the merts. Oko ed a Moton for Reconsderaton whch was
dened. Hence, the nstant petton.
Issue: Whether or not the NLRC has |ursdcton over the ega dsmssa case ed by pettoner.
+el0: The petton acks mert. The ssue revoves many on whether pettoner was an empoyee or a
corporate omcer of Smmers Word. Secton 25 of the Corporaton Code enumerates corporate omcers as the
presdent, secretary, treasurer and such other omcers as may be provded for n the by-aws. In Tabang v.
NLRC,12 we hed that an "omce" s created by the charter of the corporaton and the omcer s eected by the
drectors or stockhoders. On the other hand, an "empoyee" usuay occupes no omce and generay s
empoyed not by acton of the drectors or stockhoders but by the managng omcer of the corporaton who
aso determnes the compensaton to be pad to such empoyee.
Ceary, from the documents submtted by respondents, pettoner was a drector and omcer of Smmers
Word. The charges of ega suspenson, ega dsmssa, unpad commssons, renstatement and back
wages mputed by pettoner aganst respondents fa squarey wthn the ambt of ntra-corporate dsputes. In
a number of cases,17 we have hed that a corporate omcers dsmssa s aways a corporate act, or an ntra-
corporate controversy whch arses between a stockhoder and a corporaton. The queston of remuneraton
nvovng a stockhoder and omcer, not a mere empoyee, s not a smpe abor probem but a matter that
comes wthn the area of corporate ahars and management and s a corporate controversy n contempaton
of the Corporaton Code.18
Pror to ts amendment, Secton 5(c) of Presdenta Decree No. 902-A19 (PD 902-A) provded that ntra-
corporate dsputes fa wthn the |ursdcton of the Securtes and Exchange Commsson (SEC):
Sec. 5. In addton to the reguatory and ad|udcatve functons of the Securtes and Exchange Commsson
over corporatons, partnershps and other forms of assocatons regstered wth t as expressy granted under
exstng aws and decrees, t sha have orgna and excusve |ursdcton to hear and decde cases nvovng:
x x x
c) Controverses n the eecton or appontments of drectors, trustees, omcers or managers of such
corporatons, partnershps or assocatons.
Subsecton 5.2, Secton 5 of Repubc Act No. 8799, whch took ehect on 8 August 2000, transferred to
regona tra courts the SECs |ursdcton over a cases sted n Secton 5 of PD 902-A:
5.2. The Commssons |ursdcton over a cases enumerated under Secton 5 of Presdenta Decree No. 902-
A s hereby transferred to the Courts of genera |ursdcton or the approprate Regona Tra Court. x x x
It s a setted rue that |ursdcton over the sub|ect matter s conferred by aw.20 The determnaton of the
rghts of a drector and corporate omcer dsmssed from hs empoyment as we as the correspondng abty
of a corporaton, f any, s an ntra-corporate dspute sub|ect to the |ursdcton of the reguar courts. Thus, the
appeate court correcty rued that t s not the NLRC but the reguar courts whch have |ursdcton over the
present case.
SANTIAGO vs. CF S+AR CRE8 3ANAGE3ENT' INC
FACTS: Pettoner had been workng as a seafarer for Smth Be Management, Inc. (respondent) for about
ve (5) years. He sgned a new contract of empoyment wth the duraton of 9 months on Feb 3 1998 and he
was to be depoyed 10 days after. Ths contract was approved by POEA. A week before the date of departure,
the respondent receved a phone ca from pettoners wfe and some unknown caers askng not to send the
atter oh because f aowed, he w |ump shp n Canada.
Because of the sad nformaton, pettoner was tod that he woud not be eavng for Canada anymore. Ths
prompted hm to e a compant for ega dsmssa aganst the respondent. The LA hed the atter
responsbe. On appea, the NLRC rued that there s no empoyer-empoyee reatonshp between pettoner
and respondent, hence, the cams shoud be dsmssed. The CA agreed wth the NLRCs ndng that snce
pettoner had not departed from the Port of Mana, no empoyer-empoyee reatonshp between the partes
arose and any cam for damages aganst the so-caed empoyer coud have no eg to stand on.
ISS*E: When does the empoyer-empoyee reatonshp nvovng seafarers commence?
R*LING: A dstncton must be made between the perfecton of the empoyment contract and the
commencement of the empoyer-empoyee reatonshp. The perfecton of the contract, whch n ths case
concded wth the date of executon thereof, occurred when pettoner and respondent agreed on the ob|ect
and the cause, as we as the rest of the terms and condtons theren. The commencement of the empoyer-
empoyee reatonshp, as earer dscussed, woud have taken pace had pettoner been actuay depoyed
from the pont of hre. Thus, even before the start of any empoyer-empoyee reatonshp, contemporaneous
wth the perfecton of the empoyment contract was the brth of certan rghts and obgatons, the breach of
whch may gve rse to a cause of acton aganst the errng party. Thus, f the reverse had happened, that s
the seafarer faed or refused to be depoyed as agreed upon, he woud be abe for damages.
Respondents act of preventng pettoner from departng the port of Mana and boardng "MSV Seaspread"
consttutes a breach of contract, gvng rse to pettoners cause of acton. Respondent unateray and
unreasonaby reneged on ts obgaton to depoy pettoner and must therefore answer for the actua
damages he suhered.
DFA vs. NLRC
Facts: On 27 |anuary 1993, prvate respondent Magnay ed an ega dsmssa case aganst ADB. Two
summonses were served, one sent drecty to the ADB and the other through the Department of Foregn
Ahars ("DFA"). ADB and the DFA noted respondent Labor Arbter that the ADB, as we as ts Presdent and
Omcers, were covered by an mmunty from ega process except for borrowngs, guarantes or the sae of
securtes pursuant to Artce 50(1) and Artce 55 of the Agreement Estabshng the Asan Deveopment Bank
(the "Charter") n reaton to Secton 5 and Secton 44 of the Agreement Between The Bank And The
Government Of The Phppnes Regardng The Bank's Headquarters (the "Headquarters Agreement"). The
Labor Arbter took cognzance of the compant on the mpresson that the ADB had waved ts dpomatc
mmunty from sut and, n tme, rendered a decson n favour Magnay. The ADB dd not appea the decson.
Instead, on 03 November 1993, the DFA referred the matter to the NLRC; n ts referra, the DFA sought a
"forma vacaton of the vod |udgment." When DFA faed to obtan a favorabe decson from the NLRC, t ed
a petton for certorar.
Issues: 1. Whether or not ADB s mmune from sut
2. Whether or not by enterng nto servce contracts wth dherent prvate companes, ADB has
descended to the eve of an ordnary party to a commerca transacton gvng rse to a waver of ts
mmunty from sut
3. Whether or not the DFA has the ega standng to e the present petton
4. Whether or not the extraordnary remedy of certorar s proper n ths case
+el0:
". Under the Charter and Headquarters Agreement, the ADB en|oys mmunty from ega process of every
form, except n the speced cases of borrowng and guarantee operatons, as we as the purchase, sae and
underwrtng of securtes. The Banks omcers, on ther part, en|oy mmunty n respect of a acts performed
by them n ther omca capacty. The Charter and the Headquarters Agreement grantng these mmuntes
and prveges are treaty covenants and commtments vountary assumed by the Phppne government
whch must be respected. Beng an nternatona organzaton that has been extended a dpomatc status, the
ADB s ndependent of the muncpa aw. "One of the basc mmuntes of an nternatona organzaton s
mmunty from oca |ursdcton, .e., that t s mmune from the ega wrts and processes ssued by the
trbunas of the country where t s found. The obvous reason for ths s that the sub|ecton of such an
organzaton to the authorty of the oca courts woud ahord a convenent medum thru whch the host
government may nterfere n ther operatons or even nuence or contro ts poces and decsons of the
organzaton; besdes, such sub|ecton to oca |ursdcton woud mpar the capacty of such body to
dscharge ts responsbtes mpartay on behaf of ts member-states."
(. No. The ADB ddn't descend to the eve of an ordnary party to a commerca transacton, whch shoud
have consttuted a waver of ts mmunty from sut, by enterng nto servce contracts wth dherent prvate
companes. "There are two conctng concepts of soveregn mmunty, each wdey hed and rmy
estabshed. Accordng to the cassca or absoute theory, a soveregn cannot, wthout ts consent, be made a
respondent n the Courts of another soveregn. Accordng to the newer or restrctve theory, the mmunty of
the soveregn s recognzed ony wth regard to pubc acts or acts |ure mper of a state, but not wth regard
to prvate act or acts |ure gestons. "Certany, the mere enterng nto a contract by a foregn state wth a
prvate party cannot be the utmate test. Such an act can ony be the start of the nqury. The ogca
queston s whether the foregn state s engaged n the actvty n the reguar course of busness. If the
foregn state s not engaged reguary n a busness or trade, the partcuar act or transacton must then be
tested by ts nature. If the act s n pursut of a soveregn actvty, or an ncdent thereof, then t s an act |ure
mper, especay when t s not undertaken for gan or prot."
The servce contracts referred to by prvate respondent have not been ntended by the ADB for prot or gan
but are omca acts over whch a waver of mmunty woud not attach.
#. Yes. The DFA's functon ncudes, among ts other mandates, the determnaton of persons and nsttutons
covered by dpomatc mmuntes, a determnaton whch, when chaenged, enttes t to seek reef from the
court so as not to serousy mpar the conduct of the country's foregn reatons. The DFA must be aowed to
pead ts case whenever necessary or advsabe to enabe t to hep keep the credbty of the Phppne
government before the nternatona communty. When nternatona agreements are concuded, the partes
thereto are deemed to have kewse accepted the responsbty of seeng to t that ther agreements are duy
regarded. In our country, ths task fas prncpay on the DFA as beng the hghest executve department
wth the competence and authorty to so act n ths aspect of the nternatona arena. In Hoy See vs. Hon.
Rosaro, |r., ths Court has expaned the matter n good deta; vz: "In Pubc Internatona Law, when a state
or nternatona agency wshes to pead soveregn or dpomatc mmunty n a foregn court, t requests the
Foregn Omce of the state where t s sued to convey to the court that sad defendant s entted to mmunty.
"In the Unted States, the procedure foowed s the process of 'suggeston,' where the foregn state or the
nternatona organzaton sued n an Amercan court requests the Secretary of State to make a determnaton
as to whether t s entted to mmunty. If the Secretary of State nds that the defendant s mmune from
sut, he, n turn, asks the Attorney Genera to submt to the court a 'suggeston' that the defendant s entted
to mmunty.
"In the Phppnes, the practce s for the foregn government or the nternatona organzaton to rst secure
an executve endorsement of ts cam of soveregn or dpomatc mmunty. But how the Phppne Foregn
Omce conveys ts endorsement to the courts vares. In Internatona Cathoc Mgraton Commsson vs.
Cae|a, 190 SCRA 130 (1990), the Secretary of Foregn Ahars |ust sent a etter drecty to the Secretary of
Labor and Empoyment, nformng the atter that the respondent-empoyer coud not be sued because t
en|oyed dpomatc mmunty. In Word Heath Organzaton vs. Aquno, 48 SCRA 242 (1972), the Secretary of
Foregn Ahars sent the tra court a teegram to that ehect. In Baer vs. Tzon, 57 SCRA 1 (1974), the U.S.
Embassy asked the Secretary of Foregn Ahars to request the Soctor Genera to make, n behaf of the
Commander of the Unted States Nava Base at Oongapo Cty, Zambaes, a 'suggeston' to respondent |udge.
The Soctor Genera emboded the 'suggeston' n a manfestaton and memorandum as amcus curae. "In
the case at bench, the Department of Foregn Ahars, through the Omce of Lega Ahars moved wth ths
Court to be aowed to ntervene on the sde of pettoner. The Court aowed the sad Department to e ts
memorandum n support of pettoner's cam of soveregn mmunty.
"In some cases, the defense of soveregn mmunty was submtted drecty to the oca courts by the
respondents through ther prvate counses. In cases where the foregn states bypass the Foregn Omce, the
courts can nqure nto the facts and make ther own determnaton as to the nature of the acts and
transactons nvoved."
). Yes. Reatve to the proprety of the extraordnary remedy of certorar, the Court has, under speca
crcumstances, so aowed and entertaned such a petton when (a) the questoned order or decson s ssued
n excess of or wthout |ursdcton, or (b) where the order or decson s a patent nuty, whch, very, are the
crcumstances that can be sad to obtan n the present case. When an ad|udcator s devod of |ursdcton on
a matter before hm, hs acton that assumes otherwse woud be a cear nuty.
Petton for certorar s GRANTED, and the decson of the Labor Arbter, dated 31 August 1993 s VACATED for
beng NULL AND VOID.
4A8AC+I vs. DEL :*ERO
FACTS: Prvate respondent Domne De Ouero charged A/| Raymundo Pawnshop, Inc.,Vrgo Kawach and
pettoner |uus Kawach wth ega dsmssa, non-executon of a contract of empoyment, voaton of the
mnmum wage aw, and non-payment of overtme pay. The compant was ed before NLRC. The compant
essentay aeged that Vrgo Kawach hred prvate respondent as a cerk of the pawnshop and that on
certan occasons, she worked beyondthe reguar workng hours but was not pad the correspondng overtme
pay. The compant aso narrated an ncdent on 10 August 2002, wheren pettoner |uus Kawach scoded
prvate respondent n front of many peope about the way she treated the customers of the pawnshop and
afterwards termnated prvate respondents empoyment wthout ahordng her due process. On 7 November
2002, prvate respondent Domne De Ouero ed an acton for damages aganst pettoners |uus Kawach
and Gaye Kawach before the MeTC of Ouezon Cty. The compant for damages speccay sought the
recovery of mora damages, exempary damages and attorneys fees. Pettoners moved for the dsmssa of
the compant n the MeTC on the grounds of ack of |ursdcton and forum-shoppng. Pettoners argue that
the NLRC has |ursdcton over the acton for damages because the aeged n|ury s work-reated. They aso
contend that prvate respondent shoud not be aowed to spt her causes of acton by ng the acton for
damages separatey from the abor case. The RTC hed that prvate respondents acton for damages was
based on the aeged tortous acts commtted by her empoyers and dd not seek any reef under the Labor
Code.
ISS*E: Whether or not the RTC has |ursdcton n ths nstant acton
+ELD: NO, the RTC has no |ursdcton n the nstant case. Artce 217(a) of the Labor Code, as amended,
ceary bestows upon the Labor Arbter orgna and excusve |ursdcton over cams for damages arsng
from empoyer-empoyee reatons -n other words, the Labor Arbter has |ursdcton to award not ony the
reefs provded by abor aws, but aso damages governed by the Cv Code. Under the reasonabe causa
connecton rue, f there s a reasonabe causa connecton between the cam asserted and the empoyer-
empoyee reatons, then the case s wthn the |ursdcton of our abor courts. In the absence of such nexus,
t s the reguar courts that have |ursdcton.