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NewLex: Laws-15th Congress

June 2012 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on July 20, 2012 by Leslie C. Dy Posted in Labor Law
Tagged abandonment, appeal, attorney's fees, damages,dismissal, due
process, independent contractor, jurisdiction, loss of trust and
confidence, NLRC, reinstatement, retirement,retrenchment

Here are select June 2012 rulings of the Supreme Court of the
Philippine on labor law and procedure:
Appeal; issue of employer-employee relationship raised for the first
time on appeal. 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 alleged absence of employer-employee relationship
cannot be raised for the first time on appeal. The resolution of this
issue requires the admission and calibration of evidence and the LA
and the NLRC did not pass upon it in their decisions. Petitioner is
bound by its submissions that respondent is its employee and it
should not be permitted to change its theory. Such change of theory
cannot be tolerated on appeal, not on account of the strict
application of procedural rules, but as a matter of fairness. Duty

Free Philippines Services, Inc. vs. Manolito Q. Tria. G.R. No.

174809. June 27, 2012.
Dismissal; abandonment. Abandonment cannot be inferred from the
actuations of respondent. When he discovered that his time card
was off the rack, he immediately inquired from his supervisor. He
later sought the assistance of his counsel, who wrote a letter
addressed to Polyfoam requesting that he be re-admitted to work.
When said request was not acted upon, he filed the instant illegal
dismissal case. These circumstances clearly negate the intention to
abandon his work. Polyfoam-RGC International, Corporation and
Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June
13, 2012.
Dismissal; due process. To meet the requirements of due process in
the dismissal of an employee, an employer must furnish the worker
with two written notices: (1) a written notice specifying the grounds
for termination and giving to said employee a reasonable
opportunity to explain his side and (2) another written notice
indicating that, upon due consideration of all circumstances,
grounds have been established to justify the employers decision to
dismiss the employee. The law does not require that an intention to
terminate ones employment should be included in the first notice. It
is enough that employees are properly apprised of the charges
brought against them so they can properly prepare their defenses. It
is only during the second notice that the intention to terminate
ones employment should be explicitly stated.
The guiding principles in connection with the hearing requirement in
dismissal cases are the following:
1. Ample opportunity to be heard means any meaningful
opportunity (verbal or written) given to the employee to
answer the charges against him and submit evidence in
support of his defense, whether in a hearing, conference or
some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when
requested by the employee in writing or substantial evidentiary
disputes exist or a company rule or practice requires it, or
when similar circumstances justify it.
3. The ample opportunity to be heard standard in the Labor
Code prevails over the hearing or conference requirement in
the implementing rules and regulations.

The existence of an actual, formal trial-type hearing, although

preferred, is not absolutely necessary to satisfy the employees right
to be heard. Esguerra was able to present her defenses; and only
upon proper consideration of it did Valle Verde send the second
memorandum terminating her employment. Since Valle Verde
complied with the two-notice requirement, no procedural defect
exists in Esguerras termination. Dolores T. Esguerra vs. Valle Verde
Country Club, Inc. and Ernesto Villaluna. G.R. No. 173012, June 13,
2012.
Dismissal; loss of trust and confidence. There are two (2) classes of
positions of trust. The first class consists of managerial employees,
or those vested with the power to lay down management policies;
and the second class consists of cashiers, auditors, property
custodians or those who, in the normal and routine exercise of their
functions, regularly handle significant amounts of money or
property. Esguerra held the position of Cost Control Supervisor and
had the duty to remit to the accounting department the cash sales
proceeds from every transaction she was assigned to. This is not a
routine task that a regular employee may perform; it is related to
the handling of business expenditures or finances. For this reason,
Esguerra occupies a position of trust and confidence a position
enumerated in the second class of positions of trust. Any breach of
the trust imposed upon her can be a valid cause for dismissal.
Loss of confidence as a just cause for termination of employment
can be invoked when an employee holds a position of responsibility,
trust and confidence. In order to constitute a just cause for
dismissal, the act complained of must be related to the performance
of the duties of the dismissed employee and must show that he or
she is unfit to continue working for the employer for violation of the
trust reposed in him or her. It was Esguerras responsibility to
account for the cash proceeds; in case of problems, she should have
promptly reported it, regardless of who was at fault. Instead, she
settled the unaccounted amount only after the accounting
department informed her about the discrepancy, almost one month
following the incident. Esguerras failure to make the proper report
reflects her irresponsibility in the custody of cash for which she was
accountable. Dolores T. Esguerra vs. Valle Verde Country Club, Inc.
and Ernesto Villaluna. G.R. No. 173012, June 13, 2012.
Dismissal; serious misconduct and loss of trust and confidence.
Dejan is liable for violation of Section 7, paragraphs 4 and 11 of the
Company Code of Employee Discipline, constituting serious

misconduct, fraud and willful breach of trust of the employer, which

are just causes for termination of employment under the law. There
is no dispute about the release of the meter sockets. Also, the
persons involved were clearly identified Dejan; Gozarin, a private
electrician who received the meter sockets; Reyes, the owner of the
jeep where the meter sockets were loaded by Gozarin; Duenas, a
Meralco field representative; and Depante, another private
electrician who purportedly owned the meter sockets. The release
by Dejan of the meter sockets to Gozarin without the written
authority or SPA from the customer or customers who applied for
electric connection (as a matter of company policy) served as a key
element in proving the private contracting activity for electric
service connection being undertaken by Dejan and Duenas.
Moreover, it was bad enough that Dejan failed to ask for a written
authorization from the customers for the release of the meter
sockets as required by company policy, but the elaborate scheme
pursued by Dejan in concert with Duenas, were all undertaken to
defraud Meralco. Hence, Meralco had valid reasons for losing its
trust and confidence in Dejan. He is no ordinary employee. As
branch representative, he was principally charged with the function
and responsibility to accept payment of fees required for the
installation of electric service and facilitate issuance of meter
sockets. The duties of his position require him to always act with the
highest degree of honesty, integrity and sincerity, as the company
puts it. In light of his fraudulent act, Meralco, an enterprise imbued
with public interest, cannot be compelled to continue Dejans
employment, as it would be inimical to its interest. Manila Electric
Company (Meralco) vs. Herminigildo H. Dejan. G.R. No. 194106, June
18, 2012.
Employee benefit; attorneys fees. Lazaro must establish a legal
basis either by law, contract or other sources of obligations to
merit the receipt of the additional 10% attorneys fees collected in
the various foreclosure procedures he settled as the banks legal
officer. Lazaro has not produced any contract or provision of law that
would warrant the payment of the additional attorneys fees. He is
only entitled to his salaries as the banks legal officer, because the
services he rendered in the foreclosure proceedings were part of his
official tasks. Banco Filipino Savings and Mortgage Bank vs.
Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings
and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June
27, 2012.

Employee benefit; retirement pay. Banco Filipino maintains that the

seven-year period when it was under liquidation should not be
credited in computing Lazaros retirement pay because, during that
period, the bank was considered closed. The Supreme Court held
that banks under liquidation retain their legal personality. In fact,
even if they are prohibited from conducting regular banking
business, it is necessary that debts owed to them be collected.
Lazaro performed the duty of foreclosing debts in favor of Banco
Filipino. It cannot rightfully disclaim Lazaros work that benefitted it.
As found in the Implementing Rules of the Retirement Pay Law and
in jurisprudence, only in the absence of an applicable retirement
agreement shall Article 287 of the Labor Code apply. There is
aproviso however, that an employees retirement benefits under any
agreement shall not be less than those provided in the said article.
The Rules of the Banco Filipino Retirement Fund do not provide for
benefits lower than those in the Labor Code. In fact, the bank offers
a retirement pay equivalent to one andone-half month salary for
every year of service, a rate over and above the one-half month
salary threshold provided by the law. Although the Rules of the
Banco Filipino Retirement Fund do not grant a rounding off scheme,
they nonetheless provide that prorated credit shall be given for
incomplete years, regardless of the fraction of months in the
retirees length of service. Notwithstanding the lack of a rounding-up
provision, still, the higher retirement pay, together with the prorated
crediting, cannot be deemed to be less favorable than that provided
for by the law. Ultimately, the more important threshold to be
considered in construing whether the retirement agreement
provides less benefits, compared to those provided by the
Retirement Pay Law, is that the retirement benefits in the said
agreement should at least amount to one-half of the employees
monthly salary. Banco Filipino Savings and Mortgage Bank vs.
Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings
and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June
27, 2012
Employee dismissal. When the floating status of employees lasts for
more than six (6) months, they may be considered to have been
illegally dismissed from the service. Floating status means an
indefinite period of time when one does not receive any salary or
financial benefit provided by law. In this case, petitioners were
actually reassigned to new posts, albeit in a different location from
where they resided. Thus, there can be no floating status or

indefinite period to speak of. Instead, petitioners were the ones who
refused to report for work in their new assignment.
In cases involving security guards, a relief and transfer order in itself
does not sever the employment relationship between the security
guards and their agency. Employees have the right to security of
tenure, but this does not give them such a vested right to their
positions as would deprive the company of its prerogative to change
their assignment or transfer them where their services, as security
guards, will be most beneficial to the client. An employer has the
right to transfer or assign its employees from one office or area of
operation to another in pursuit of its legitimate business interest,
provided there is no demotion in rank or diminution of salary,
benefits, and other privileges; and the transfer is not motivated by
discrimination or bad faith, or effected as a form of punishment or
demotion without sufficient cause. While petitioners may claim that
their transfer to Manila will cause added expenses and
inconvenience, absent any showing of bad faith or ill motive on the
part of the employer, the transfer remains valid. Salvador O. Mojar,
et al. vs. Agro Commercial Security Service Agency, et al. G.R. No.
187188, June 27, 2012.
Employee dismissal; burden of proof. Under the law, the burden of
proving that the termination of employment was for a valid or
authorized cause rests on the employer. Failure to discharge this
burden would result in an unjust or illegal dismissal. The companys
evidence on the respondents alleged infractions do not
substantially show that they violated company rules and regulations
to warrant their dismissal. It is obvious that the company
overstepped the bounds of its management prerogative in the
dismissal of Mauricio and Camacho. It lost sight of the principle that
management prerogative must be exercised in good faith and with
due regard to the rights of the workers in the spirit of fairness and
with justice in mind. Philbag Industrial Manufacturing Corp. vs.
Philbag Workers Union-Lakas at Gabay ng Manggagawang
Nagkakaisa. G.R. No. 182486, June 20, 2012.
Employee dismissal; due process. Retrenchment is subject to faithful
compliance with the substantive and procedural requirements laid
down by law and jurisprudence. For a valid retrenchment, the
following elements must be present:
1. That retrenchment is reasonably necessary and likely to
prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, actual and real, or

if only expected, are reasonably imminent as perceived

objectively and in good faith by the employer;
2. That the employer served written notice both to the employees
and to the Department of Labor and Employment at least one
month prior to the intended date of retrenchment;
3. That the employer pays the retrenched employees separation
pay equivalent to one (1) month pay or at least month pay
for every year of service, whichever is higher;
4. That the employer exercises its prerogative to retrench
employees in good faith for the advancement of its interest
and not to defeat or circumvent the employees right to
security of tenure; and
5. That the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for
certain workers.
All these elements were successfully proven by petitioner. First, the
huge losses suffered by the Club for the past two years had forced
petitioner to close it down to avert further losses which would
eventually affect the operations of petitioner. Second, all 45
employees working in the Club were served with notice of
termination. The corresponding notice was likewise served to the
DOLE one month prior to retrenchment. Third, the employees were
offered separation pay, most of whom have accepted and opted not
to join in this complaint. Fourth, the cessation of or withdrawal from
business operations was bona fide in character and not impelled by
a motive to defeat or circumvent the tenurial rights of employees.
Waterfront Cebu City Hotel vs. Ma. Melanie P. Jimenez, et al. G.R. No.
174214, June 13, 2012.
Employee dismissal; due process. The following are the guiding
principles in connection with the hearing requirement in dismissal
cases:
1. Ample opportunity to be heard means any meaningful
opportunity (verbal or written) given to the employee to
answer the charges against him and submit evidence in
support of his defense, whether in a hearing, conference or
some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when
requested by the employee in writing or substantial evidentiary

disputes exist or a company rule or practice requires it, or

when similar circumstances justify it.
3. The ample opportunity to be heard standard in the Labor
Code prevails over the hearing or conference requirement in
the implementing rules and regulations.
Given that the petitioners expressly requested a conference or a
convening of a grievance committee, such formal hearing became
mandatory. After PGAI failed to affirmatively respond to such
request, it follows that the hearing requirement was not complied
with and, therefore, Vallota was denied his right to procedural due
process. Prudential Guarantee and Assurance Employee Labor Union
and Sandy T. Vallota vs. NLRC, Prudential Guarantee and Assurance
Inc., and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; just cause. 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 as a cause for
termination of employment. A cause analogous to serious
misconduct is a voluntary and/or willful act or omission attesting to
an employees 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. Previous
infractions may be cited as justification for dismissing an employee
only if they are related to the subsequent offense. However, it must
be noted that such a discussion was unnecessary since the theft,
taken in isolation from Fermins other violations, was in itself a valid
cause for the termination of his employment. Cosmos Bottling Corp.
vs. Wilson Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and
Cecilia Bautista. G.R. No. 193676 & G.R. No. 194303. June 20, 2012.
Employee dismissal; loss of trust and confidence. The Labor Code
recognizes that an employer, for just cause, may validly terminate
the services of an employee for serious misconduct or willful
disobedience of the lawful orders of the employer or representative
in connection with the employees work. Fraud or willful breach by
the employee of the trust reposed by the employer in the former, or
simply loss of confidence, also justifies an employees dismissal
from employment. Willful breach of trust or loss of confidence
requires that the employee (1) occupied a position of trust or (2)
was routinely charged with the care of the employers property. To
warrant dismissal based on loss of confidence, there must be some
basis for the loss of trust or the employer must have reasonable
grounds to believe that the employee is responsible for the

misconduct that renders the latter unworthy of the trust and

confidence demanded by his or her position. For more than a month,
the petitioners did not even inform PLDT of the whereabouts of the
plant materials. Instead, he stocked these materials at his residence
even if they were needed in the daily operations of the company. In
keeping with the honesty and integrity demanded by his position, he
should have turned over these materials to the plants warehouse.
Thus, PLDT reasonably suspected petitioner of stealing the
companys property. At that juncture, the employer may already
dismiss the employee since it had reasonable grounds to believe or
to entertain the moral conviction that the latter was responsible for
the misconduct, and the nature of his participation therein rendered
him absolutely unworthy of the trust and confidence demanded by
his position. Romeo E. Paulino vs. NLRC, Philippine Long Distance
Co., Inc. G.R. No. 176184, June 13, 2012.
Employee dismissal; loss of trust and confidence. Loss of confidence
as a just cause for dismissal was never intended to provide
employers with a blank check for terminating their employees. It
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.
The first requisite for dismissal on the ground of loss of trust and
confidence is that the employee concerned must be one holding a
position of trust and confidence. The second requisite is that there
must be an act that would justify the loss of trust and confidence.
Vallotas position as Junior Programmer is analogous to the second
class of positions of trust and confidence. Though he did not
physically handle money or property, he became privy to
confidential data or information by the nature of his functions. At a
time when the most sensitive of information is found not printed on
paper but stored on hard drives and servers, an employee who
handles or has access to data in electronic form naturally becomes
the unwilling recipient of confidential information. There was no

other evidence presented to prove fraud in the manner of securing

or obtaining the files found in Vallotas computer. The presence of
the files would merely merit the development of some suspicion on
the part of the employer, but should not amount to a loss of trust
and confidence such as to justify the termination of his employment.
Such act is not of the same class, degree or gravity as the acts that
have been held to be of such character. Prudential Guarantee and
Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC,
Prudential Guarantee and Assurance Inc., and/or Jocelyn
Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; loss of trust and confidence. To validly dismiss
an employee on the ground of loss of trust and confidence under
Article 282 (c) of the Labor Code of the Philippines, the following
guidelines must be observed: 1) loss of confidence should not be
simulated; 2) it should not be used as subterfuge for causes which
are improper, illegal or unjustified; 3) it may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary; and
4) it must be genuine, not a mere afterthought to justify earlier
action taken in bad faith. More importantly, it must be based on a
willful breach of trust and founded on clearly established facts. The
testimony of Lobitaa constitutes substantial evidence to prove that
respondent, as the then Power Plant Manager, accepted
commissions and/or kickbacks from suppliers, which is a clear
violation of Section 2.04 of petitioners Company Rules and
Regulations. Jurisprudence consistently holds that for managerial
employees, the mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for
his dismissal. Respondents termination was for a just and valid
cause. Apo Cement Corporation Vs. Zaldy E. Baptisma. G.R. No.
176671. June 20, 2012.
Employee dismissal; order of reinstatement. Article 223 of the Labor
Code provides that in case there is an order of reinstatement, the
employer must admit the dismissed employee under the same
terms and conditions, or merely reinstate the employee in the
payroll. The order shall be immediately executory. Thus, 3rd Alert
cannot escape liability by simply invoking that Navia did not report
for work. The law states that the employer must still reinstate the
employee in the payroll. Where reinstatement is no longer viable as
an option, separation pay equivalent to one (1) month salary for
every year of service could be awarded as an alternative. 3rd Alert

Security and Detective Services, Inc. vs. Romualdo Navia. G.R. No.
200653, June 13, 2012.
Employee dismissal; retrenchment. Retrenchment is the termination
of employment initiated by the employer through no fault of and
without prejudice to the employees. It is resorted to during periods
of business recession, industrial depression, or seasonal fluctuations
or during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery or of
automation. It is an act of the employer of dismissing employees
because of losses in the operation of a business, lack of work, and
considerable reduction on the volume of his business. In this case,
the closure of a department or division of a company constitutes
retrenchment by, and not closure of, the company itself. Petitioner
has not totally ceased its business operations. It merely ceased
operations of a department. Waterfront Cebu City Hotel vs. Ma.
Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; willful breach of trust. The loss of trust and
confidence must be based on willful breach of the trust reposed in
the employee by his employer. Such 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. Moreover, it must be based on
substantial evidence and not on the employers whims or caprices or
suspicions otherwise, the employee would eternally remain at the
mercy of the employer. The Supreme Court has laid down the
guidelines for the application of the loss of trust and confidence
doctrine: (1) loss of confidence should not be simulated; (2) it should
not be used as a subterfuge for causes which are improper, illegal or
unjustified; (3) it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and (4) it must be genuine,
not a mere afterthought, to justify an earlier action taken in bad
faith. Villanueva worked for Meralco as a Branch Representative
whose tasks included the issuance of Contracts for Electric Service
after receipt of the amount due for service connection from
customers. Obviously, he was entrusted not only with the
responsibility of handling company funds but also to cater to
customers who intended to avail of Meralcos services. This is
nothing but an indication that trust and confidence were reposed in
him by the company, although his position was not strictly
managerial by nature. Meralcos loss of trust and confidence arising

out of Villanuevas act of misappropriation of company funds in the

course of processing customer applications has been proven by
substantial evidence, thus, justified. Verily, the issuance of
additional receipts for excessive payments exacted from customers
is a willful breach of the trust reposed in him by the
company.Vicente Villanueva, Jr. vs.. The National Labor Relations
Commission, Third Division, Manila Electric Company, Manuel Lopez,
Chairman and CEO, and Francisco Collantes, Manager. G.R. No.
176893, June 13, 2012.
Employee suit; damages. To obtain moral damages, the claimant
must prove the existence of bad faith by clear and convincing
evidence, for the law always presumes good faith. It is not even
enough that one merely suffered sleepless nights, mental anguish
and serious anxiety as the result of the actuations of the other party.
In this case, Lazaro did not state any moral anguish that he suffered.
Neither did he substantiate his imputations of malice to Banco
Filipino. He only made a sweeping declaration, without concrete
proof, that the bank in refusing his claim maliciously damaged his
property rights and interest. Accordingly, neither moral damages nor
exemplary damage can be awarded to him.
With respect to attorneys fees, an award is proper only if that
person was forced to litigate and incur expenses to protect ones
rights and interest by reason of an unjustified act or omission of the
party for whom it is sought. Banco Filipino had a prima facie
legitimate defense that, because it underwent liquidation
proceedings, it cannot be compelled to credit that period in the
computation of the employees the retirement pay and profit shares.
Considering that Banco Filipinos refusal cannot be accurately
characterized as unjustified, Lazaro cannot claim an award of
attorneys fees. Banco Filipino Savings and Mortgage Bank vs.
Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings
and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June
27, 2012.
Independent contractor; tests. 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 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.
The test 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.
Gramaje is not an independent job contractor, but a labor-only
contractor. First, Gramaje has no substantial capital or investment.
The presumption is that a contractor is a labor-only contractor
unless he overcomes the burden of proving that it has substantial

capital, investment, tools, and the like. Neither Gramaje nor

Polyfoam presented evidence showing Gramajes ownership of the
equipment and machineries used in the performance of the alleged
contracted job.
Second, Gramaje 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, Polyfoam, its apparent role having been merely to
recruit persons to work for Polyfoam. It is undisputed that
respondent had performed his task of packing Polyfoams foam
products in Polyfoams premises. As to the recruitment of
respondent, petitioners were able to establish only that respondents
application was referred to Gramaje, but that is all. Prior to his
termination, respondent had been performing the same job in
Polyfoams business for almost six (6) years. He was even furnished
a copy of Polyfoams Mga Alituntunin at Karampatang
Parusa, which embodied Polyfoams rules on attendance, the
manner of performing the employees duties, ethical standards,
cleanliness, health, safety, peace and order. These rules carried
with them the corresponding penalties in case of violation. While it is
true that petitioners submitted the Affidavit of Polyfoams
supervisor, claiming that the latter did not exercise supervision over
respondent because the latter was not Polyfoams but Gramajes
employee, said Affidavit is insufficient to prove such claim.
Petitioners should have presented the person who they claim to
have exercised supervision over respondent and their alleged other
employees assigned to Polyfoam. It was never established that
Gramaje took entire charge, control and supervision of the work and
service agreed upon. Polyfoam-RGC International, Corporation and
Precilla A. Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June
13, 2012.
NLRC; jurisdiction over interpretation or implementation of the CBA.
R.A. 8042 is a special law governing overseas Filipino workers.
However, there is no specific provision thereunder which provides
for jurisdiction over disputes or unresolved grievances regarding the
interpretation or implementation of a CBA. Section 10 of R.A. 8042
simply speaks, in general, of claims arising out of an 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. On the other hand,

Articles 217(c) and 261 of the Labor Code are very specific in stating
that voluntary arbitrators have jurisdiction over cases arising from
the interpretation or implementation of collective bargaining
agreements. In the present case, the basic issue raised by Merridy
Jane in her complaint filed with the NLRC is: which provision of the
subject CBA applies insofar as death benefits due to the heirs of
Nelson are concerned. This issue clearly involves the interpretation
or implementation of the said CBA. Thus, the specific or special
provisions of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the
CBA entered into by and between respondent GCI and AMOSUP
provides that the Company and the Union agree that in case of
dispute or conflict in the interpretation or application of any of the
provisions of this Agreement, or enforcement of Company policies,
the same shall be settled through negotiation, conciliation or
voluntary arbitration. The provisions of the CBA are in consonance
with Rule VII, Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas
Filipinos Act of 1995, as amended by Republic Act No. 10022, which
states that for OFWs with collective bargaining agreements, the
case shall be submitted for voluntary arbitration in accordance with
Articles 261 and 262 of the Labor Code. With respect to disputes
involving claims of Filipino seafarers wherein the parties are covered
by a collective bargaining agreement, the dispute or claim should be
submitted to the jurisdiction of a voluntary arbitrator or panel of
arbitrators. It is only in the absence of a collective bargaining
agreement that parties may opt to submit the dispute to either the
NLRC or to voluntary arbitration. Estate of Nelson R. Dulay,
represented by his wife Meddiry Jane P. Dulay vs. Aboitiz Jebsen
Maritime, Inc. and General Charterers, Inc. G.R. No. 172642, June 13,
2012.
Service; proof of service. Petitioners allege that no affidavit of
service was attached to the CA Petition. However, the Supreme
Court noted that in the CA Resolution, the appellate court stated
that their records revealed that Atty. Espinas, petitioners counsel of
record at the time, was duly served a copy of the following: CA
Resolution granting respondents Motion for Extension of Time to file
the CA Petition; CA Resolution requiring petitioners to file their
Comment on the CA Petition; and CA Resolution, submitting the case
for resolution, as no comment was filed. Such service to Atty.
Espinas was valid despite the fact he was already deceased at the

time. If a party to a case has appeared by counsel, service of

pleadings and judgments shall be made upon his counsel or one of
them, unless service upon the party is specifically ordered by the
court. It is not the duty of the courts to inquire, during the progress
of a case, whether the law firm or partnership representing one of
the litigants continues to exist lawfully, whether the partners are still
alive, or whether its associates are still connected with the
firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service
Agency, et al. G.R. No. 187188, June 27, 2012.