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1. Royal Plant Workers Union v. Coca Cola Bottlers beyond eight (8) hours. However, the bottling operators are
G.R. No. 198783 April 15, 2013
ROYAL PLANT WORKERS UNION, Petitioner,
vs.
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT,
Respondent.
DECISION
MENDOZA, J.:
Assailed in this petition is the May 24, 2011 Decision1 and the
September 2, 2011 Resolution2 of the Court of Appeals (CA) in CA-
G.R. SP No. 05200, entitled Coca-Cola Bottlers Philippines, Inc.-Cebu
Plant v. Royal Plant Workers Union, which nullified and set aside the
June 11, 2010 Decision3 of the Voluntary Arbitration Panel (Arbitration
Committee) in a case involving the removal of chairs in the bottling plant
of Coca-Cola Bottlers Philippines, Inc. (CCBPI).
The Factual and Procedural
Antecedents
The factual and procedural antecedents have been accurately recited
in the May 24, 2011 CA decision as follows:
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic
corporation engaged in the manufacture, sale and distribution of
softdrink products. It has several bottling plants all over the country, one
of which is located in Cebu City. Under the employ of each bottling plant
are bottling operators. In the case of the plant in Cebu City, there are
20 bottling operators who work for its Bottling Line 1 while there are 12-
14 bottling operators who man its Bottling Line 2. All of them are male
and they are members of herein respondent Royal Plant Workers Union
(ROPWU).
The bottling operators work in two shifts. The first shift is from 8 a.m. to
5 p.m. and the second shift is from 5 p.m. up to the time production
operations is finished. Thus, the second shift varies and may end
compensated with overtime pay if the shift extends beyond eight (8)
hours. For Bottling Line 1, 10 bottling operators work for each shift while
6 to 7 bottling operators work for each shift for Bottling Line 2.
Each shift has rotations of work time and break time. Prior to September
2008, the rotation is this: after two and a half (2 ) hours of work, the
bottling operators are given a 30-minute break and this goes on until
the shift ends. In September 2008 and up to the present, the rotation
has changed and bottling operators are now given a 30-minute break
after one and one half (1 ) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were provided
with chairs upon their request. In 1988, the bottling operators of then
Bottling Line 1 followed suit and asked to be provided also with chairs.
Their request was likewise granted. Sometime in September 2008, the
chairs provided for the operators were removed pursuant to a national
directive of petitioner. This directive is in line with the "I Operate, I
Maintain, I Clean" program of petitioner for bottling operators, wherein
every bottling operator is given the responsibility to keep the machinery
and equipment assigned to him clean and safe. The program reinforces
the task of bottling operators to constantly move about in the
performance of their duties and responsibilities.
With this task of moving constantly to check on the machinery and
equipment assigned to him, a bottling operator does not need a chair
anymore, hence, petitioners directive to remove them. Furthermore,
CCBPI rationalized that the removal of the chairs is implemented so
that the bottling operators will avoid sleeping, thus, prevent injuries to
their persons. As bottling operators are working with machines which
consist of moving parts, it is imperative that they should not fall asleep
as to do so would expose them to hazards and injuries. In addition,
sleeping will hamper the efficient flow of operations as the bottling
operators would be unable to perform their duties competently.
The bottling operators took issue with the removal of the chairs.
Through the representation of herein respondent, they initiated the
grievance machinery of the Collective Bargaining Agreement (CBA) in
November 2008. Even after exhausting the remedies contained in the
grievance machinery, the parties were still at a deadlock with petitioner
still insisting on the removal of the chairs and respondent still against
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such measure. As such, respondent sent a Notice to Arbitrate, dated
16 July 2009, to petitioner stating its position to submit the issue on the
removal of the chairs for arbitration. Nevertheless, before submitting to
arbitration the issue, both parties availed of the conciliation/mediation
proceedings before the National Conciliation and Mediation Board
(NCMB) Regional Branch No. VII. They failed to arrive at an amicable
settlement.
Thus, the process of arbitration continued and the parties appointed the
chairperson and members of the Arbitration Committee as outlined in
the CBA. Petitioner and respondent respectively appointed as
members to the Arbitration Committee Mr. Raul A. Kapuno, Jr. and Mr.
Luis Ruiz while they both chose Atty. Alice Morada as chairperson
thereof. They then executed a Submission Agreement which was
accepted by the Arbitration Committee on 01 October 2009. As
contained in the Submission Agreement, the sole issue for arbitration
is whether the removal of chairs of the operators assigned at the
production/manufacturing line while performing their duties and
responsibilities is valid or not.
Both parties submitted their position papers and other subsequent
pleadings in amplification of their respective stands. Petitioner argued
that the removal of the chairs is valid as it is a legitimate exercise of
management prerogative, it does not violate the Labor Code and it does
not violate the CBA it contracted with respondent. On the other hand,
respondent espoused the contrary view. It contended that the bottling
operators have been performing their assigned duties satisfactorily with
the presence of the chairs; the removal of the chairs constitutes a
violation of the Occupational Health and Safety Standards, the policy
of the State to assure the right of workers to just and humane conditions
of work as stated in Article 3 of the Labor Code and the Global
Workplace Rights Policy.
Ruling of the Arbtration Committee
On June 11, 2010, the Arbitration Committee rendered a decision in
favor of the Royal Plant Workers Union (the Union) and against CCBPI,
the dispositive portion of which reads, as follows:
Wherefore, the undersigned rules in favor of ROPWU declaring that the
removal of the operators chairs is not valid. CCBPI is hereby ordered
to restore the same for the use of the operators as before their removal
in 2008.4
The Arbitration Committee ruled, among others, that the use of chairs
by the operators had been a company practice for 34 years in Bottling
Line 2, from 1974 to 2008, and 20 years in Bottling Line 1, from 1988
to 2008; that the use of the chairs by the operators constituted a
company practice favorable to the Union; that it ripened into a benefit
after it had been enjoyed by it; that any benefit being enjoyed by the
employees could not be reduced, diminished, discontinued, or
eliminated by the employer in accordance with Article 100 of the Labor
Code, which prohibited the diminution or elimination by the employer of
the employees benefit; and that jurisprudence had not laid down any
rule requiring a specific minimum number of years before a benefit
would constitute a voluntary company practice which could not be
unilaterally withdrawn by the employer.
The Arbitration Committee further stated that, although the removal of
the chairs was done in good faith, CCBPI failed to present evidence
regarding instances of sleeping while on duty. There were no specific
details as to the number of incidents of sleeping on duty, who were
involved, when these incidents happened, and what actions were
taken. There was no evidence either of any accident or injury in the
many years that the bottling operators used chairs. To the Arbitration
Committee, it was puzzling why it took 34 and 20 years for CCBPI to
be so solicitous of the bottling operators safety that it removed their
chairs so that they would not fall asleep and injure themselves.
Finally, the Arbitration Committee was of the view that, contrary to
CCBPIs position, line efficiency was the result of many factors and it
could not be attributed solely to one such as the removal of the chairs.
Not contented with the Arbitration Committees decision, CCBPI filed a
petition for review under Rule 43 before the CA.
Ruling of the CA
On May 24, 2011, the CA rendered a contrasting decision which
nullified and set aside the decision of the Arbitration Committee. The
dispositive portion of the CA decision reads:
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WHEREFORE, premises considered, the petition is hereby GRANTED
and the Decision, dated 11 June 2010, of the Arbitration Committee in
AC389-VII-09-10-2009D is NULLIFIED and SET ASIDE. A new one is
entered in its stead SUSTAINING the removal of the chairs of the
bottling operators from the manufacturing/production line.5
The CA held, among others, that the removal of the chairs from the
manufacturing/production lines by CCBPI is within the province of
management prerogatives; that it was part of its inherent right to control
and manage its enterprise effectively; and that since it was the
employers discretion to constantly develop measures or means to
optimize the efficiency of its employees and to keep its machineries and
equipment in the best of conditions, it was only appropriate that it
should be given wide latitude in exercising it.
The CA stated that CCBPI complied with the conditions of a valid
exercise of a management prerogative when it decided to remove the
chairs used by the bottling operators in the manufacturing/production
lines. The removal of the chairs was solely motivated by the best
intentions for both the Union and CCBPI, in line with the "I Operate, I
Maintain, I Clean" program for bottling operators, wherein every bottling
operator was given the responsibility to keep the machinery and
equipment assigned to him clean and safe. The program would
reinforce the task of bottling operators to constantly move about in the
performance of their duties and responsibilities. Without the chairs, the
bottling operators could efficiently supervise these machineries
operations and maintenance. It would also be beneficial for them
because the working time before the break in each rotation for each
shift was substantially reduced from two and a half hours (2 ) to one
and a half hours (1 ) before the 30-minute break. This scheme was
clearly advantageous to the bottling operators as the number of resting
periods was increased. CCBPI had the best intentions in removing the
chairs because some bottling operators had the propensity to fall
asleep while on the job and sleeping on the job ran the risk of injury
exposure and removing them reduced the risk.
The CA added that the decision of CCBPI to remove the chairs was not
done for the purpose of defeating or circumventing the rights of its
employees under the special laws, the Collective Bargaining
Agreement (CBA) or the general principles of justice and fair play. It
opined that the principles of justice and fair play were not violated
because, when the chairs were removed, there was a commensurate
reduction of the working time for each rotation in each shift. The
provision of chairs for the bottling operators was never part of the CBAs
contracted between the Union and CCBPI. The chairs were not
provided as a benefit because such matter was dependent upon the
exigencies of the work of the bottling operators. As such, CCBPI could
withdraw this provision if it was not necessary in the exigencies of the
work, if it was not contributing to the efficiency of the bottling operators
or if it would expose them to some hazards. Lastly, the CA explained
that the provision of chairs to the bottling operators cannot be covered
by Article 100 of the Labor Code on elimination or diminution of benefits
because the employees benefits referred to therein mainly involved
monetary considerations or privileges converted to their monetary
equivalent.
Disgruntled with the adverse CA decision, the Union has come to this
Court praying for its reversal on the following GROUNDS
I
THAT WITH DUE RESPECT, THE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR IN HOLDING THAT A PETITION
FOR REVIEW UNDER RULE 43 OF THE RULES OF COURT IS THE
PROPER REMEDY OF CHALLENGING BEFORE SAID COURT THE
DECISION OF THE VOLUNTARY ARBITRATOR OR PANEL OF
VOLUNTARY ARBITRATORS UNDER THE LABOR CODE.
II
THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY
ABUSED ITS DISCRETION IN NULLIFYING AND SETTING ASIDE
THE DECISION OF THE PANEL OF VOLUNTARY ARBITRATORS
WHICH DECLARED AS NOT VALID THE REMOVAL OF THE CHAIRS
OF THE OPERATORS IN THE MANUFACTURING AND/OR
PRODUCTION LINE.
In advocacy of its positions, the Union argues that the proper remedy
in challenging the decision of the Arbitration Committee before the CA
is a petition for certiorari under Rule 65. The petition for review under
Rule 43 resorted to by CCBPI should have been dismissed for being
an improper remedy. The Union points out that the parties agreed to
WEEK 6 LABOR
submit the unresolved grievance involving the removal of chairs to
voluntary arbitration pursuant to the provisions of Article V of the
existing CBA. Hence, the assailed decision of the Arbitration Committee
is a judgment or final order issued under the Labor Code of the
Philippines. Section 2, Rule 43 of the 1997 Rules of Civil Procedure,
expressly states that the said rule does not cover cases under the Labor
Code of the Philippines. The judgments or final orders of the Voluntary
Arbitrator or Panel of Voluntary Arbitrators are governed by the
provisions of Articles 260, 261, 262, 262-A, and 262-B of the Labor
Code of the Philippines.
On the substantive aspect, the Union argues that there is no connection
between CCBPIs "I Operate, I Maintain, I Clean" program and the
removal of the chairs because the implementation of the program was
in 2006 and the removal of the chairs was done in 2008. The 30-minute
break is part of an operators working hours and does not make any
difference. The frequency of the break period is not advantageous to
the operators because it cannot compensate for the time they are made
to stand throughout their working time. The bottling operators get tired
and exhausted after their tour of duty even with chairs around. How
much more if the chairs are removed?
The Union further claims that management prerogatives are not
absolute but subject to certain limitations found in law, a collective
bargaining agreement, or general principles of fair play and justice. The
operators have been performing their assigned duties and
responsibilities satisfactorily for thirty (30) years using chairs. There is
no record of poor performance because the operators are sitting all the
time. There is no single incident when the attention of an operator was
called for failure to carry out his assigned tasks. CCBPI has not
submitted any evidence to prove that the performance of the operators
was poor before the removal of the chairs and that it has improved after
the chairs were removed. The presence of chairs for more than 30
years made the operators awake and alert as they could relax from time
to time. There are sanctions for those caught sleeping while on duty.
Before the removal of the chairs, the efficiency of the operators was
much better and there was no recorded accident. After the removal of
the chairs, the efficiency of the operators diminished considerably,
resulting in the drastic decline of line efficiency.
Finally, the Union asserts that the removal of the chairs constitutes
violation of the Occupational Health and Safety Standards, which
provide that every company shall keep and maintain its workplace free
from hazards that are likely to cause physical harm to the workers or
damage to property. The removal of the chairs constitutes a violation of
the State policy to assure the right of workers to a just and humane
condition of work pursuant to Article 3 of the Labor Code and of
CCBPIs Global Workplace Rights Policy. Hence, the unilateral
withdrawal, elimination or removal of the chairs, which have been in
existence for more than 30 years, constitutes a violation of existing
practice.
The respondents position
CCBPI reiterates the ruling of the CA that a petition for review under
Rule 43 of the Rules of Court was the proper remedy to question the
decision of the Arbitration Committee. It likewise echoes the ruling of
the CA that the removal of the chairs was a legitimate exercise of
management prerogative; that it was done not to harm the bottling
operators but for the purpose of optimizing their efficiency and CCBPIs
machineries and equipment; and that the exercise of its management
prerogative was done in good faith and not for the purpose of
circumventing the rights of the employees under the special laws, the
CBA or the general principles of justice and fair play.
The Courts Ruling
The decision in this case rests on the resolution of two basic questions.
First, is an appeal to the CA via a petition for review under Rule 43 of
the 1997 Rules of Civil Procedure a proper remedy to question the
decision of the Arbitration Committee? Second, was the removal of the
bottling operators chairs from CCBPIs production/manufacturing lines
a valid exercise of a management prerogative?
The Court sustains the ruling of the CA on both issues.
Regarding the first issue, the Union insists that the CA erred in ruling
that the recourse taken by CCBPI in appealing the decision of the
Arbitration Committee was proper. It argues that the proper remedy in
challenging the decision of the Voluntary Arbitrator before the CA is by
WEEK 6 LABOR
filing a petition for certiorari under Rule 65 of the Rules of Court, not a
petition for review under Rule 43.
CCBPI counters that the CA was correct in ruling that the recourse it
took in appealing the decision of the Arbitration Committee to the CA
via a petition for review under Rule 43 of the Rules of Court was proper
and in conformity with the rules and prevailing jurisprudence.
A Petition for Review
under Rule 43 is the
proper remedy
CCBPI is correct. This procedural issue being debated upon is not
novel. The Court has already ruled in a number of cases that a decision
or award of a voluntary arbitrator is appealable to the CA via a petition
for review under Rule 43. The recent case of Samahan Ng Mga
Manggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon. Voluntary
Arbitrator Buenaventura C. Magsalin and Hotel Enterprises of the
Philippines6 reiterated the well-settled doctrine on this issue, to wit:
In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-
APL v. Bacungan,7 we repeated the well-settled rule that a decision or
award of a voluntary arbitrator is appealable to the CA via petition for
review under Rule 43. We held that:
"The question on the proper recourse to assail a decision of a voluntary
arbitrator has already been settled in Luzon Development Bank v.
Association of Luzon Development Bank Employees, where the Court
held that the decision or award of the voluntary arbitrator or panel of
arbitrators should likewise be appealable to the Court of Appeals, in line
with the procedure outlined in Revised Administrative Circular No. 1-95
(now embodied in Rule 43 of the 1997 Rules of Civil Procedure), just
like those of the quasi-judicial agencies, boards and commissions
enumerated therein, and consistent with the original purpose to provide
a uniform procedure for the appellate review of adjudications of all
quasi-judicial entities.
Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint
Employees Union-Olalia v. Court of Appeals, the Court reiterated the
aforequoted ruling. In Alcantara, the Court held that notwithstanding
Section 2 of Rule 43, the ruling in Luzon Development Bank still stands.
The Court explained, thus:
The provisions may be new to the Rules of Court but it is far from being
a new law. Section 2, Rules 42 of the 1997 Rules of Civil Procedure, as
presently worded, is nothing more but a reiteration of the exception to
the exclusive appellate jurisdiction of the Court of Appeals, as provided
for in Section 9, Batas Pambansa Blg. 129, as amended by Republic
Act No. 7902:
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the
Securities and Exchange Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling
within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act
and of subparagraph (1) of the third paragraph and subparagraph (4)
of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank
but, nevertheless, held that the decisions of voluntary arbitrators issued
pursuant to the Labor Code do not come within its ambit x x x."
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil
Procedure, as amended, provide:
"SECTION 1. Scope. - This Rule shall apply to appeals from judgments
or final orders of the Court of Tax Appeals and from awards, judgments,
final orders or resolutions of or authorized by any quasi-judicial agency
in the exercise of its quasi-judicial functions. Among these agencies are
the x x x, and voluntary arbitrators authorized by law.
xxxx
SEC. 3. Where to appeal. - An appeal under this Rule may be taken to
the Court of Appeals within the period and in the manner therein
provided, whether the appeal involves questions of fact, of law, or
mixed questions of fact and law.
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SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15)
days from notice of the award, judgment, final order or resolution, or
from the date of its last publication, if publication is required by law for
its effectivity, or of the denial of petitioners motion for new trial or
reconsideration duly filed in accordance with the governing law of the
court or agency a quo. x x x. (Emphasis supplied.)
Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators
Resolution denying petitioners motion for reconsideration, petitioner
should have filed with the CA, within the fifteen (15)-day reglementary
period, a petition for review, not a petition for certiorari.
On the second issue, the Union basically claims that the CCBPIs
decision to unilaterally remove the operators chairs from the
production/manufacturing lines of its bottling plants is not valid because
it violates some fundamental labor policies. According to the Union,
such removal constitutes a violation of the 1) Occupational Health and
Safety Standards which provide that every worker is entitled to be
provided by the employer with appropriate seats, among others; 2)
policy of the State to assure the right of workers to a just and humane
condition of work as provided for in Article 3 of the Labor Code;8 3)
Global Workplace Rights Policy of CCBPI which provides for a safe and
healthy workplace by maintaining a productive workplace and by
minimizing the risk of accident, injury and exposure to health risks; and
4) diminution of benefits provided in Article 100 of the Labor Code.9
Opposing the Unions argument, CCBPI mainly contends that the
removal of the subject chairs is a valid exercise of management
prerogative. The management decision to remove the subject chairs
was made in good faith and did not intend to defeat or circumvent the
rights of the Union under the special laws, the CBA and the general
principles of justice and fair play.
Again, the Court agrees with CCBPI on the matter.
A Valid Exercise of
Management Prerogative
The Court has held that management is free to regulate, according to
its own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, time, place, and manner of
work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers,
and discipline, dismissal and recall of workers. The exercise of
management prerogative, however, is not absolute as it must be
exercised in good faith and with due regard to the rights of labor.10
In the present controversy, it cannot be denied that CCBPI removed the
operators chairs pursuant to a national directive and in line with its "I
Operate, I Maintain, I Clean" program, launched to enable the Union to
perform their duties and responsibilities more efficiently. The chairs
were not removed indiscriminately. They were carefully studied with
due regard to the welfare of the members of the Union. The removal of
the chairs was compensated by: a) a reduction of the operating hours
of the bottling operators from a two-and-one-half (2 )-hour rotation
period to a one-and-a-half (1 ) hour rotation period; and b) an increase
of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good
intentions as CCBPI wanted to avoid instances of operators sleeping
on the job while in the performance of their duties and responsibilities
and because of the fact that the chairs were not necessary considering
that the operators constantly move about while working. In short, the
removal of the chairs was designed to increase work efficiency. Hence,
CCBPIs exercise of its management prerogative was made in good
faith without doing any harm to the workers rights.
The fact that there is no proof of any operator sleeping on the job is of
no moment. There is no guarantee that such incident would never
happen as sitting on a chair is relaxing. Besides, the operators
constantly move about while doing their job. The ultimate purpose is to
promote work efficiency.
No Violation of Labor Laws
The rights of the Union under any labor law were not violated. There is
no law that requires employers to provide chairs for bottling operators.
The CA correctly ruled that the Labor Code, specifically Article 13211
thereof, only requires employers to provide seats for women. No similar
WEEK 6 LABOR
requirement is mandated for men or male workers. It must be stressed
that all concerned bottling operators in this case are men.
There was no violation either of the Health, Safety and Social Welfare
Benefit provisions under Book IV of the Labor Code of the Philippines.
As shown in the foregoing, the removal of the chairs was compensated
by the reduction of the working hours and increase in the rest period.
The directive did not expose the bottling operators to safety and health
hazards.
The Union should not complain too much about standing and moving
about for one and one-half (1 ) hours because studies show that
sitting in workplaces for a long time is hazardous to ones health. The
report of VicHealth, Australia,12 disclosed that "prolonged workplace
sitting is an emerging public health and occupational health issue with
serious implications for the health of our working population.
Importantly, prolonged sitting is a risk factor for poor health and early
death, even among those who meet, or exceed, national13 activity
guidelines." In another report,14 it was written:
Workers needing to spend long periods in a seated position on the job
such as taxi drivers, call centre and office workers, are at risk for injury
and a variety of adverse health effects.
The most common injuries occur in the muscles, bones, tendons and
ligaments, affecting the neck and lower back regions. Prolonged sitting:
reduces body movement making muscles more likely to pull, cramp
or strain when stretched suddenly, causes fatigue in the back and neck
muscles by slowing the blood supply and puts high tension on the
spine, especially in the low back or neck, and
causes a steady compression on the spinal discs that hinders their
nutrition and can contribute to their premature degeneration.
Sedentary employees may also face a gradual deterioration in health if
they do not exercise or do not lead an otherwise physically active life.
The most common health problems that these employees experience
are disorders in blood circulation and injuries affecting their ability to
move. Deep Vein Thrombosis (DVT), where a clot forms in a large vein
after prolonged sitting (eg after a long flight) has also been shown to be
a risk.
Workers who spend most of their working time seated may also
experience other, less specific adverse health effects. Common effects
include decreased fitness, reduced heart and lung efficiency, and
digestive problems. Recent research has identified too much sitting as
an important part of the physical activity and health equation, and
suggests we should focus on the harm caused by daily inactivity such
as prolonged sitting.
Associate professor David Dunstan leads a team at the Baker IDI in
Melbourne which is specifically researching sitting and physical activity.
He has found that people who spend long periods of time seated (more
than four hours per day) were at risk of:
higher blood levels of sugar and fats,
larger waistlines, and
higher risk of metabolic syndrome
regardless of how much moderate to vigorous exercise they had.
In addition, people who interrupted their sitting time more often just by
standing or with light activities such as housework, shopping, and
moving about the office had healthier blood sugar and fat levels, and
smaller waistlines than those whose sitting time was not broken up.
Of course, in this case, if the chairs would be returned, no risks would
be involved because of the shorter period of working time. The study
was cited just to show that there is a health risk in prolonged sitting.
No Violation of the CBA
The CBA15 between the Union and CCBPI contains no provision
whatsoever requiring the management to provide chairs for the
operators in the production/manufacturing line while performing their
duties and responsibilities. On the contrary, Section 2 of Article 1 of the
CBA expressly provides as follows:
Article I
WEEK 6 LABOR
SCOPE
SECTION 2. Scope of the Agreement. All the terms and conditions of
employment of employees and workers within the appropriate
bargaining unit (as defined in Section 1 hereof) are embodied in this
Agreement and the same shall govern the relationship between the
COMPANY and such employees and/or workers. On the other hand, all
such benefits and/or privileges as are not expressly provided for in this
Agreement but which are now being accorded, may in the future be
accorded, or might have previously been accorded, to the employees
and/or workers, shall be deemed as purely voluntary acts on the part of
the COMPANY in each case, and the continuance and repetition
thereof now or in the future, no matter how long or how often, shall not
be construed as establishing an obligation on the part of the
COMPANY. It is however understood that any benefits that are agreed
upon by and between the COMPANY and the UNION in the Labor-
Management Committee Meetings regarding the terms and conditions
of employment outside the CBA that have general application to
employees who are similarly situated in a Department or in the Plant
shall be implemented. [emphasis and underscoring supplied]
As can be gleaned from the aforecited provision, the CBA expressly
provides that benefits and/or privileges, not expressly given therein but
which are presently being granted by the company and enjoyed by the
employees, shall be considered as purely voluntary acts by the
management and that the continuance of such benefits and/or
privileges, no matter how long or how often, shall not be understood as
establishing an obligation on the companys part. Since the matter of
the chairs is not expressly stated in the CBA, it is understood that it was
a purely voluntary act on the part of CCBPI and the long practice did
not convert it into an obligation or a vested right in favor of the Union.
No Violation of the general principles
of justice and fair play
The Court completely agrees with the CA ruling that the removal of the
chairs did not violate the general principles of justice and fair play
because the bottling operators working time was considerably reduced
from two and a half (2 ) hours to just one and a half (1 ) hours and
the break period, when they could sit down, was increased to 30
minutes between rotations. The bottling operators new work schedule
is certainly advantageous to them because it greatly increases their rest
period and significantly decreases their working time. A break time of
thirty (30) minutes after working for only one and a half (1 ) hours is a
just and fair work schedule.
No Violation of Article 100
of the Labor Code
The operators chairs cannot be considered as one of the employee
benefits covered in Article 10016 of the Labor Code. In the Courts view,
the term "benefits" mentioned in the non-diminution rule refers to
monetary benefits or privileges given to the employee with monetary
equivalents.
Such benefits or privileges form part of the employees wage, salary or
compensation making them enforceable obligations.
This Court has already decided several cases regarding the non-
diminution rule where the benefits or privileges involved in those cases
mainly concern monetary considerations or privileges with monetary
equivalents. Some of these cases are: Eastern Telecommunication
Phils. Inc. v. Eastern Telecoms Employees Union,17 where the case
involves the payment of 14th, 15th and 16th month bonuses; Central
Azucarera De Tarlac v. Central Azucarera De Tarlac Labor Union-
NLU,18 regarding the 13th month pay, legal/special holiday pay, night
premium pay and vacation and sick leaves; TSPIC Corp. v. TSPIC
Employees Union,19 regarding salary wage increases; and American
Wire and Cable Daily Employees Union vs. American Wire and Cable
Company, Inc.,20 involving service awards with cash incentives,
premium pay, Christmas party with incidental benefits and promotional
increase.
In this regard, the Court agrees with the CA when it resolved the matter
and wrote:
Let it be stressed that the aforequoted article speaks of non-diminution
of supplements and other employee benefits. Supplements arc
privileges given to an employee which constitute as extra remuneration
WEEK 6 LABOR

besides his or her basic ordinary earnings and wages. From this
definition, We can only deduce that the other employee benefits spoken
of by Article 100 pertain only to those which are susceptible of monetary
considerations. Indeed, this could only be the most plausible conclusion
because the cases tackling Article 100 involve mainly with monetary
considerations or privileges converted to their monetary equivalents.

xxxx

Without a doubt, equating the provision of chairs to the bottling

operators Ds something within the ambit of "benefits'' in the context of
Article 100 of the Labor Code is unduly stretching the coverage of the
law. The interpretations of Article 100 of the Labor Code do not show
even with the slightest hint that such provision of chairs for the bottling
operators may be sheltered under its mantle.21

Jurisprudence recognizes the exercise of management prerogatives.

Labor Jaws also discourage interference with an employer's judgment
in the conduct of its business. For this reason, the Court often declines
to interfere in legitimate business decisions of employers. The law must
protect not only the welfare of the employees, but also the right of the
employers.22

WHEREFORE, the petition is DENIED.

SO ORDERED.
WEEK 6 LABOR
2. Meralco Industrial Engineering Services Corp. vs. NLRC
[G.R. No. 145402. March 14, 2008.]
MERALCO INDUSTRIAL ENGINEERING SERVICES
CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, OFELIA P. LANDRITO GENERAL SERVICES and/or
OFELIA P. LANDRITO, respondents.
DECISION
CHICO-NAZARIO, J p:
Before this Court is a Petition for Review on Certiorari under Rule 45 of
the 1997 Revised Rules of Civil Procedure seeking to reverse and set
aside (1) the Decision 1 of the Court of Appeals in CA-G.R. SP No.
50806, dated 24 April 2000, which modified the Decision 2 of the
National Labor Relations Commission (NLRC), dated 30 January 1996
in NLRC NCR CA No. 001737-91 (NLRC NCR Case No. 00-09-04432-
89), and thereby held the petitioner solidarily liable with the private
respondents for the satisfaction of the separation pay of the latter's
employees; and (2) the Resolution 3 of the appellate court, dated 27
September 2000, in the same case which denied the petitioner's Motion
for Reconsideration.
Petitioner Meralco Industrial Engineering Services Corporation
(MIESCOR) is a corporation duly organized and existing under the laws
of the Republic of the Philippines and a client of private respondents.
Private respondent Ofelia P. Landrito General Services (OPLGS) is a
business firm engaged in providing and rendering general services,
such as janitorial and maintenance work to its clients, while private
respondent Ofelia P. Landrito is the Proprietor and General Manager of
OPLGS.
The factual milieu of the present case is as follows:
On 7 November 1984, petitioner and private respondents executed
Contract Order No. 166-84, 4 whereby the latter would supply the
petitioner janitorial services, which include labor, materials, tools and
equipment, as well as supervision of its assigned employees, at
petitioner's Rockwell Thermal Plant in Makati City. Pursuant thereto,
private respondents assigned their 49 employees as janitors to
petitioner's Rockwell Thermal Plant with a daily wage of P51.50 per
employee.
On 20 September 1989, however, the aforesaid 49 employees
(complainants) lodged a Complaint for illegal deduction, underpayment,
non-payment of overtime pay, legal holiday pay, premium pay for
holiday and rest day and night differentials 5 against the private
respondents before the Labor Arbiter. The case was docketed as NLRC
NCR Case No. 00-09-04432-89.
In view of the enactment of Republic Act No. 6727, 6 the contract
between the petitioner and the private respondents was amended 7 for
the 10th time on 3 November 1989 to increase the minimum daily wage
per employee from P63.55 to P89.00 or P2,670.00 per month. Two
months thereafter, or on 2 January 1990, 8 petitioner sent a letter to
private respondents informing them that effective at the close of
business hours on 31 January 1990, petitioner was terminating
Contract Order No. 166-84. Accordingly, at the end of the business
hours on 31 January 1990, the complainants were pulled out from their
work at the petitioner's Rockwell Thermal Plant. Thus, on 27 February
1990, complainants amended their Complaint to include the charge of
illegal dismissal and to implead the petitioner as a party respondent
therein.
Since the parties failed to settle amicably before the Labor Arbiter, they
submitted their respective position papers and other pleadings together
with their documentary evidence. Thereafter, a Decision was rendered
by the Labor Arbiter on 26 March 1991, dismissing the Complaint
against the petitioner for lack of merit, but ordering the private
respondents to pay the complainants the total amount of P487,287.07
representing unpaid wages, separation pay and overtime pay; as well
as attorney's fees in an amount equivalent to 10% of the award or
P48,728.70. All other claims of the complainants against the private
respondents were dismissed. 9
Feeling aggrieved, private respondents appealed the aforesaid
Decision to the NLRC. Private respondents alleged, among other
things, that: (1) 48 of the 49 complainants had executed affidavits of
desistance and they had never attended any hearing nor given any
authority to anyone to file a case on their behalf; (2) the Labor Arbiter
WEEK 6 LABOR
erred in not conducting a full-blown hearing on the case; (3) there is
only one complainant in that case who submitted a position paper on
his own; (4) the complainants were not constructively dismissed when
they were not given assignments within a period of six months, but had
abandoned their jobs when they failed to report to another place of
assignment; and (5) the petitioner, being the principal, was solidarily
liable with the private respondents for failure to make an adjustment on
the wages of the complainants. 10 On 28 May 1993, the NLRC issued
a Resolution 11 affirming the Decision of the Labor Arbiter dated 26
March 1991 with the modification that the petitioner was solidarily liable
with the private respondents, ratiocinating thus:
We, however, disagree with the dismissal of the case against [herein
petitioner]. Under Art. 107 12 of the Labor Code of the Philippines,
[herein petitioner] is considered an indirect employer and can be held
solidarily liable with [private respondents] as an independent
contractor. Under Art. 109, 13 for purposes of determining the extent of
its liability, [herein petitioner] is considered a direct employer, hence, it
is solidarily liable for complainant's (sic) wage differentials and unpaid
overtime. We find this situation obtaining in this case in view of the
failure of [private respondents] to pay in full the labor standard benefits
of complainants, in which case liability is limited thereto and does not
extend to the establishment of employer-employee relations. 14
[Emphasis supplied]. aHcDEC
Both private respondents and petitioner separately moved for
reconsideration of the aforesaid Resolution of the NLRC. In their Motion
for Reconsideration, private respondents reiterated that the
complainants abandoned their work, so that private respondents should
not be liable for separation pay; and that petitioner, not private
respondents, should be liable for complainants' other monetary claims,
i.e., for wage differentials and unpaid overtime. The petitioner, in its own
Motion for Reconsideration, asked that it be excluded from liability. It
averred that private respondents should be solely responsible for their
acts as it sufficiently paid private respondents all the benefits due the
complainants.
On 30 July 1993, the NLRC issued an Order 15 noting that based on
the records of the case, the judgment award in the amount of
P487,287.07 was secured by a surety bond posted by the private
respondents; 16 hence, there was no longer any impediment to the
satisfaction of the complainants' claims. Resultantly, the NLRC denied
the private respondents' Motion for Reconsideration. The NLRC
likewise directed the Labor Arbiter to enforce the monetary award
against the private respondents' surety bond and to determine who
should finally shoulder the liability therefor. 17
Alleging grave abuse of discretion of the NLRC in its issuance of the
Resolution and Order dated 28 May 1993 and 30 July 1993,
respectively, private respondents filed before this Court a Petition for
Certiorari with prayer for the issuance of a writ of preliminary injunction.
The same was docketed as G.R. No. 111506 entitled Ofelia Landrito
General Services v. National Labor Relations Commission. The said
Petition suspended the proceedings before the Labor Arbiter.
On 23 May 1994, however, this Court issued a Resolution 18
dismissing G.R. No. 111506 for failure of private respondents to
sufficiently show that the NLRC had committed grave abuse of
discretion in rendering its questioned judgment. This Court's Resolution
in G.R. No. 111506 became final and executory on 25 July 1994. 19
As a consequence thereof, the proceedings before the Labor Arbiter
resumed with respect to the determination of who should finally
shoulder the liability for the monetary awards granted to the
complainants, in accordance with the NLRC Order dated 30 July 1993.
On 5 October 1994, the Labor Arbiter issued an Order, 20 which reads:
As can be gleaned from the Resolution dated [28 May 1993], there is
that necessity of clarifying the respective liabilities of [herein petitioner]
and [herein private respondents] insofar as the judgment award in the
total sum of P487,287.07 is concerned.
The judgment award in the total sum of P487,287.07 as contained in
the Decision dated [26 March 1991] consists of three (3) parts, as
follows: First, the judgment award on the underpayment; Second, the
judgment award on separation pay; and Third, the judgment award on
the overtime pay.
The question now is: Which of these awards is [petitioner] solidarily
liable with [private respondents]? DaIAcC
WEEK 6 LABOR
An examination of the record elicits the finding that [petitioner] is
solidarily liable with [private respondents] on the judgment awards on
the underpayment and on the non-payment of the overtime pay. . . . .
This joint and several liability of the contractor [private respondents] and
the principal [petitioner] is mandated by the Labor Code to assure
compliance of the provisions therein, including the statutory minimum
wage (Art. 99, 21 Labor Code). The contractor-agency 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-agency's
employees for purposes of paying the employees their wages should
the contractor-agency 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.
In sum, the complainants may enforce the judgment award on
underpayment and the non-payment of overtime pay against either
[private respondents] and/or [petitioner].
However, in view of the finding in the Decision that [petitioner] had
adjusted its contract price for the janitorial services it contracted with
[private respondents] conforming to the provisions of Republic Act No.
6727, should the complainants enforce the judgment on the
underpayment and on the non-payment of the overtime pay aginst (sic)
[petitioner], the latter can seek reimbursement from the former
[meaning (private respondents)], but should the judgment award on the
underpayment and on the non-payment of the overtime pay be
enforced against [private respondents], the latter cannot seek
reimbursement against [petitioner].
The judgment award on separation pay is the sole liability of [private
respondents].
WHEREFORE, [petitioner] is jointly and severally liable with [private
respondents] in the judgment award on underpayment and on the non-
payment of overtime pay. Should the complainants enforce the above
judgment award against [petitioner], the latter can seek reimbursement
against [private respondents], but should the aforementioned judgment
award be enforced against [private respondents], the latter cannot seek
reimbursement from the [petitioner].
The judgment award on the payment of separation pay is the sole
liability of [private respondents].
Let an alias writ of execution be issued. [Emphasis supplied].
Again, both the private respondents and the petitioner appealed the
afore-quoted Order of the Labor Arbiter to the NLRC. On 25 April 1995,
the NLRC issued a Resolution 22 affirming the Order dated 5 October
1994 of the Labor Arbiter and dismissing both appeals for non-posting
of the appeal or surety bond and/or for utter lack of merit. 23 When the
private respondents and the petitioner moved for reconsideration,
however, it was granted by the NLRC in its Order 24 dated 27 July
1995. The NLRC thus set aside its Resolution dated 25 April 1995, and
directed the private respondents and the petitioner to each post an
appeal bond in the amount of P487,287.62 to perfect their respective
appeals. 25 Both parties complied. 26
On 30 January 1996, the NLRC rendered a Decision modifying the
Order of the Labor Arbiter dated 5 October 1994, the dispositive portion
of which reads:
WHEREFORE, the [21 November 1994] appeal of [herein petitioner] is
hereby granted. The [5 October 1994] Order of Labor Arbiter Donato G.
Quinto, Jr., is modified to the extent that it still held [petitioner] as "jointly
and severally liable with [herein private respondents] in the judgment
award on underpayment and on the non-payment of overtime pay," our
directive being that the Arbiter should now satisfy said labor-standards
award, as well as that of the separation pay, exclusively through the
surety bond posted by [private respondents]. 27 [Emphasis supplied].
Dissatisfied, private respondents moved for the reconsideration of the
foregoing Decision, but it was denied by the NLRC in an Order 28 dated
30 October 1996. This NLRC Order dated 30 October 1996 became
final and executory on 29 November 1996.
On 4 December 1996, private respondents filed a Petition for Certiorari
29 before this Court assailing the Decision and the Order of the NLRC
dated 30 January 1996 and 30 October 1996, respectively. On 9
WEEK 6 LABOR
December 1998, this Court issued a Resolution 30 referring the case
to the Court of Appeals conformably with its ruling in St. Martin Funeral
Home v. National Labor Relations Commission. 31 The case was
docketed before the appellate court as CA-G.R. SP No. 50806.
The Petition made a sole assignment of error, to wit:
THE HONORABLE COMMISSION GRAVELY ERRED AND
GRAVELY ABUSED ITS DISCRETION IN FINDING THAT THE
ULTIMATE LIABILITY SHOULD FALL ON THE [HEREIN PRIVATE
RESPONDENTS] ALONE, WITHOUT REIMBURSEMENT FROM THE
[HEREIN PETITIONER], IN ORDER TO SATISFY THE MONETARY
AWARDS OF THE [THEREIN COMPLAINANTS]. 32
After due proceedings, the Court of Appeals rendered the assailed
Decision on 24 April 2000, modifying the Decision of the NLRC dated
30 January 1996 and holding the petitioner solidarily liable with the
private respondents for the satisfaction of the laborers' separation pay.
According to the Court of Appeals:
The [NLRC] adjudged the payment of separation pay to be the sole
responsibility of [herein private respondents] because (1) there is no
employer-employee relationship between [herein petitioner] and the
forty-nine (49) [therein complainants]; (2) the payment of separation
pay is not a labor standard benefit. We disagree.
Again, We quote Article 109 of the Labor Code,as amended, viz:
"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. . ."
The abovementioned statute speaks of "any violation of any provision
of this Code." Thus, the existence or non-existence of employer-
employee relationship and whether or not the violation is one of labor
standards is immaterial because said provision of law does not make
any distinction at all and, therefore, this Court should also refrain from
making any distinction. Concomitantly, [herein petitioner] should be
jointly and severally liable with [private respondents] for the payment of
wage differentials, overtime pay and separation pay of the [therein
complainants]. The joint and several liability imposed to [petitioner] is,
again, without prejudice to a claim for reimbursement by [petitioner]
against [private respondents] for reasons already discusses (sic).
WHEREFORE, premises studiedly considered, the assailed 30
January 1996 decision of [the NLRC] is hereby modified insofar as
[petitioner] should be held solidarily liable with [the private respondents]
for the satisfaction of the laborers' separation pay. No pronouncement
as to costs. 33 [Emphasis supplied].
The petitioner filed a Motion for Reconsideration of the aforesaid
Decision but it was denied by the Court of Appeals in a Resolution dated
27 September 2000.
Petitioner now comes before this Court via a Petition for Review on
Certiorari, docketed as G.R. No. 145402, raising the sole issue of
"whether or not the Honorable Court of Appeals palpably erred when it
went beyond the issues of the case as it modified the factual findings
of the Labor Arbiter which attained finality after it was affirmed by Public
Respondent NLRC and by the Supreme Court which can no longer be
disturbed as it became the law of the case." 34
Petitioner argues that in the assailed Decision dated 24 April 2000, the
Court of Appeals found that the sole issue for its resolution was whether
the ultimate liability to pay the monetary awards in favor of the 49
employees falls on the private respondents without reimbursement
from the petitioner. Hence, the appellate court should have limited itself
to determining the right of private respondents to still seek
reimbursement from petitioner for the monetary awards on the unpaid
wages and overtime pay of the complainants.
According to petitioner, the NLRC, in its Resolution dated 28 May 1993,
already found that petitioner had fully complied with its salary
obligations to the complainants. Petitioner invokes the same NLRC
Resolution to support its claim that it was not liable to share with the
private respondents in the payment of separation pay to complainants.
When private respondents questioned the said NLRC Resolution in a
Petition for Certiorari with this Court, docketed as G.R. No. 111506, this
Court found that the NLRC did not commit grave abuse of discretion in
the issuance thereof and accordingly dismissed private respondents'
Petition. Said NLRC Resolution, therefore, has since become final and
WEEK 6 LABOR
executory and can no longer be disturbed for it now constitutes the law
of the case.
Assuming for the sake of argument that the Court of Appeals can still
take cognizance of the issue of petitioner's liability for complainants'
separation pay, petitioner asserts that the appellate court seriously
erred in concluding that it is jointly and solidarily liable with private
respondents for the payment thereof. The payment of separation pay
should be the sole responsibility of the private respondents because
there was no employer-employee relationship between the petitioner
and the complainants, and the payment of separation pay is not a labor
standards benefit. IDSaTE
Law of the case has been defined as the opinion delivered on a former
appeal. It is a term applied to an established rule that when an appellate
court passes on a question and remands the case to the lower court for
further proceedings, the question there settled becomes the law of the
case upon subsequent appeal. It means that whatever is once
irrevocably established as the controlling legal rule or decision between
the same parties in the same case continues to be the law of the case,
whether correct on general principles or not, so long as the facts on
which such decision was predicated continue to be the facts of the case
before the court. 35 Indeed, courts must adhere thereto, whether the
legal principles laid down were "correct on general principles or not" or
"whether the question is right or wrong" because public policy, judicial
orderliness and economy require such stability in the final judgments of
courts or tribunals of competent jurisdiction. 36
Petitioner's application of the law of the case principle to the case at bar
as regards its liability for payment of separation pay is misplaced.
The only matters settled in the 23 May 1994 Resolution of this Court in
G.R. No. 111506, which can be regarded as the law of the case, were
(1) both the petitioner and the private respondents were jointly and
solidarily liable for the judgment awards due the complainants; and (2)
the said judgment awards shall be enforced against the surety bond
posted by the private respondents. However, the issue as regards the
liability of the petitioner for payment of separation pay was yet to be
resolved because precisely, the NLRC, in its Order dated 30 July 1993,
still directed the Labor Arbiter to make a determination on who should
finally shoulder the monetary awards granted to the complainants. And
it was only after G.R. No. 111506 was dismissed by this Court that the
Labor Arbiter promulgated his Decision dated 5 October 1994, wherein
he clarified the respective liabilities of the petitioner and the private
respondents for the judgment awards. In his 5 October 1994 Decision,
the Labor Arbiter explained that the solidary liability of the petitioner
was limited to the monetary awards for wage underpayment and non-
payment of overtime pay due the complainants, and it did not, in any
way, extend to the payment of separation pay as the same was the sole
liability of the private respondents.
Nonetheless, this Court finds the present Petition meritorious.
The Court of Appeals indeed erred when it ruled that the petitioner was
jointly and solidarily liable with the private respondents as regards the
payment of separation pay.
The appellate court used as basis Article 109 of the Labor Code,as
amended, in holding the petitioner solidarily liable with the private
respondents for the payment of separation pay:
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 purposes of determining the extent of
their civil liability under this Chapter, they shall be considered as direct
employers. [Emphasis supplied].
However, the afore-quoted provision must be read in conjunction with
Articles 106 and 107 of the Labor Code,as amended.
Article 107 of the Labor Code,as amended, defines an indirect
employer as "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." To ensure that
the contractor's employees are paid their appropriate wages, Article
106 of the Labor Code,as amended, provides:
ART. 106. CONTRACTOR OR SUBCONTRACTOR. . . . .
WEEK 6 LABOR
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. [Emphasis supplied].
Taken together, an indirect employer (as defined by Article 107) can
only be held solidarily liable with the independent contractor or
subcontractor (as provided under Article 109) in the event that the latter
fails to pay the wages of its employees (as described in Article 106).
Hence, while it is true that the petitioner was the indirect employer of
the complainants, it cannot be held liable in the same way as the
employer in every respect. The petitioner may be considered an indirect
employer only for purposes of unpaid wages. As this Court succinctly
explained in Philippine Airlines, Inc. v. National Labor Relations
Commission: 37
While USSI is an independent contractor under the security service
agreement and PAL may be considered an indirect employer, that
status did not make PAL the employer of the security guards in every
respect. As correctly posited by the Office of the Solicitor General, PAL
may be considered an indirect employer only for purposes of unpaid
wages since Article 106, which is applicable to the situation
contemplated in Section 107, speaks of wages. The concept of indirect
employer only relates or refers to the liability for unpaid wages. Read
together, Articles 106 and 109 simply mean that the party with whom
an independent contractor deals is solidarily liable with the latter for
unpaid wages, and only to that extent and for that purpose that the latter
is considered a direct employer. The term "wage" is defined in Article
97(f) of the Labor Code as "the remuneration of 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 unwritten contract of employment for
work done or to be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by the Secretary
of Labor, of board, lodging, or other facilities customarily furnished by
the employer to the employee." aHATDI
Further, there is no question that private respondents are operating as
an independent contractor and that the complainants were their
employees. There was no employer-employee relationship that existed
between the petitioner and the complainants and, thus, the former could
not have dismissed the latter from employment. Only private
respondents, as the complainants' employer, can terminate their
services, and should it be done illegally, be held liable therefor. The
only instance when the principal can also be held liable with the
independent contractor or subcontractor for the backwages and
separation pay of the latter's employees is when there is proof that the
principal conspired with the independent contractor or subcontractor in
the illegal dismissal of the employees, thus:
The liability arising from an illegal dismissal is unlike an order to pay the
statutory minimum wage, because the workers' right to such wage is
derived from law. The proposition that payment of back wages and
separation pay should be covered by Article 109, which holds an
indirect employer solidarily responsible with his contractor or
subcontractor for "any violation of any provision of this Code," would
have been tenable if there were proof there was none in this case
that the principal/employer had conspired with the contractor in the acts
giving rise to the illegal dismissal. 38
It is the established fact of conspiracy that will tie the principal or indirect
employer to the illegal dismissal of the contractor or subcontractor's
employees. In the present case, there is no allegation, much less proof
presented, that the petitioner conspired with private respondents in the
illegal dismissal of the latter's employees; hence, it cannot be held liable
for the same.
Neither can the liability for the separation pay of the complainants be
extended to the petitioner based on contract. Contract Order No. 166-
84 executed between the petitioner and the private respondents
contains no provision for separation pay in the event that the petitioner
terminates the same. It is basic that a contract is the law between the
parties and the stipulations therein, provided that they are not contrary
to law, morals, good customs, public order or public policy, shall be
binding as between the parties. 39 Hence, if the contract does not
provide for such a liability, this Court cannot just read the same into the
contract without possibly violating the intention of the parties.
WEEK 6 LABOR
It is also worth noting that although the issue in CA-G.R. SP No. 50806
pertains to private respondents' right to reimbursement from petitioner
for the "monetary awards" in favor of the complainants, they limited their
arguments to the monetary awards for underpayment of wages and
non-payment of overtime pay, and were conspicuously silent on the
monetary award for separation pay. Thus, private respondents' sole
liability for the separation pay of their employees should have been
deemed settled and already beyond the power of the Court of Appeals
to resolve, since it was an issue never raised before it. 40
Although petitioner is not liable for complainants' separation pay, the
Court conforms to the consistent findings in the proceedings below that
the petitioner is solidarily liable with the private respondents for the
judgment awards for underpayment of wages and non-payment of
overtime pay.
In this case, however, private respondents had already posted a surety
bond in an amount sufficient to cover all the judgment awards due the
complainants, including those for underpayment of wages and non-
payment of overtime pay. The joint and several liability of the principal
with the contractor and subcontractor were enacted to ensure
compliance with the provisions of the Labor Code,principally those on
statutory minimum wage. This liability facilitates, if not guarantees,
payment of the workers' compensation, thus, giving the workers ample
protection as mandated by the 1987 Constitution. 41 With private
respondents' surety bond, it can therefore be said that the purpose of
the Labor Code provision on the solidary liability of the indirect
employer is already accomplished since the interest of the
complainants are already adequately protected. Consequently, it will be
futile to continuously hold the petitioner jointly and solidarily liable with
the private respondents for the judgment awards for underpayment of
wages and non-payment of overtime pay.
But while this Court had previously ruled that the indirect employer can
recover whatever amount it had paid to the employees in accordance
with the terms of the service contract between itself and the contractor,
42 the said ruling cannot be applied in reverse to this case as to allow
the private respondents (the independent contractor), who paid for the
judgment awards in full, to recover from the petitioner (the indirect
employer).
Private respondents have nothing more to recover from petitioner.
Petitioner had already handed over to private respondent the wages
and other benefits of the complainants. Records reveal that it had
complied with complainants' salary increases in accordance with the
minimum wage set by Republic Act No. 6727 by faithfully adjusting the
contract price for the janitorial services it contracted with private
respondents. 43 This is a finding of fact made by the Labor Arbiter, 44
untouched by the NLRC 45 and explicitly affirmed by the Court of
Appeals, 46 and which should already bind this Court.
This Court is not a trier of facts. Well-settled is the rule that the
jurisdiction of this Court in a petition for review on certiorari under Rule
45 of the Revised Rules of Court is limited to reviewing only errors of
law, not of fact, unless the factual findings complained of are completely
devoid of support from the evidence on record, or the assailed judgment
is based on a gross misapprehension of facts. Besides, factual findings
of quasi-judicial agencies like the NLRC, when affirmed by the Court of
Appeals, are conclusive upon the parties and binding on this Court. 47
Having already received from petitioner the correct amount of wages
and benefits, but having failed to turn them over to the complainants,
private respondents should now solely bear the liability for the
underpayment of wages and non-payment of the overtime pay.
WHEREFORE, premises considered, the instant Petition is hereby
GRANTED. The Decision and Resolution of the Court of Appeals dated
24 April 2000 and 27 September 2000, respectively, in CA-G.R. SP No.
50806, are hereby REVERSED AND SET ASIDE. The Decision dated
30 January 1996 of the National Labor Relations Commission in NLRC
NCR CA No. 001737-91 (NLRC NCR Case No. 00-09-04432-89) is
hereby REINSTATED. No costs.
SO ORDERED.
||| (Meralco Industrial Engineering Services Corp. v. National Labor
Relations Commission, G.R. No. 145402, [March 14, 2008], 572 PHIL
94-118)
WEEK 6 LABOR
3. PAL vs. Ligan
[G.R. No. 146408. February 29, 2008.]
PHILIPPINE AIRLINES, INC., petitioner, vs. ENRIQUE LIGAN,
EMELITO SOCO, ALLAN PANQUE, JOLITO OLIVEROS, RICHARD
GONCER, NONILON PILAPIL, AQUILINO YBANEZ, BERNABE
SANDOVAL, RUEL GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR
M. CAPIN, RAMEL BERNARDES, LORENZO BUTANAS, BENSON
CARESUSA, JEFFREY LLENOS, ROQUE PILAPIL, ANTONIO M.
PAREJA, CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO
TUNACAO, CHERRIE ALEGRES, BENEDICTO AUXTERO,
EDUARDO MAGDADARAUG, NELSON M. DULCE, and ALLAN
BENTUZAL, respondents.
DECISION
CARPIO MORALES, J p:
Petitioner Philippine Airlines as Owner, and Synergy Services
Corporation (Synergy) as Contractor, entered into an Agreement 1 on
July 15, 1991 whereby Synergy undertook to "provide loading,
unloading, delivery of baggage and cargo and other related services to
and from [petitioner]'s aircraft at the Mactan Station." 2
The Agreement specified the following "Scope of Services" of
Contractor Synergy:
1.2 CONTRACTOR shall furnish all the necessary capital, workers,
loading, unloading and delivery materials, facilities, supplies,
equipment and tools for the satisfactory performance and execution of
the following services (the Work):
a. Loading and unloading of baggage and cargo to and from the aircraft;
b. Delivering of baggage from the ramp to the baggage claim area;
c. Picking up of baggage from the baggage sorting area to the
designated parked aircraft;
d. Delivering of cargo unloaded from the flight to cargo terminal;
e. Other related jobs (but not janitorial functions) as may be required
and necessary;
CONTRACTOR shall perform and execute the aforementioned Work at
the following areas located at Mactan Station, to wit:
a. Ramp Area
b. Baggage Claim Area
c. Cargo Terminal Area, and
d. Baggage Sorting Area 3 (Underscoring supplied)
And it expressly provided that Synergy was "an independent contractor
and . . . that there w[ould] be no employer-employee relationship
between CONTRACTOR and/or its employees on the one hand, and
OWNER, on the other." 4
On the duration of the Agreement, Section 10 thereof provided:
10.1 Should at any time OWNER find the services herein undertaken
by CONTRACTOR to be unsatisfactory, it shall notify CONTRACTOR
who shall have fifteen (15) days from such notice within which to
improve the services. If CONTRACTOR fails to improve the services
under this Agreement according to OWNER'S specifications and
standards, OWNER shall have the right to terminate this Agreement
immediately and without advance notice.
10.2 Should CONTRACTOR fail to improve the services within the
period stated above or should CONTRACTOR breach the terms of this
Agreement and fail or refuse to perform the Work in such a manner as
will be consistent with the achievement of the result therein contracted
for or in any other way fail to comply strictly with any terms of this
Agreement, OWNER at its option, shall have the right to terminate this
Agreement and to make other arrangements for having said Work
performed and pursuant thereto shall retain so much of the money held
on the Agreement as is necessary to cover the OWNER's costs and
damages, without prejudice to the right of OWNER to seek resort to the
WEEK 6 LABOR
bond furnished by CONTRACTOR should the money in OWNER's
possession be insufficient. aIDHET
xxx xxx xxx (Underscoring supplied)
Except for respondent Benedicto Auxtero (Auxtero), the rest of the
respondents, who appear to have been assigned by Synergy to
petitioner following the execution of the July 15, 1991 Agreement, filed
on March 3, 1992 complaints before the NLRC Regional Office VII at
Cebu City against petitioner, Synergy and their respective officials for
underpayment, non-payment of premium pay for holidays, premium
pay for rest days, service incentive leave pay, 13th month pay and
allowances, and for regularization of employment status with petitioner,
they claiming to be "performing duties for the benefit of [petitioner] since
their job is directly connected with [its] business . . . ." 5
Respondent Auxtero had initially filed a complaint against petitioner and
Synergy and their respective officials for regularization of his
employment status. Later alleging that he was, without valid ground,
verbally dismissed, he filed a complaint against petitioner and Synergy
and their respective officials for illegal dismissal and reinstatement with
full backwages. 6
The complaints of respondents were consolidated.
By Decision 7 of August 29, 1994, Labor Arbiter Dominador Almirante
found Synergy an independent contractor and dismissed respondents'
complaint for regularization against petitioner, but granted their money
claims. The fallo of the decision reads:
WHEREFORE, foregoing premises considered, judgment is hereby
rendered as follows:
(1) Ordering respondents PAL and Synergy jointly and severally to pay
all the complainants herein their 13th month pay and service incentive
leave benefits;
xxx xxx xxx
(3) Ordering respondent Synergy to pay complainant Benedicto
Auxtero a financial assistance in the amount of P5,000.00.
The awards hereinabove enumerated in the aggregate total amount of
THREE HUNDRED TWENTY-TWO THOUSAND THREE HUNDRED
FIFTY NINE PESOS AND EIGHTY SEVEN CENTAVOS
(P322,359.87) are computed in detail by our Fiscal Examiner which
computation is hereto attached to form part of this decision.
The rest of the claims are hereby ordered dismissed for lack of merit. 8
(Underscoring supplied)
On appeal by respondents, the NLRC, Fourth Division, Cebu City,
vacated and set aside the decision of the Labor Arbiter by Decision 9
of January 5, 1996, the fallo of which reads:
WHEREFORE, the Decision of the Labor Arbiter Dominador A.
Almirante, dated August 29, 1994, is hereby VACATED and SET
ASIDE and judgment is hereby rendered:
1. Declaring respondent Synergy Services Corporation to be a 'labor-
only' contractor;
2. Ordering respondent Philippine Airlines to accept, as its regular
employees, all the complainants, . . . and to give each of them the
salaries, allowances and other employment benefits and privileges of a
regular employee under the Collective Bargaining Agreement
subsisting during the period of their employment;
xxx xxx xxx
4. Declaring the dismissal of complainant Benedicto Auxtero to be
illegal and ordering his reinstatement as helper or utility man with
respondent Philippine Airlines, with full backwages, allowances and
other benefits and privileges from the time of his dismissal up to his
actual reinstatement; and
5. Dismissing the appeal of respondent Synergy Services Corporation,
for lack of merit. 10 (Emphasis and underscoring supplied)
Only petitioner assailed the NLRC decision via petition for certiorari
before this Court.
By Resolution 11 of January 25, 1999, this Court referred the case to
the Court of Appeals for appropriate action and disposition,
WEEK 6 LABOR
conformably with St. Martin Funeral Homes v. National Labor Relations
Commission which was promulgated on September 16, 1998.
The appellate court, by Decision of September 29, 2000, affirmed the
Decision of the NLRC. 12 Petitioner's motion for reconsideration having
been denied by Resolution of December 21, 2000, 13 the present
petition was filed, faulting the appellate court ScaEIT
I.
. . . IN UPHOLDING THE NATIONAL LABOR RELATIONS
COMMISSION DECISION WHICH IMPOSED THE RELATIONSHIP
OF EMPLOYER-EMPLOYEE BETWEEN PETITIONER AND THE
RESPONDENTS HEREIN.
II.
. . . IN AFFIRMING THE RULING OF THE NATIONAL LABOR
RELATIONS COMMISSION ORDERING THE REINSTATEMENT OF
RESPONDENT AUXTERO DESPITE THE ABSENCE [OF] ANY
FACTUAL FINDING IN THE DECISION THAT PETITIONER
ILLEGALLY TERMINATED HIS EMPLOYMENT.
III.
. . . [IN ANY EVENT IN] COMMITT[ING] A PATENT AND GRAVE
ERROR IN UPHOLDING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION WHICH COMPELLED THE PETITIONER
TO EMPLOY THE RESPONDENTS AS REGULAR EMPLOYEES
DESPITE THE FACT THAT THEIR SERVICES ARE IN EXCESS OF
PETITIONER COMPANY'S OPERATIONAL REQUIREMENTS. 14
(Underscoring supplied)
Petitioner argues that the law does not prohibit an employer from
engaging an independent contractor, like Synergy, which has
substantial capital in carrying on an independent business of
contracting, to perform specific jobs.
Petitioner further argues that its contracting out to Synergy various
services like janitorial, aircraft cleaning, baggage-handling, etc., which
are directly related to its business, does not make respondents its
employees.
Petitioner furthermore argues that none of the four (4) elements of an
employer-employee relationship between petitioner and respondents,
viz.: selection and engagement of an employee, payment of wages,
power of dismissal, and the power to control employee's conduct, is
present in the case. 15
Finally, petitioner avers that reinstatement of respondents had been
rendered impossible because it had reduced its personnel due to heavy
losses as it had in fact terminated its service agreement with Synergy
effective June 30, 1998 16 as a cost-saving measure.
The decision of the case hinges on a determination of whether Synergy
is a mere job-only contractor or a legitimate contractor. If Synergy is
found to be a mere job-only contractor, respondents could be
considered as regular employees of petitioner as Synergy would then
be a mere agent of petitioner in which case respondents would be
entitled to all the benefits granted to petitioner's regular employees;
otherwise, if Synergy is found to be a legitimate contractor,
respondents' claims against petitioner must fail as they would then be
considered employees of Synergy.
The statutory basis of legitimate contracting or subcontracting is
provided in Article 106 of the Labor Code which 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.
WEEK 6 LABOR
The Secretary of Labor may, by appropriate regulations, restrict or
prohibit the contracting out of labor to protect the rights of workers
established under the 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 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. (Emphasis, capitalization and
underscoring supplied) HEISca
Legitimate contracting and labor-only contracting are defined in
Department Order (D.O.) No. 18-02, Series of 2002 (Rules
Implementing Articles 106 to 109 of the Labor Code, as amended) as
follows:
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. (Emphasis and underscoring
supplied)
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 [sic] 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. (Emphasis,
underscoring and capitalization supplied)
"Substantial capital or investment" and the "right to control" are defined
in the same Section 5 of the Department Order as follows:
"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. (Emphasis and underscoring
supplied)
From the records of the case, it is gathered that the work performed by
almost all of the respondents loading and unloading of baggage and
cargo of passengers is directly related to the main business of
petitioner. And the equipment used by respondents as station loaders,
such as trailers and conveyors, are owned by petitioner. 17
Petitioner asserts, however, that mere compliance with substantial
capital requirement suffices for Synergy to be considered a legitimate
contractor, citing Neri v. National Labor Relations Commission. 18
Petitioner's reliance on said case is misplaced.
In Neri, the Labor Arbiter and the NLRC both determined that Building
Care Corporation had a capital stock of P1 million fully subscribed and
WEEK 6 LABOR
paid for. 19 The corporation's status as independent contractor had in
fact been previously confirmed in an earlier case 20 by this Court which
found it to be serving, among others, a university, an international bank,
a big local bank, a hospital center, government agencies, etc."
In stark contrast to the case at bar, while petitioner steadfastly asserted
before the Labor Arbiter and the NLRC that Synergy has a substantial
capital to engage in legitimate contracting, it failed to present evidence
thereon. As the NLRC held:
The decision of the Labor Arbiter merely mentioned on page 5 of his
decision that respondent SYNERGY has substantial capital, but there
is no showing in the records as to how much is that capital. Neither had
respondents shown that SYNERGY has such substantial capital. . . .
21 (Underscoring supplied)
It was only after the appellate court rendered its challenged Decision of
September 29, 2002 when petitioner, in its Motion for Reconsideration
of the decision, sought to prove, for the first time, Synergy's substantial
capitalization by attaching photocopies of Synergy's financial
statements, e.g., balance sheets, statements of income and retained
earnings, marked as "Annexes 'A' 'A-4.'" 22
More significantly, however, is that respondents worked alongside
petitioner's regular employees who were performing identical work. 23
As San Miguel Corporation v. Aballa 24 and Dole Philippines, Inc. v.
Esteva, et al. 25 teach, such is an indicium of labor-only contracting.
CTEDSI
For labor-only contracting to exist, Section 5 of D.O. No. 18-02 which
requires any of two elements to be present is, for convenience, re-
quoted:
(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. (Emphasis and
CAPITALIZATION supplied)
Even if only one of the two elements is present then, there is labor-only
contracting.
The control test element under the immediately-quoted paragraph (ii),
which was not present in the old Implementing Rules (Department
Order No. 10, Series of 1997), 26 echoes the prevailing jurisprudential
trend 27 elevating such element as a primary determinant of employer-
employee relationship in job contracting agreements.
One who claims to be an independent contractor has to prove that he
contracted to do the work according to his own methods and without
being subject to the employer's control except only as to the results. 28
While petitioner claimed that it was Synergy's supervisors who actually
supervised respondents, it failed to present evidence thereon. It did not
even identify who were the Synergy supervisors assigned at the
workplace.
Even the parties' Agreement does not lend support to petitioner's claim,
thus:
Section 6. Qualified and Experienced Worker: Owner's Right to Dismiss
Workers.
CONTRACTOR shall employ capable and experienced workers and
foremen to carry out the loading, unloading and delivery Work as well
as provide all equipment, loading, unloading and delivery equipment,
materials, supplies and tools necessary for the performance of the
Work. CONTRACTOR shall upon OWNER'S request furnish the latter
with information regarding the qualifications of the former's workers, to
prove their capability and experience. Contractor shall require all its
workers, employees, suppliers and visitors to comply with OWNER'S
rules, regulations, procedures and directives relative to the safety and
security of OWNER'S premises, properties, and operations. For this
purpose, CONTRACTOR shall furnish its employees and workers
identification cards to be countersigned by OWNER and uniforms to be
approved by OWNER. OWNER may require CONTRACTOR to
WEEK 6 LABOR
dismissimmediately and prohibit entry into OWNER'S premises of any
person employed therein by CONTRACTOR who in OWNER'S opinion
is incompetent or misconducts himself or does not comply with
OWNER'S reasonable instructions and requests regarding security,
safety and other matters and such person shall not again be employed
to perform the services hereunder without OWNER'S permission. 29
(Underscoring partly in the original and partly supplied; emphasis
supplied)
Petitioner in fact admitted that it fixes the work schedule of respondents
as their work was dependent on the frequency of plane arrivals. 30 And
as the NLRC found, petitioner's managers and supervisors approved
respondents' weekly work assignments and respondents and other
regular PAL employees were all referred to as "station attendants" of
the cargo operation and airfreight services of petitioner. 31
Respondents having performed tasks which are usually necessary and
desirable in the air transportation business of petitioner, they should be
deemed its regular employees and Synergy as a labor-only contractor.
32
The express provision in the Agreement that Synergy was an
independent contractor and there would be "no employer-employee
relationship between [Synergy] and/or its employees on one hand, and
[petitioner] on the other hand" is not legally binding and conclusive as
contractual provisions are not valid determinants of the existence of
such relationship. For it is the totality of the facts and surrounding
circumstances of the case 33 which is determinative of the parties'
relationship.
Respecting the dismissal on November 15, 1992 34 of Auxtero, a
regular employee of petitioner who had been working as utility
man/helper since November 1988, it is not legally justified for want of
just or authorized cause therefor and for non-compliance with
procedural due process. Petitioner's claim that he abandoned his work
does not persuade. 35 The elements of abandonment being (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
manifested by some overt acts, 36 the onus probandi lies with petitioner
which, however, failed to discharge the same.
Auxtero, having been declared to be a regular employee of petitioner,
and found to be illegally dismissed from employment, should be entitled
to salary differential 37 from the time he rendered one year of service
until his dismissal, reinstatement plus backwages until the finality of this
decision. 38 In view, however, of the long period of time 39 that had
elapsed since his dismissal on November 15, 1992, it would be
appropriate to award separation pay of one (1) month salary for each
year of service, in lieu of reinstatement. 40
As regards the remaining respondents, the Court affirms the ruling of
both the NLRC and the appellate court, ordering petitioner to accept
them as its regular employees and to give each of them the salaries,
allowances and other employment benefits and privileges of a regular
employee under the pertinent Collective Bargaining Agreement. cdasia
Petitioner claims, however, that it has become impossible for it to
comply with the orders of the NLRC and the Court of Appeals, for during
the pendency of this case, it was forced to reduce its personnel due to
heavy losses caused by economic crisis and the pilots' strike of June 5,
1998. 41 Hence, there are no available positions where respondents
could be placed.
And petitioner informs that "the employment contracts of all if not most
of the respondents . . . were terminated by Synergy effective 30 June
1998 when petitioner terminated its contract with Synergy." 42
Other than its bare allegations, petitioner presented nothing to
substantiate its impossibility of compliance. In fact, petitioner waived
this defense by failing to raise it in its Memorandum filed on June 14,
1999 before the Court of Appeals. 43 Further, the notice of termination
in 1998 was in disregard of a subsisting temporary restraining order 44
to preserve the status quo, issued by this Court in 1996 before it
referred the case to the Court of Appeals in January 1999. So as to
thwart the attempt to subvert the implementation of the assailed
decision, respondents are deemed to be continuously employed by
petitioner, for purposes of computing the wages and benefits due
respondents.
Finally, it must be stressed that respondents, having been declared to
be regular employees of petitioner, Synergy being a mere agent of the
latter, had acquired security of tenure. As such, they could only be
WEEK 6 LABOR

dismissed by petitioner, the real employer, on the basis of just or

authorized cause, and with observance of procedural due process.

WHEREFORE, the Court of Appeals Decision of September 29, 2000

is AFFIRMED with MODIFICATION.

Petitioner PHILIPPINE AIRLINES, INC. is ORDERED to:

(a) accept respondents ENRIQUE LIGAN, EMELITO SOCO, ALLAN

PANQUE, JOLITO OLIVEROS, RICHARD GONCER, NONILON
PILAPIL, AQUILINO YBANEZ, BERNABE SANDOVAL, RUEL
GONCER, VIRGILIO P. CAMPOS, JR., ARTHUR M. CAPIN, RAMEL
BERNARDES, LORENZO BUTANAS, BENSON CARESUSA,
JEFFREY LLENOS, ROQUE PILAPIL, ANTONIO M. PAREJA,
CLEMENTE R. LUMAYNO, NELSON TAMPUS, ROLANDO
TUNACAO, CHERRIE ALEGRES, EDUARDO MAGDADARAUG,
NELSON M. DULCE and ALLAN BENTUZAL as its regular employees
in their same or substantially equivalent positions, and pay the wages
and benefits due them as regular employees plus salary differential
corresponding to the difference between the wages and benefits given
them and those granted to petitioner's other regular employees of the
same rank; and

(b) pay respondent BENEDICTO AUXTERO salary differential;

backwages from the time of his dismissal until the finality of this
decision; and separation pay, in lieu of reinstatement, equivalent to one
(1) month pay for every year of service until the finality of this decision.

There being no data from which this Court may determine the monetary
liabilities of petitioner, the case is REMANDED to the Labor Arbiter
solely for that purpose.

SO ORDERED.

||| (Philippine Airlines Inc. v. Ligan, G.R. No. 146408, [February 29,
2008], 570 PHIL 497-515)
WEEK 6 LABOR
4. Almeda, et. al. vs. Asahi Glass Phil. Inc.
THIRD DIVISION
[G.R. No. 177785. September 3, 2008.]
RANDY ALMEDA, EDWIN M. AUDENCIAL, NOLIE D. RAMIREZ,
ERNESTO M. CALICAGAN and REYNALDO M. CALICAGAN,
petitioners, vs. ASAHI GLASS PHILIPPINES, INC., respondent.
DECISION
CHICO-NAZARIO, J p:
Before this Court is a Petition for Review on Certiorari under Rule 45 of
the Revised Rules of Court, filed by petitioners Randy Almeda, Edwin
Audencial, Nolie Ramirez, Ernesto Calicagan and Reynaldo Calicagan,
seeking to reverse and set aside the Decision 1 dated 10 November
2006 and the Resolution 2 dated 27 April 2007 of the Court of Appeals
in CA-G.R. SP No. 93291. The appellate court reversed and set aside
the Decision dated 29 June 2005 and Resolution dated 24 November
2005 of the National Labor Relations Commission (NLRC) in NLRC
NCR CA No. 039768-04 finding respondent Asahi Glass Philippines,
Inc. jointly and severally liable with San Sebastian Allied Services, Inc.
(SSASI) for illegal dismissal, and ordering both respondent and SSASI
to reinstate petitioners to their former positions and to pay their
backwages from 2 December 2002 up to the date of their actual
reinstatement. Instead, the Court of Appeals reinstated the Decision
dated 18 February 2004 of the Labor Arbiter dismissing petitioners'
complaint for illegal dismissal against respondent and SSASI, but
ordering the payment of separation benefits to petitioners. THIcCA
The present Petition arose from a complaint for illegal dismissal with
claims for moral and exemplary damages and attorney's fees filed by
petitioners against respondent and SSASI.
In their Complaint 3 filed before the Labor Arbiter, petitioners alleged
that respondent (a domestic corporation engaged in the business of
glass manufacturing) and SSASI (a labor-only contractor) entered into
a service contract on 5 March 2002 whereby the latter undertook to
provide the former with the necessary manpower for its operations.
Pursuant to such a contract, SSASI employed petitioners Randy
Almeda, Edwin Audencial, Nolie Ramirez and Ernesto Calicagan as
glass cutters, and petitioner Reynaldo Calicagan as Quality Controller,
4 all assigned to work for respondent. Petitioners worked for
respondent for periods ranging from three to 11 years. 5 On 1
December 2002, respondent 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
respondent; and that their dismissal from employment without the
benefit of due process of law was unlawful. In support of their complaint,
petitioners submitted a copy of their work schedule to show that they
were under the direct control of the respondent which dictated the time
and manner of performing their jobs. STaAcC
Respondent, on the other hand, refuted petitioners' allegations that they
were its regular employees. Instead, respondent 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, dated 5 March 2002, the validity of
which was never assailed by the petitioners. Respondent contested
petitioners' contention that they were performing functions that were
directly related to respondent's main business since petitioners were
simply tasked to do mirror cutting, an activity occasionally performed
upon a customer's order. Respondent likewise denied exercising
control over petitioners and asserted that such was wielded by SSASI.
Finally, respondent maintained that SSASI was engaged in legitimate
job contracting and was licensed by the Department of Labor and
Employment (DOLE) to engage in such activity as shown in its
Certificate of Registration. 6 Respondent presented before the Labor
Arbiter copies of the Opinion dated 18 February 2003 of DOLE
Secretary Patricia Sto. Tomas authorizing respondent to contract out
certain activities not necessary or desirable to the business of the
company; and the Opinion dated 10 July 2003 of DOLE Bureau of
Labor Relations (DOLE-BLR) Director Hans Leo Cacdac allowing
respondent to contract out even services that were not directly related
to its main line of business.
WEEK 6 LABOR
SSASI, for its part, claimed that it was a duly registered independent
contractor as evidenced by the Certificate of Registration issued by the
DOLE on 3 January 2003. SSASI averred that it was the one who hired
petitioners and assigned them to work for respondent on occasions that
the latter's 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. aSHAIC
On 18 February 2004, the Labor Arbiter promulgated his Decision 7
finding that respondent submitted overwhelming documentary
evidence to refute the bare allegations of the petitioners and
accordingly dismissing the complaint for lack of merit. However, he also
ordered the payment of separation benefits to petitioners. The Labor
Arbiter thus decreed:
WHEREFORE, premises considered, judgment is hereby rendered
declaring that the instant case should be, as it is hereby DISMISSED
for lack of merit. However, the respondent San Sebastian Allied
Services, Inc. is hereby ordered to pay the [herein petitioners] Edwin
M. Audencial, Reynaldo Calicagan, Randy Almeda, Nolie D. Ramirez
and Ernesto Calicagan their respective separation benefits in the
following specified amounts:
(1) Edwin Audencial P41,327.00
(2) Reynaldo M. Calicagan 15,860.00
(3) Randy V. Almeda 45,084.00
(4) Nolie Ramirez 15,028.00
(5) Ernesto Calicagan 22,542.00
All other claims are dismissed.
On appeal, the NLRC reversed the afore-quoted Decision of the Labor
Arbiter, giving more evidentiary weight to petitioners' testimonies. It
appeared to the NLRC that SSASI was engaged in labor-only
contracting since it did not have substantial capital and investment in
the form of tools, equipment and machineries. The petitioners were
recruited and assigned by SSASI to respondent as glass cutters,
positions which were directly related to respondent's principal business
of glass manufacturing. In light of the factual circumstances of the case,
the NLRC declared that petitioners were employees of respondent and
not of SSASI. Hence, the NLRC ruled in its Decision 8 dated 29 June
2005: cSTDIC
WHEREFORE, the decision appealed from is hereby VACATED and
SET ASIDE. [Herein respondent] and [SSASI] are hereby ordered to:
(1) reinstate the [herein petitioners] to their former position as glass
cutters; and (2) pay [petitioners'] full backwages from December 2,
2002 up to the date of their actual reinstatement. The liability of
[respondent] and [SSASI] for [petitioners'] backwages is further
declared to be joint and several.
Only respondent moved for the reconsideration of the foregoing NLRC
Decision. Respondent prayed that the NLRC vacate its previous finding
that SSASI was a labor-only contractor and that it was guilty of the
illegal dismissal of petitioners. In a Resolution 9 dated 24 November
2005, the NLRC denied the Motion for Reconsideration of respondent
for lack of compelling justification to modify, alter or reverse its earlier
Decision. TaSEHC
This prompted respondent to elevate its case to the Court of Appeals
by the filing of a Petition for Certiorari with Application for the Issuance
of Temporary Restraining Order (TRO), 10 alleging that the NLRC
abused its discretion in ignoring the established facts and legal
principles fully substantiated by the documentary evidence on record
and legal opinions of labor officials, and in giving more credence to the
empty allegations advanced by petitioners.
To prevent the execution of the Decision dated 25 June 2005 and
Resolution dated 24 November 2005 of the NLRC, respondent included
in its Petition a prayer for the issuance of a TRO, which it reiterated in
a motion filed on 29 August 2006. Acting on respondent's motion, the
Court of Appeals issued a TRO on 11 September 2006 enjoining the
NLRC from enforcing its 25 June 2005 Decision and 24 November 2005
Resolution. 11
On 10 November 2006, the Court of Appeals rendered a Decision
granting respondent's Petition for Certiorari and reversing the NLRC
Decision dated 25 June 2005. The appellate court found merit in
respondent's argument that the NLRC gravely abused its discretion in
WEEK 6 LABOR
not finding that there was a legitimate job contracting between
respondent and SSASI. SSASI is a legitimate job contractor as proven
by its Certificate of Registration issued by the DOLE. Respondent
entered into a valid service contract with SSASI, by virtue of which
petitioners were assigned by SSASI to work for respondent. The
service contract itself, which was duly approved by the DOLE, defined
the relationship between SSASI and petitioners as one of employer-
employees. It was SSASI which exercised the power of control over
petitioners. Petitioners were merely allowed to work at respondent's
premises for reasons of efficiency. Moreover, it was SSASI, not
respondent, who terminated petitioners' services. The fallo of the
Decision of the Court of Appeals state:
WHEREFORE, premises considered, the petition is GRANTED and
[NLRC's] assailed 29 June 2005 Decision is, accordingly, REVERSED
and SET ASIDE. In lieu thereof, the 18 February 2004 Decision
rendered in the case by Labor Arbiter Francisco A. Robles is
REINSTATED. 12
The Court of Appeals denied petitioners' Motion for Reconsideration in
a Resolution dated 27 April 2007.
Hence, petitioners come before this Court via the instant Petition for
Review on Certiorari assailing the 10 November 2006 Decision and 27
April 2007 Resolution of the Court of Appeals based on the following
assignment of errors: EACTSH
I.
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
REVERSING THE FINDING OF THE NLRC THAT RESPONDENT
COMPANY IS ENGAGED IN LABOR-ONLY CONTRACTING.
II.
THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN
REVERSING THE RULING OF THE NLRC THAT SAN SEBASTIAN
ALLIED SERVICES, INC. IS MERELY RESPONDENT'S AGENT AND
RESPONDENT IS PETITIONERS' REAL EMPLOYER. TcSaHC
III.
THE COURT OF APPEALS COMMITTED AN ERROR IN DISMISSING
PETITIONERS' COMPLAINT FOR ILLEGAL DISMISSAL.
It is apparent to this Court that the judicious resolution of the Petition at
bar hinges on two elemental issues: (1) whether petitioners were
employees of respondent; and (2) if they were, whether they were
illegally dismissed. aETASc
Respondent adamantly insists that petitioners were not its employees
but those of SSASI, a legitimate job contractor duly licensed by the
DOLE to undertake job contracting activities. The job performed by
petitioners were not directly related to respondent's primary venture as
flat glass manufacturer, for they were assigned to the mirroring line to
perform glass cutting on occasions when the employees of respondent
could not comply with the market's intermittent increased demand. And
even if petitioners were working at respondent's premises, it was SSASI
which effectively supervised the manner and method petitioners
performed their jobs, except as to the result thereof.
The Court would only be able to deem petitioners as employees of
respondent if it is established that SSASI was a labor-only contractor,
and not a legitimate job contractor or subcontractor. ISADET
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. 13 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;
WEEK 6 LABOR
(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. 14
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. 15 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; cDTHIE
(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. 16
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 employed by the
principal employer. 17 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. Respondent's bare
allegations, without supporting proof that SSASI had substantial capital
or investment, do not sway this Court. 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. DSacAE
Furthermore, the Court is unconvinced by respondent's argument that
petitioners were performing jobs that were not directly related to
respondent's 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 market's 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 market's demand; necessarily,
therefore, petitioners performed the same functions as the regular
workforce. Even respondent's claim that petitioners' services were
required only intermittently, depending on the market, deserves scant
credit. 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. 18
In the instant case, petitioners worked at the respondent's premises,
and nowhere else. 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. Obscurity hounds respondent's argument that
even if petitioners were working under its roof, it was still SSASI which
exercised control over the manner in which they accomplished their
work. There was no showing that it was SSASI who established
petitioners' working procedure and methods, or who supervised
WEEK 6 LABOR
petitioners in their work, or who evaluated the same. Other than being
the one who hired petitioners, there was absolute lack of evidence that
SSASI exercised control over them or their work. ScTCIE
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.
Despite respondent's disavowal of the existence of an employer-
employee relationship between it and petitioners and its unyielding
insistence that petitioners were employees of SSASI, the totality of the
facts and the surrounding circumstances of the case convey otherwise.
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. Surely, respondent cannot expect this Court to sustain its
stance and accord full evidentiary weight to the documentary evidence
belatedly procured in its vain attempt to evade liability as petitioners'
employer.
The Certificate of Registration presented by respondent to buttress its
position that SSASI is a duly registered job contractor is of little
significance, considering that it were issued only on 3 January 2003.
There is no further proof that prior to said date, SSASI had already
registered with and had been recognized by the DOLE as a job
contractor. cIECaS
Verily, the Certificate of Registration of SSASI, instead of supporting
respondent's case, only served to raise more doubts. The timing of the
registration of SSASI is highly suspicious. It is important to note that
SSASI was already providing respondent with workers, including
petitioners, long before SSASI was registered with the DOLE as a job
contractor. Some of the petitioners were hired by SSASI and made to
work for respondent for 11 years. Petitioners were also dismissed from
service only a month prior to the issuance of the Certificate of
Registration of SSASI. Neither respondent nor SSASI exerted any effort
to explain the reason for the belated registration with the DOLE by
SSASI as a purported job contractor. It may be safely discerned from
the surrounding circumstances that the Certificate of Registration of
SSASI was merely secured in order to blanket the previous relations
between SSASI and respondent with legality.
Moreover, the Certificate of Registration issued by the DOLE
recognized that SSASI was a legitimate job contractor only as of the
date of its issuance, 3 January 2003. There is no basis whatsoever to
give the said Certificate any retroactive effect. The Certificate can only
be used as reference by persons who would consider the services
offered by SSASI subsequent to its issuance. Respondent, who entered
into contractual relations with SSASI way before the said Certificate,
cannot claim that it relied thereon. SDECAI
Hence, the status of SSASI as a job contractor previous to its
registration with the DOLE on 3 January 2003 is still refutable. It can
only be determined upon an evaluation of its activities as contractor
prior to the issuance of its Certificate of Registration.
For the same reasons, this Court cannot give much weight to the
Opinions dated 18 February 2003 and 10 July 2003 of DOLE Secretary
Sto. Tomas and DOLE-BLR Director Cacdac, respectively, allowing
respondent to contract out certain services. The said Opinions were
noticeably issued only after the hiring and termination of petitioners.
And, although the Opinions allow respondent to contract out certain
services, they do not necessarily prove that the services respondent
contracted to SSASI were actually among those it was allowed to
contract out; or that SSASI was a legitimate job contractor, thus,
relieving respondent of any liability for the dismissal of petitioners by
SSASI.
Equally unavailing is respondent's 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. To permit
respondent to disguise the true nature of its transactions with SSASI by
the terms of its contract, for the purpose of evading its liabilities under
the law, would seriously impair the administration of justice. 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
WEEK 6 LABOR
contractor or as job contractor, it being crucial that its character be
measured in terms of and determined by the criteria set by statute. 19
Having established that respondent was petitioners' employer, the
Court now proceeds to determining whether petitioners were dismissed
in accordance with law.
Article 280 of the Labor Code, as amended, reads
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. DaEATc
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 Court expounded on the afore-quoted provision, thus
The primary standard, therefore, of determining a regular employment
is the reasonable connection between the particular activity performed
by the employee in relation to 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 or merely intermittent, the law deems the 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 also considered regular, but only with respect to
such activity and while such activity exists. 20
In the instant Petition, the Court has already declared that petitioners'
employment as quality controllers and glass cutters are directly related
to the usual business or trade of respondent as a glass manufacturer.
Respondent would have wanted this Court to believe that petitioners'
employment was dependent on the increased market demand.
However, bearing in mind that petitioners have worked for respondent
for not less than three years and as much as 11 years, which
respondent did not refute, then petitioners' continued employment
clearly demonstrates its continuing necessity and indispensability to the
business of respondent, raising their employment to regular status.
Thus, having gained regular status, petitioners were entitled to security
of tenure and could only be dismissed on just or authorized causes and
after they had been accorded due process. 21
As petitioners' employer, respondent has the burden of proving that the
dismissal was for a cause allowed under the law, and that they were
afforded procedural due process. 22 However, respondent failed to
discharge this burden with substantial evidence as it noticeably
narrowed its defense to the denial of any employer-employee
relationship between it and petitioners. DaScCH
The sole reason given for the dismissal of petitioners by SSASI was the
termination of its service contract with respondent. But since SSASI
was a labor-only contractor, and petitioners were to be deemed the
employees of respondent, then the said reason would not constitute a
just or authorized cause 23 for petitioners' dismissal. It would then
appear that petitioners were summarily dismissed based on the afore-
cited reason, without compliance with the procedural due process for
notice and hearing.
Herein petitioners, having been unjustly dismissed from work, are
entitled to reinstatement without loss of seniority rights and other
privileges and to full back wages, inclusive of allowances, and to other
benefits or their monetary equivalents computed from the time
compensation was withheld up to the time of actual reinstatement. 24
Their earnings elsewhere during the periods of their illegal dismissal
shall not be deducted therefrom. 25
WHEREFORE, premises considered, the instant Petition is GRANTED.
The Decision dated 10 November 2006 and Resolution dated 27 April
WEEK 6 LABOR

2007 of the Court of Appeals in CA-G.R. SP No. 93291 are REVERSED

and SET ASIDE. The Decision dated 29 June 2005 of the National
Labor Relations Commission in NLRC-NCR CA No. 039768-04 is
thereby REINSTATED. Let the records of this case be remanded to the
Computation and Examination Unit of the NLRC for the proper
computation of subject money claims as above-discussed. No costs.
STcEaI

SO ORDERED.

||| (Almeda v. Asahi Glass Philippines, Inc., G.R. No. 177785,

[September 3, 2008], 586 PHIL 103-119)
WEEK 6 LABOR
5. Aklan, et. al. vs. San Miguel Corp
[G.R. No. 168537. December 11, 2008.]
DAMIAN AKLAN, JUANITO AMIDO, REYNALDO BATICA, RAMIL
BAUTISTA, WELARD BAUTISTA, MAMERTO BRIGOLI, ELMER
CABOTEJA, JOEL CAMMAYO, WELFREDO CARIO, RODOLFO
CINCO, ARWEN DABLO, RUBEN DE CASTRO, ROMEO DEL
ROSARIO, RODERICK DELA CRUZ, ALEX DELA VEGA, JOAN
ERICO DUMALAGAN, JULITO DURIAN, JOSELITO DUYANEN, REX
FARNACIO, ROLANDO FELIZARDO, EFREN FERNANDEZ,
BERNARDO GALLOGO, EDUARDO GARCIA, REX IGNACIO,
DANIEL JAMISOLA, NOEL JANER, RAQUEL JANER, ROWAN
JANER, CONSORCIO LIAN, BERNARD MACARAEG, DARIO
MACARAEG, JESUS MACARAEG, EDGARDO MAHAGUAY,
IRENEO ODIAMAR, ALEXIS OLIVAR, ARNEL OLIVAR, EDUARDO
PEREMNE, ALAN QUILES, JOSEPH QUILES, RHONNEL RODIL,
RONALDO SALVADOR, RAMIL SANTIAGO, FRANCIS SUPRINO,
REXES SUPRINO, RODRIGO SUPRINO, RONALD SUPRINO,
EDUARDO TIONGSON, petitioners, vs. SAN MIGUEL
CORPORATION, BMA PHILASIA, INC., and ARLENE EUSEBIO,
respondents.
DECISION
REYES, R.T., J p:
WE tackle in this labor case the dichotomy between impermissible
labor-only contracting and legitimate job contracting.
This is a review on certiorari of the Decision 1 of the Court of Appeals
(CA) upholding that of the National Labor Relations Commission
(NLRC), finding the dismissal of petitioners justified. HcISTE
The Facts
Respondent BMA Philasia, Inc. (BMA) is a domestic corporation
engaged in the business of transporting and hauling of cargoes, goods,
and commodities of all kinds. Respondent Arlene Eusebio is the
president of BMA.
Petitioners, numbering forty-seven (47) in all, are the former employees
of respondent BMA at respondent San Miguel Corporation's (SMC)
warehouse in Pasig City. They were hired under fixed-term contracts
beginning October 1999.
On July 31, 2001, a number of petitioners went to the Department of
Labor and Employment (DOLE) District Office to file a complaint against
BMA and Eusebio for underpayment of wages and non-payment of
premium pay for rest day, 13th month pay, and service incentive leave
pay. 2
On August 14, 2001, petitioner Elmer Caboteja was charged with
insubordination and disrespect to superior, failure to properly perform
his job assignment, and unauthorized change of schedule. He was
directed to submit his written explanation within forty-eight (48) hours.
On August 17, 2001, Caboteja was terminated for the offenses of
disregard of company rules and regulations and rude attitude to
supervisors. On August 27, 2001, he filed a complaint for illegal
dismissal against BMA. 3
On various dates thereafter, BMA agreed to a settlement with some of
the complainants in the case 4 for underpayment of wages. 5 Eleven of
the present petitioners executed quitclaims and releases in favor of
BMA and Eusebio in the presence of DOLE district officers. BMA
refused to settle the claim of other complainants.
On September 13, 2001, petitioners Joan Erico Dumalagan and
Ronaldo Salvador were also terminated for failure to perform their job
responsibilities. On September 17, 2001, Dumalagan and Salvador
filed complaints for illegal dismissal against BMA. 6 DIEACH
On October 18, 2001, petitioners held a picket at the warehouse
premises to protest BMA's refusal to pay the claim for underpayment of
the rest of the workers. This picket disrupted the business operations
of private respondents, prompting BMA to terminate their services.
Subsequently, petitioners filed separate complaints against BMA,
Eusebio, and SMC for illegal dismissal. 7 All the complaints for illegal
dismissal were consolidated.
Petitioners alleged that they were illegally dismissed after filing a
complaint for underpayment of wages and non-payment of benefits
WEEK 6 LABOR
before the DOLE; they were terminated after staging a peaceful picket
to protest the non-payment of their claims. According to them, BMA is
a labor-only contractor. SMC was not only the owner of the warehouse
and equipment used by BMA, it was their true employer. The manner
and means by which they performed their work were controlled by SMC
through its Sales Logistic Coordinator who was overseeing their
performance everyday.
Private respondents BMA and Eusebio countered that petitioners
Caboteja, Dumalagan, and Salvador were validly and justly dismissed.
They were among the eleven who already signed quitclaims and
releases before the DOLE district office after receiving an amount in
settlement of their claims. As for the rest of petitioners (36
complainants), there was no illegal dismissal to speak of. Said
employees simultaneously did not go back to work for no apparent
reason on October 18, 2001.
Private respondent SMC maintained that it had no employer-employee
relationship with petitioners who were hired and supervised exclusively
by BMA pursuant to a warehousing and delivery agreement in
consideration of a fixed monthly fee. SMC argued that BMA is a
legitimate and independent contractor, duly registered with the
Securities and Exchange Commission (SEC) as a separate and distinct
corporation with substantial capitalization, investment, equipment, and
tools. It submitted documentary evidence proving that BMA engaged
the services of petitioners, paid for their wages and benefits, and
exercised exclusive control and supervision over them.
SMC showed that under their contract, BMA provided delivery trucks,
drivers, and helpers in the storage and distribution of SMC products.
On a day-to-day basis, after the routes were made by SMC salesmen,
they would book the orders they obtained. In turn, BMA's Schedular
Planner, detailed at the Pasig Warehouse, downloaded these booked
orders from the computer and processed the necessary documents to
be forwarded to the Warehouse Checker, also an employee of BMA.
SMC contended that petitioners were dismissed by BMA for staging a
two-hour strike without complying with the mandatory requirements for
a valid strike. As a result, BMA had to come up with ways and means
in order to avoid the disruption of delivery operations. SECHIA
Labor Arbiter and NLRC Dispositions
After due hearings, Labor Arbiter Veneranda C. Guerrero found
respondent BMA liable for illegal dismissal and ordered the
reinstatement of petitioners. She ruled that the evidence presented duly
established that BMA was a legitimate independent contractor and the
actual employer of petitioners. Its failure, however, to comply with the
registration and reportorial requirements of the DOLE rendered SMC,
its principal, directly liable to the claims of petitioners. 8 Thus, BMA and
SMC were found jointly and severally liable for the payment of
petitioners' backwages and money claims. The dispositive part of the
Arbiter ruling runs in this wise:
WHEREFORE, all the foregoing considered, judgment is hereby
rendered finding respondent BMA Philasia, Inc., liable for illegal
dismissal. Accordingly, is it hereby ordered to reinstate all of the
complainants to their previous positions, and to pay jointly and severally
with respondent San Miguel the complainants' backwages reckoned
from the time of their illegal dismissal up to their actual/payroll
reinstatement, the aggregate amount of which as of this date amounts
to SEVEN MILLION FIVE HUNDRED EIGHTEEN THOUSAND TWO
HUNDRED FIFTY-TWO AND 89/100 PESOS (P7,518,252.89). In
addition respondents are solidarily held liable to pay the complainants'
Daniel Jamisola, Rodolfo Cinco, Eduardo Garcia, Dario Macaraeg,
Romeo Del Rosario, Alan Quiles, Joseph Quiles, Ronald Suprino,
Rolando Felizardo, Efren Fernandez, Damian Aklan, Welard Bautista,
Rodrigo Suprino, Noel Janer, Jesus Macaraeg, Reynaldo Batica,
Rhonnel Rodil, Eduardo Peremne, Mamerto Brigoli, Ireneo Odiamar,
Rex Ignacio, Edgardo Mahaguay, Reyes Suprino, Rodrigo Dela Cruz,
Ramil Bautista, Francis Suprino, Eduardo Tiongson, Joel Cammayo,
Arwen Dablo, Alex Dela Vega, Bernard Gallogo, Rex Farnacio, Ruben
de Castro, Rowan Janer, Raquel Janer, and Bernardo Macaraeg their
salary differentials, service incentive leave pay and 13th month pay in
the aggregate amount of ONE MILLION TWO HUNDRED FIFTY-SIX
THOUSAND THREE HUNDRED SIXTY-SIX and 80/100 PESOS
(P1,256,366.80).
Respondents are further assessed the amount equivalent to ten
percent (10%) of the total award, as and for attorney's fees.
The computation of the complainants' individually adjudged benefits
shall form part of this Decision as Annex "A" hereof.
All other claims are DISMISSED for lack of merit.
SO ORDERED. 9 (Emphasis supplied)
WEEK 6 LABOR
Respondents appealed the decision of the Labor Arbiter to the NLRC.
On December 19, 2003, the NLRC reversed the Labor Arbiter
disposition and ruled that there was no illegal dismissal. The fallo of the
NLRC decision reads: TEIHDa
WHEREFORE, in view of all the foregoing, the appealed decision of the
Labor Arbiter is hereby REVERSED and SET ASIDE and a new
decision is hereby rendered finding that there was no illegal dismissal
committed by respondents, hence, no liability for backwages. However,
complainants are awarded their salary differentials, service incentive
leave pay and 13th month pay except for the year 2000 in the aggregate
amount of ONE MILLION TWO HUNDRED FIFTY-SIX THOUSAND
THREE HUNDRED SIXTY-SIX AND 80/100 (P1,256,366.80) and 10%
ATTORNEY's FEES based on the salary differentials, SILP and 13th
month pay.
SO ORDERED. 10
The NLRC found that petitioners Caboteja, Dumalagan, and Salvador
were separated from their jobs for just and valid causes. They were
given the opportunity to explain their sides. As for the quitclaims
previously executed by the other petitioners, the NLRC ruled that these
were sufficient basis to release respondent BMA from liability.
With respect to the first and second assigned errors, the records show
that complainants Elmer Caboteja, Erico "Jojo" Dumalagan and
Ronaldo Salvador were separated from their jobs for just and valid
causes and after they were given the chance to explain their sides.
Copies of memoranda were served upon them advising their violation
of company rules and regulations and rude attitude and disrespect to
superiors and disrespect to superiors in the case of Caboteja and failure
to perform duties and responsibilities in the case of Dumalagan and
Salvador. They were asked to explain and finding their explanations
unacceptable, respondents dismissed them. Hence, they are not
entitled to separation pay. TCSEcI
As regards the other complainants, there is no showing that they were
illegally dismissed from their jobs by BMA. They have not given details
on to whom they reported for work, who barred them from entering the
respondents' premises and from working, in so many words how they
were told that they were already dismissed. The only evident fact is that
they just stopped reporting for work beginning October 18, 2001 without
informing BMA why there were doing so. Their claim that they were not
allowed by the respondents to return to their work is hard to believe.
Why should the respondents terminate simultaneously the services of
the complainants and completely paralyze respondents' business
operation, particularly their service contract with SMC? Complainants
have not shown any reason which would compel the respondents to
resort to mass dismissal. On the other hand, complainants have strong
reason to paralyze respondents' operation in order to force compliance
to their demands.
xxx xxx xxx
In fact, the records of this case also disclose that during the mandatory
conciliation proceedings, BMA urged these complainants to go back to
work, but may refused to do so. Obviously, their refusal to go back to
their work was a deliberate move to force respondents to give in to their
demands. Considering this refusal, it is not hard to believe that
complainants were not dismissed but rather they refused to work in
order to paralyze respondents' operations and force them to give in to
complainants' demands. 11 (Emphasis supplied)
CA Disposition
Aggrieved, petitioners filed a Rule 65 petition with the CA. The following
grounds were interposed: (1) that the NLRC gravely abused its
discretion in holding that Caboteja, Dumalagan, and Salvador were
validly dismissed; (2) that the other petitioners were not dismissed but
were guilty of abandonment; and (3) that the quitclaims executed by
eleven of the petitioners barred the complaint for illegal dismissal. 12
On April, 15, 2005, the CA denied the petition, affirming in full the NLRC
disposition, thus:
WHEREFORE, premises considered, the present petition is hereby
DENIED DUE COURSE and accordingly DISMISSED, for lack of merit.
The assailed Decision dated December 19, 2003 and Resolution dated
July 20, 2004 of the National Labor Relations Commission in the
consolidated cases, NLRC Case No. CN 08-04522-01-CA No. 036856-
03 (NLRC NCR North Sector Case Nos. 08-04522-2001, 09-04941-
2001, 00-11-05023-2001, 00-11-05969-2001, 11-01-00450-2002, 02-
00934-2002, 12-06288-2001, and 12-06320-2001), are hereby
AFFIRMED and UPHELD.
No pronouncement as to costs.
SO ORDERED. 13
WEEK 6 LABOR
In ruling against petitioners, the CA found that the NLRC committed no
reversible error or grave abuse of discretion in ruling that petitioners
were not illegally dismissed but actually refused to report back to work
after staging a surprise stoppage that paralyzed respondent BMA's
business operations at the Pasig warehouse on October 18, 2001.
Issues
Undaunted, petitioners resorted to this review on certiorari, anchored
on the following grounds:
The CA committed a serious legal error in not ruling that respondent
San Miguel Corporation (principal of respondent BMA Philasia), and
respondent Arlene Eusebio, (president and owner of respondent BMA
Philasia) are all solidarily liable for petitioners' money claims.
The CA committed a serious legal error in ruling that the quitclaims
executed by eleven (11) of the petitioners, in relation to their claims for
underpayment of wages before the DOLE, also barred their subsequent
complaint for illegal dismissal, despite the fact that the said complaint
was not yet in existence at the time the quitclaims were executed.
The CA committed a serious legal error in refusing to hold that
respondent San Miguel Corporation was petitioners' real employer
despite the fact that respondent BMA Philasia was not duly registered
with the DOLE and caused the workers to perform tasks directly related
to the business of respondent San Miguel Corporation and under the
latter's supervision.
The CA committed a legal error and acted with grave abuse of
discretion in holding that petitioners Elmer Caboteja, Joan Erico
Dumalagan, and Ronaldo Salvador were not illegally dismissed from
their jobs, despite a previous ruling of the Labor Arbiter to the contrary.
The CA committed a serious legal error in not awarding damages, at
the very least, to petitioners Joan Erico Dumalagan, and Ronaldo
Salvador for violation of their right to due process. EHaASD
The CA seriously committed an error of law in holding that the rest of
the petitioners abandoned their jobs and were not dismissed therefrom,
contrary to the findings of the Labor Arbiter who heard the case. 14
(Underscoring supplied)
Our Ruling
Petitioners argue mainly that their employer is, in fact, respondent
SMC, not respondent BMA. They contend that BMA is a labor-only
contractor and SMC, as their true employer, should be held directly
liable for their money claims.
A finding that a contractor is a "labor-only" contractor, as opposed to
permissible job contracting, 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. 15
Both the Labor Arbiter and the NLRC found that the employment
contracts of petitioners duly prove that an employer-employee
relationship existed between petitioners and BMA. We hasten to add
that the existence of an employer-employee relationship is ultimately a
question of fact and the findings by the Labor Arbiter and the NLRC on
that score shall be accorded not only respect but even finality when
supported by ample evidence. 16
In its ruling, the NLRC considered the following elements to determine
the existence of an employer-employee relationship: (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. 17 All four elements were found by the NLRC to be
vested in BMA. This NLRC finding was affirmed by the CA: HCITDc
. . . It is the BMA which actually conducts the hauling, storage, handling,
transporting, and delivery operations of SMC's products pursuant to
their warehousing and Delivery Agreement. BMA itself hires and
supervises its own workers to carry out the aforesaid business
activities. Apart from the fact that it was BMA which paid for the wages
and benefits, as well as SSS contributions of petitioners, it was also the
management of BMA which directly supervised and imposed
disciplinary actions on the basis of established rules and regulations of
the company. The documentary evidence consisting of numerous
memos throughout the period of petitioners' employment leaves no
doubt in the mind of this Court that petitioners are only too aware of
who is their true employer. Petitioners received daily instructions on
their tasks form BMA management, particularly, private respondent
Arlene C. Eusebio, and whenever they committed lapses or offenses in
connection with their work, it was to said officer that they submitted
WEEK 6 LABOR
compliance such as written explanations, and brought matters
connected with their specific responsibilities. 18
The employer-employee relationship between BMA and petitioners is
not tarnished by the absence of registration with DOLE as an
independent job contractor on the part of BMA. The absence of
registration only gives rise to the presumption that the contractor is
engaged in labor-only contracting, a presumption that respondent BMA
ably refuted.
Thus, We find no grave abuse of discretion in the CA observation that
respondent BMA is the true employer of petitioners who should be held
directly liable for their claims. Likewise, no grave abuse of discretion
can be ascribed to the CA when it ruled that illegal dismissal was
absent.
The records fully disclose that petitioners Caboteja, Dumalagan, and
Salvador were separated from their jobs for just and valid causes.
Caboteja was cited for violation of company rules and regulations and
disrespectful conduct. Dumalagan and Salvador were investigated for
failure to perform duties and responsibilities. After their explanations
were found unacceptable, they were accordingly dismissed.
As for the other petitioners, they contend that they were illegally
dismissed when respondent BMA barred them from entering the work
premises and from performing their work. Both the NLRC and the CA
found that petitioners failed to substantiate this contention. Rather, what
was shown in the records was that they simply stopped reporting for
work starting October 18, 2001 when they staged a picket. The CA
observation along this line is worth restating: HaAIES
. . . petitioners failed to substantiate their claim that they had been
prevented from entering the work premises after staging a "picket" on
October 18, 2001 to further press their demands for payment of their
money claims. At this time, the labor standards case was already
pending with the DOLE District Office and petitioners could have
availed of said proceedings with the intervention of DOLE officials.
Instead, however, they resorted to an illegal stoppage of work that
paralyzed the business operations of BMA. As aptly noted by the
NLRC, there is simply no probable or logical reason for private
respondent BMA to simultaneously dismiss its workers that will disrupt
business operations at the warehouse. Under the factual
circumstances, it clearly appears that petitioners refused to report back
to their work in order to force their employer BMA to give in to their
immediate demand for the salary differentials and unpaid benefits
subject of their complaint with the DOLE. Hence, BMA cannot be held
liable for illegal dismissal.
While it is true that the defense of abandonment may not be given
credence or is negated by the immediate filing of illegal dismissal cases
by the affected employees, records clearly reveal that as of October 18,
2001, petitioners without justifiable cause failed and refused to report
back to their work. Their claim of having been prevented from entering
the work premises was not given due weight for no particulars was even
alleged by them in their report back to their jobs, who prevented their
entry to the company premises and details as to what steps they took
to bring the matter to the attention of DOLE District Office wherein their
complaint for labor standards violation was already pending. 19
(Emphasis supplied)
Moreover, eleven of petitioners contend that their quitclaims should not
be considered as a bar to their complaint for illegal dismissal because
that complaint was not yet in existence at the time the quitclaims were
executed. That the quitclaims were executed voluntarily is not denied
by petitioners. They, however, contend that the quitclaims should be
construed as limited to the money claims in connection with the first
labor standards complaint 20 they had filed before the DOLE district
office.
Unless there is a showing that the employee signed involuntarily or
under duress, quitclaims and releases are upheld by this Court as the
law between the parties. 21 If the agreement was voluntarily entered
into by the employee, with full understanding of what he was doing, and
represents a reasonable settlement of the claims of the employee, it is
binding on the parties and may not be later disowned simply because
of a change of mind. 22 In the case under review, the quitclaims and
releases signed by petitioners stated: HIAEcT
That for and in consideration of the sum of FIFTY-THREE THOUSAND
PESOS (P53,000.00) 23 in settlement of my/our claim/s as financial
assistance and/or gratuitously given by my/our employer receipt of
which is hereby acknowledge to my/our complete and full satisfaction,
I/we hereby release and discharge the above respondent and/or its
officers from any and all claims by way of wages, overtime pay,
WEEK 6 LABOR

differential pay, or otherwise as may be due me/us incident to my/our

past employment with said establishment. I/we hereby state further that
I/we have no more claim, right or action of whatsoever nature whether
past, present or contingent against the said respondent and/or its
officers. 24 (Emphasis supplied)

As correctly observed by the NLRC, the language employed by the

above quitclaims and releases indicates in no uncertain terms that
petitioners voluntarily and freely acknowledged receipt of full
satisfaction of all claims against respondents. Thus, the quitclaims
effectively barred petitioners from questioning their dismissal.
Social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the protection
that should be equally and evenly extended to all groups as a combined
force in our social and economic life. 25 While labor should be protected
at all times, this protection must not be at the expense of capital.

WHEREFORE, the petition is DENIED and the assailed Decision of the

Court of Appeals AFFIRMED. EaIcAS
SO ORDERED.

||| (Aklan v. San Miguel Corp. , G.R. No. 168537, [December 11, 2008],
594 PHIL 344-361)