Fonterra Brand Phils, Inc.
vs Largado and Estrellado The instant petition for certiorari under Rule 65 assails the decision and the
Case Digest GR 205300 March 18 2015
Facts:
Fonterra contracted the services of Zytron to provide for trade merchandising
representatives (TMRs) in the marketing and promotion of its milk and dairy
products.
Among those TMRs whose services were engaged are Largado and
Estrellado, who are the respondents in this case.
After 4 years, Fonterra terminated its contract with Zytron and entered into
an agreement for manpower supply with AC Sicat.
Desirous of continuing their work as TMRs in Fonterra, Largado and
Estrellado submitted their job application with AC Sicat, a legitimate job
contracting company.
AC Sicat hired their services as TMRs for a term of 5 months.
When their 5-month contract with AC Sicat were about to expire, they
allegedly sought renewal thereof, which was allegedly refused.
This prompted them to file for complaints of illegal dismissal, regularization,
nonpayment of service incentive leave, 13th month pay, and actual and
moral damages against Fonterra, Zytron and AC Sicat.
Issue 1: W/N Largado and Estrellado were illegally terminated by Zytron
No. When Largado and Estrella refused to renew their contract with Zytron by
applying with AC Sicat, they effectively resigned from Zytron. Hence, they were not
illegally dismissed because they voluntary terminated their employment with the latter.
Issue 2: W/N Largado and Estrellado were illegally terminated by AC Sicat
No. There is no illegal dismissal to speak of since AC Sicat is a legitimate job
contractor and their termination is merely brought about by the expiration of their
employment contracts with AC Sicat.
First, Largado and Estrellado were hired as fixed-term or project employees of AC
Sicat. The determining factor of such employment is not the duty of the employee but
the day certain agreed upon by the parties for the commencement and termination of
the employment relationship. Second, the non-renewal of their contracts by AC Sicat
is a management prerogative, and failure of respondents to prove that such was done
in bad faith militates against their contention that they were illegally dismissed.
Hence, the expiration of their contract with AC Sicat simply caused the natural
cessation of their fixed-term employment thereat.
PEOPLES BROADCASTING (BOMBO RADYO PHILS., INC.), Petitioner,
vs. THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT,
THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON
JUEZAN, Respondents.
FACTS:
resolution of the Court of Appeals.
The petition traces its origins to a complaint filed by Jandeleon Juezan
(respondent) against Peoples Broadcasting Service, Inc. (Bombo Radyo
Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive
leave, 13th month pay, premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages and non-coverage of SSS,
PAG-IBIG and Philhealth (non-diminution of benefits in the amount allegedly
6K) before the Department of Labor and Employment (DOLE) Cebu
City.
On the basis of the complaint, the DOLE conducted a plant level inspection.
Labor Inspector wrote under the heading Findings/Recommendations non-
diminution of benefits and Note: Respondent deny employer-employee
relationship with the complainant- see Notice of Inspection results.
PETITIONERS POSITION: Management representative informed that complainant is
a drama talent hired on a per drama participation basis hence no employer-
employeeship existed between them. As proof of this, management presented
photocopies of cash vouchers, billing statement, employments of specific undertaking
(a contract between the talent director & the complainant), summary of billing of
drama production etc. They (mgt.) has not control of the talent if he ventures into
another contract w/ other broadcasting industries.
RULING OF DOLE REGIONAL DIRECTOR: respondent is an employee of petitioner,
and that the former is entitled to his money claims amounting toP203,726.30. MR
denied; Appeal with the DOLE Secretary, dismissed the appeal on the ground that
petitioner did not post a cash or surety bond and instead submitted a Deed of
Assignment of Bank Deposit.
APPEAL WITH THE CA: claiming that it was denied due process when the DOLE
Secretary disregarded the evidence it presented and failed to give it the opportunity to
refute the claims of respondent. Petitioner maintained that there is no employer-
employee relationship had ever existed between it and respondent because it was the
drama directors and producers who paid, supervised and disciplined respondent. It
also added that the case was beyond the jurisdiction of the DOLE and should
have been considered by the labor arbiter because respondents claim
exceeded P5,000.00. CA denied.
WITH THE SC: petitioner argues that the National Labor Relations Commission
(NLRC), and not the DOLE Secretary, has jurisdiction over respondents claim, in
view of Articles 217 and 128 of the Labor Code.
RESPONDENTS POSITION: respondent posits that the Court of Appeals did not
abuse its discretion. He invokes Republic Act No. 7730, which removes the
jurisdiction of the Secretary of Labor and Employment or his duly authorized
representatives, from the effects of the restrictive provisions of Article 129 and 217 of
the Labor Code, regarding the confinement of jurisdiction based on the amount of
claims.; and wrong mode of appeal.
ISSUE: WON the Secretary of Labor have the power to determine the existence of an
employer-employee relationship.
HELD: No
To resolve this pivotal issue, one must look into the extent of the visitorial and
enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as
amended by Republic Act 7730. It reads:
Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to
the contrary, and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the
course of inspection xxx
The provision is quite explicit that the visitorial and enforcement power of the
DOLE comes into play only in cases when the relationship of employer-
employee still exists. Of course, a persons entitlement to labor standard benefits
under the labor laws presupposes the existence of employer-employee relationship in
the first place.The clause signifies that the employer-employee relationship must have
existed even before the emergence of the controversy. Necessarily, the DOLEs
power does not apply in two instances, namely: (a) where the employer-
employee relationship has ceased; and (b) where no such relationship has ever
existed.
The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the
Disposition of Labor Standards Cases15 issued by the DOLE Secretary. It reads:
Rule II MONEY CLAIMS ARISING FROM COMPLAINT/ROUTINE INSPECTION
Sec. 3. Complaints where no employer-employee relationship actually exists. Where
employer-employee relationship no longer exists by reason of the fact that it has
already been severed, claims for payment of monetary benefits fall within the
exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face of
the complaint, it can be ascertained that employer-employee relationship no
longer exists, the case, whether accompanied by an allegation of illegal
dismissal, shall immediately be endorsed by the Regional Director to the
appropriate branch of the National Labor Relations Commission (NLRC).
Clearly the law accords a prerogative to the NLRC over the claim when the employer-
employee relationship has terminated or such relationship has not arisen at all. The
reason is obvious. In the second situation especially, the existence of an employer-
employee relationship is a matter which is not easily determinable from an ordinary
inspection, necessarily so, because the elements of such a relationship are not
verifiable from a mere ocular examination. The determination of which should be
comprehensive and intensive and therefore best left to the specialized quasi-
judicial body that is the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement
power somehow has to make a determination of the existence of an employer-
employee relationship. Such prerogatival determination, however, cannot be
coextensive with the visitorial and enforcement power itself. Indeed, such
determination is merely preliminary, incidental and collateral to the DOLEs primary
function of enforcing labor standards provisions. The determination of the existence of
employer-employee relationship is still primarily lodged with the NLRC.
Thus, before the DOLE may exercise its powers under Article 128, two important
questions must be resolved: (1) Does the employer-employee relationship still exist,
or alternatively, was there ever an employer-employee relationship to speak of; and
(2) Are there violations of the Labor Code or of any labor law?
A mere assertion of absence of employer-employee relationship does not deprive the
DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a
prima facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power.
Without a doubt, petitioner, since the inception of this case had been
consistent in maintaining that respondent is not its employee. Certainly, a
preliminary determination, based on the evidence offered, and noted by the
Labor Inspector during the inspection as well as submitted during the
proceedings before the Regional Director puts in genuine doubt the existence
of employer-employee relationship. From that point on, the prudent recourse on
the part of the DOLE should have been to refer respondent to the NLRC for the
proper dispensation of his claims.Furthermore, as discussed earlier, even the
evidence relied on by the Regional Director in his order are mere self-serving
declarations of respondent, and hence cannot be relied upon as proof of employer-
employee relationship.
Petition GRANTED.
___________
Jethro Intelligence & Security Corp., vs Secretary of DOLE (2009) G.R. 172537
Facts:
Petitioner Jethro Intelligence and Security Corporation (Jethro) is a security
service contractor with a security service contract agreement with co-
petitioner Yakult Phils., Inc. (Yakult).
On the basis of a complaint filed by respondent Frederick Garcia (Garcia),
one of the security guards deployed by Jethro, for underpayment of wages,
legal/special holiday pay, premium pay for rest day, 13th month pay, and
night shift differential, the Department of Labor and Employment (DOLE)
conducted an inspection at Yakults premises in Calamba, Laguna in the
course of which several labor standards violations were noted, including
keeping of payrolls and daily time records in the main office,under payment
of wages, overtime pay and other benefits, and non-registration with the
DOLE as required under Department Order No. 18-02.
Hearings on Garcias complaint and on the subsequent complaints of his co
respondents Gil Cordero et al. were conducted during which Jethro
submitted copies of payrolls covering June 16 to 30, 2003, February to May
16-31, 2004, June 16-30, 2003,and February 1-15, 2004. Jethro failed to
submit daily time records of the claimants from 2002 to June 2004, however,
despite the order for it to do so.
 By Order of September 9, 2004, the DOLE Regional Director, noting
petitioners failure to rectify the violations noted during the above-stated
inspection within the period given for the purpose, found them jointly and
severally liable to herein respondents for the aggregate amount of EIGHT
HUNDRED NINE THOUSAND TWO HUNDRED TEN AND 16/100PESOS
(P809,210.16) representing their wage differentials, regular holiday pay,
special day premium pay, 13th month pay, overtime pay, service incentive
leave pay, night shift differential premium and rest day premium. Petitioners
were also ordered to submit proof of payment to the claimants within ten
calendar days, failing which the entire award would be doubled, pursuant to
Republic Act No. 8188, and the corresponding writs of execution and
garnishment would be issued.
Issues:
1. Whether the SOLE has no jurisdiction over the case because, following Article 129
of the Labor Code, the aggregate money claim of each employee exceeded
P5,000.00.
2. Whether petitioner Jethro, as the admitted employer of respondents, could not be
expected to keep payrolls and daily time records in Yakults premises as its office is in
Quezon City, hence, the inspection conducted in Yakults plant had no basis.
3. Whether or not the issuance of the questioned writs of execution and garnishment
by the DOLE-Regional Director was in order.
Held:
While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter
has jurisdiction to hear and decide cases where the aggregate money claims of each
employee exceeds P5,000.00, said provisions do not contemplate nor cover the
visitorial and enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article 128 of the
Labor Code (as amended by R.A.No. 7730).Art. 128 explicitly excludes from its
coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding
the provisions of Articles 129 and 217 of this Code to the contrary xxx thereby
retaining and further strengthening the power of the Secretary of Labor or his duly
authorized representative to issue compliance orders to give effect to the labor
standards provisions of said Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial safety engineers made in the
course of inspection In the case at bar, the Secretary of Labor correctly assumed
jurisdiction over the case as it does not come under the exception clause in Art.
128(b) of the Labor Code. While petitioner Jethro appealed the inspection results and
there isa need to examine evidentiary matters to resolve the issues raised, the
payrolls presented by it were considered in the ordinary course of inspection. While
the employment records of the employees could not be expected to be found in
Yakults premises in Calamba, as Jethros offices are in Quezon City, the records
show that Jethro was given ample opportunity to present its payrolls and other
pertinent documents during the hearings and to rectify the violations noted during the
ocular inspection. It, however, failed to do so, more particularly to submit competent
proof that it was giving its security guards the wages and benefits mandated by law.
Jethros failure to keep payrolls and daily time records in Yakults premises was not
the only labor standard violation found to have been committed by it; it likewise failed
to register as a service contractor with the DOLE, pursuant to Department Order No.
18-02 and, as earlier stated, to pay the wages and benefits in accordance with the
rates prescribed by law. It bears emphasis that the SOLE, under Article 106 of the
Labor Code, as amended, exercises quasi-judicial power, at least to the extent
necessary to determine violations of labor standards provisions of the Code and other
labor legislation. He/she or the Regional Directors can issue compliance orders and
writs of execution for the enforcement thereof. The significance of and binding effect
of the compliance orders of the DOLE Secretary is enunciated in Article 128 of the
Labor Code. And Sec. 5, Rule V (Execution) of the Rules on Disposition of Labor
Standards Cases in Regional Offices provides that the filing of a petition for certiorari
shall not stay the execution of the appealed order or decision, unless the aggrieved
party secures a temporary restraining order (TRO) from the Court. In the case at bar,
no TRO or injunction was issued, hence, the issuance of the questioned writs of
execution and garnishment by the DOLE-Regional Director was in order.
Chavez vs Bonto-Perez
Chavez is a dancer who was contracted by Centrum Placement &
Promotions Corporation to perform in Japan for 6 months.
The contract was for $1.5k a month, which was approved by POEA.
After the approval of said contract, Chavez entered into a side contract
reducing her salary with her Japanese employer through her local manager-
agency (Jaz Talents Promotion).
The salary was reduced to $500 and $750 was to go to Jaz Talents. In
February 1991 (two years after the expiration of her contract), Chavez sued
Centrum Placement and Jaz Talents for underpayment of wages before the
POEA.
The POEA ruled against her. POEA stated that the side agreement entered
into by Chavez with her Japanese employer superseded the Standard
Employment Contract; that POEA had no knowledge of such side agreement
being entered into; that Chavez is barred by laches for sleeping on her right
for two years.
ISSUE: Whether or not Chavez is entitled to relief.
HELD: Yes. The SC ruled that the managerial commission agreement executed by
Chavez to authorize her Japanese Employer to deduct her salary is void because it is
against our existing laws, morals and public policy. It cannot supersede the standard
employment contract approved by the POEA with the following stipulation appended
thereto:
It is understood that the terms and conditions stated in this Employment Contract are
in conformance with the Standard Employment Contract for Entertainers prescribed
by the POEA under Memorandum Circular No. 2, Series of 1986. Any alterations or
changes made in any part of this contract without prior approval by the POEA shall be
null and void;
The side agreement which reduced Chavezs basic wage is null and void for violating
the POEAs minimum employment standards, and for not having been approved by
the POEA. Here, both Centrum Placement and Jaz Talents are solidarily liable.
Laches does not apply in the case at bar. In this case, Chavez filed her claim well salary, then in effect, we will be saying that this kind of salesmen do not receive any
within the three-year prescriptive period for the filing of money claims set forth in salary and, therefore, not entitled to separation pay in the event of discharge from
Article 291 of the Labor Code. For this reason, laches is not applicable. employment. This narrow interpretation is not in accord with the liberal spirit of the
labor laws, and considering the purpose of separation pay which is, to alleviate the
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL, difficulties which confront a dismissed employee thrown to the streets to face the
petitioners,vs NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), harsh necessities of life. In Soriano vs. NLRC (155 SCRA 124), we held that the
LABOR ARBITER FLAVIO AGUAS,and F.E. ZUELLIG (M), INC., respondents. commissions also claimed by the employee (override commission plus net deposit
incentive) are not properly includible in such base figure since such commissions
FACTS: must be earned by actual market transactions attributable to the petitioner [salesman].
Since the commissions in the present case were earned by actual transactions
Zuelig filed an application for clearance to terminate the services of Songco, attributable to Song, et al., these should be included in their separation pay. In the
and others, on the ground of retrenchment due to financial losses. computation thereof, what should be taken into account is the average commission
During the hearing, the parties agreed that the sole issue to be resolved was earned during their last year of employment.
the basis of the separation pay due.
The salesmen received monthly salaries of at least P400.00 and commission
for every sale they made.
The Collective Bargaining Agreements between Zuelig and the union of
which Songco, et al. were members contained the following provision: "Any
employee who is separated from employment due to old age, sickness,
death or permanent lay-off, not due to the fault of said employee, shall
receive from the company a retirement gratuity in an amount equivalent to
one (1) month's salary per year of service."
The Labor Arbiter ordered Zuelig to pay Songco et al., separation pay
equivalent to their one month salary (exclusive of commissions, allowances,
etc.) for every year of service with the company.
The National Labor Relations Commission sustained the Arbiter.

ISSUE: Whether or not earned sales commissions and allowances should be included
in the monthly salary of Songco, et al. for the purpose of computing their separation
pay.

RULING: YES

In the computation of back wages and separation pay, account must be taken not
only of the basic salary of the employee, but also of the transportation and emergency
living allowances. Even if the commissions were in the form of incentives or
encouragement, so that the salesman would be inspired to put a little more industry
on jobs particularly assigned to them, still these commissions are direct
remunerations for services rendered which contributed to the increase of income of
the employee.

Commission is the recompense compensation or reward of an agent, salesman,

executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a
percentage on the amount of his transactions or on the profit to the principal.

The nature of the work of a salesman and the reason for such type of remuneration
for services rendered demonstrate that commissions are part of Songco, et al'swage
or salary. The Court takes judicial notice of the fact that some salesmen do not
receive any basic salary, but depend on commissions and allowances or
commissions alone, although an employer-employee relationships exists. If the
opposite view is adopted, i.e., that commissions do not form part of the wage or