2015 labor finals digests final

UNIVERSITY OF SAN CARLOS

COLLEGE OF LAW

COMPENDIUM OF LABOR STANDARDS LAW

FINAL CASE DIGESTS 2014

_________________________________

IN PARTIAL FULFILLMENT

FOR THE REQUIREMENTS IN

LLB 242N (LABOR STANDARDS LAW)

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SUBMITTED BY:

(name)

LLB – 2 (EH306)

SUBMITTED TO:

ATTY. JEFFERSON M. MARQUEZ

OCTOBER 16, 2014

LABOR STANDARDS LAW

LIST OF LABOR STANDARD CASES

JURISDICTION OF THE LABOR ARBITER

2011 NLRC RULES OF PROCEDURE

1. T/SGP Larkins vs. NLRC, G.R. No. 92432, February 23, 1995

2. UERM Memorial Medical Center vs. NLRC, G.R. No. 110419, March 3, 1997

3. Phil Tranco Services vs. NLRC, G.R. No. 124100, April 1, 1998

4. St. Martin Funeral Homes vs. NLRC, G.R. No. 130866, September 16, 1998

5. Ludo & Luym Corp., vs. Saornido, G.R. No. 140960, January 20, 2003

6. Hansin Engineering & Construction vs. CA, G.R. No. 165910, April 10, 2006

7. Phil. Journalist Inc. vs. NLRC, G.R. No. 166421, Sept. 5, 2006

8. Balagtas Multi-purpose Coop. Vs. CA, G.R. No. 159268, Oct. 27, 2006

9. St. Martin Funeral Homes vs. NLRC, G.R. No. 142351, Nov. 22, 2006

10. DOLE Phils. Vs. Esteva, G.R. No. 161115, Nov. 30, 2006

11. Intercontinental Broadcasting Corp., vs. Panganiban, G.R. No. 151407, February 6, 2007

12. Far East Agricutural Supply vs. Lebatigue, G.R. No. 162813, February 12, 2007

13. Letran Calamba Faculty & Employees Association vs. NLRC, G.R. No. 156225, January 29, 2008

14. Metro Transit Organization vs. Piglas NFWU-KMU et al., G.R. No. 175460, April 14, 2008

15. J.K. Mercado & Sons Agricultural Enterprises, Inc., vs Sto. Tomas, G.R.No. 158084, August 29, 2008

16. J. Phil. Marine Inc., vs. NLRC, G.R. No. 1753661, August 11, 2008; but see Ilagan vs. Court of Appeals, G.R. No. 162089, July 9, 2008

17. Sy vs. ALC Industries, G.R. No. 168339, October 10, 2008

18. PCI Travel Corp., vs. NLRC, G.R. No. 154379, October 31, 2008

19. Lopez vs. Q. C. Sports Club, G.R. No. 164032, January 19, 2009

20. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012

21. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012

22. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012

23. McBurnie vs Ganzon, G.R. No. 178034/1718117, October 17, 2013, En banc

24. Indophil Textile Mills Inc. vs Engr. Adviento, G.R. No. 171212, August 4, 2014

25. Manila Mining Corp., vs. Amor, G.R. No. 182800, April 20, 2015

OTHER IMPORTANT LABOR PROVISIONSA. CONTRACTING ARRANGEMENT

26. PBCom vs. NLRC, 146 SCRA 347 [1986]27. Neri vs. NLRC, 224 SCRA 717 [1993]28. Filipinas Synthetic Fiber Corp., vs. NLRC,

257 SCRA 336 [1996]29. Maraquinot vs. NLRC, 284 SCRA 539

[1998]30. Urbanes Jr. vs. Sec. Of Labor, G.R. No.

122791, Feb. 19, 200331. San Miguel vs. Maerc Integrated Services,

G.R. No. 144672, July 10, 200332. Mariveles Shipyard vs. CA, G.R. No.

144134, Nov. 11, 200333. New Golden City Builders vs. CA, G.R. No.

154715, Dec. 11, 200334. National Food Authority vs. Maceda

SecurIty Agency, G.R. No. 163448, March 8, 2005

35. Abella vs. PLDT, G.R. No. 159469, June 8, 2005

36. San Miguel vs. Aballa, G.R. No. 149011, June 28, 2005

37. Manila Electric Co., vs. Benamira, G.R. No. 145271, July 14, 2005

UNIVERSITY OF SAN CARLOS SCHOOL OF LAW AND GOVERNANCE 2

LABOR STANDARDS LAW

38. Granspan Development Corp., vs. Bernardo, G.R. No. 141464, Sept. 21, 2005

39. Acevedo vs. Advanstar Co., G.R. No. 157656, Nov. 11, 2005

40. Big AA Manufacturer vs. Antonio, G.R. No. 1608504, March 3, 2006

41. DOLE Phils. Vs. Esteva, G.R. No. 161115, Nov. 30, 2006

42. San Miguel Vs. NLRC, G.R. No. 147566, Dec. 6, 2006 citing Maerc Integrated Services case

43. Eparwa Security & Janitorial Services vs. Liceo De Cagayan Univ. G.R. No. 150402, Nov. 28, 2006, citing Eagle Security case

44. Lapanday Agri Development Corp., vs. Court of Appeals, 324 SCRA 39

45. Escario vs. NLRC, 333 SCRA 257 [2000]46. Aboitiz Haulers vs. Dimapatoi, G.R. No.

148619, Sept. 19, 200647. GSIS vs. NLRC, G.R. No. 157647, October

15, 2007, citing Rosewood Processing vs. NLRC, 290 SCRA 408

48. Republic of the Phils/SSC/SSS vs. Asiapro Cooperative, G.R. No. 172101, November 23, 2007

49. Almeda et al., vs. Asahi Glass, G.R. No. 177785, Sept 3, 2008

50. Sasan, Sr et al., vs. NLRC and EPCIB, G.R. No. 176240, October 17, 2008

51. Purefoods Corp., vs. NLRC et al., G.R. No. 172241, November 20, 2008

52. Maranaw Hotels and Resort vs. Court of Appeals, et al., G.R. No. 149660, Jan. 20, 2009

53. CCBPI vs. Agito et al., G.R. No. 179546, Feb. 13, 2009

54. South Davao Development Company et al., vs. Gamo et al., GR No. 171814, May 8, 2009

55. Traveno et al., vs. Bobongon Banana Growers Multi-purpose Cooperative et al., GR No. 164205, Sept. 3, 2009

56. Locsin et al., vs. PLDT, GR No. 185251, Oct 2, 2009

57. Aliviado et al vs. Procter & Gamble Phils GR No. 160506, March 9, 2010

58. San Miguel Corp. vs. Semillano et al., GR No. 164257, July 5, 201

59. Manila Water Co. vs. Dalumpines, GR No. 175501, Oct. 4, 2010

60. Teng vs. Pahagac, GR No. 169704, November 17, 2010

61. GSIS vs. NLRC et al., GR No. 180045, Nov. 17, 2010

62. Sy et al., vs. Fairland Knitcraft Co Inc. G.R. No. 189658, December 12, 2011

63. Polyfoam-RGC International Corp., vs. Concepcion, G.R. No. 172349, June 13, 2012

64. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012

65. Digital Telecommunications Phils Inc. vs. Digitel Employees Union et al., G.R. No. 184903-04, October 10, 2012

66. Norkis Trading Corp., vs. Buenavista, et al., G.R. No. 182018, October 10, 2012

67. Goya Inc. vs. Goya Inc. Employees Union-FFW G.R. No. 170054, Jan. 21, 2013

68. Vigilla et al., vs. Phil. College of Criminology Inc., G.R. No. 200094, June 10, 2013

69. BPI Employees Union-Davao city-FUBU vs. Bank of the Phil Islands et al., G.R. No. 174912, July 24, 2013

70. Alilin et al., vs Petron Corp., G.R. No. 177592, June 9, 2014

71. Ampeleloquio vs Jaka Distribution Inc., GR. No. 196936, July 2, 2014

72. FVR Skills & Services Exponenets Inc. vs Seva, et al., GR. No. 200857, Oct. 22, 2014

73. Fonterra Brand Phils vs Largado et al., GR. No. 205300, March 18, 2015

B. WORKER'S PREFERENCE

74. DBP vs. NLRC, 242 SCRA 59 [1995]75. Batongbuhay Gold Mines vs. De la Serna,

312 SCRA 4576. Barayoga vs. Asset Privatization Trust, G.R.

No. 160073, October 24, 200577. Phil. Airlines vs. Zamora, G.R. No. 166996,

Feb. 6, 200778. Phil. Airlines vs. Phil. Airlines Employees

Association, 525 SCRA 29 [2007], citing Rubberworld vs. NLRC, 305 SCRA 721 [1999]


LABOR STANDARDS LAW

79. Garcia vs. Phil Air Lines, G.R. No. 164856, January 20, 2009

C. ATTORNEY'S FEES & APPEARANCE OF LAWYERS80. Bank of the Philippines Island vs. NLRC,

171 SCRA 55681. Traders Royal Bank Employees Union vs.

NLRC, 269 SCRA 733 [1997]82. Brahm Industries vs. NLRC, 280 SCRA 824

[1997]83. Heirs of Aniban vs. NLRC, 282 SCRA 377

[1997]84. Sapio vs. Undaloc Construction et al., G.R.

No. 155034, May 22, 200885. Atty. Ortiz vs. San Miguel Corp., G.R. No.

151983-84, July 31, 200886. Masmud vs. NLRC et al., G.R. No. 183385,

Feb. 13, 200987. Kaisahan at kapatiran ng mga Manggagawa

at Kawani sa MWC-East Zone Union vs. Manila Water Company, G.R. No. 174179, November 16, 2011

88. Malvar vs. Kraft Food Phils Inc. et al., G.R. No. 183952, Sept. 9, 2013

89. T&H Shopfitters Corp., vs. T&H Shopfitters Corp Workers Union, GR No. 191714, February 26, 2014

D. SPECIAL TYPES OF WORKERS

90. Bernardo vs. NLRC, 310 SCRA 186 [1999]

E. EMPLOYMENT OF WOMEN

91. PT&T vs. NLRC, 272 SCRA 596 [1997]92. Del Monte Phils vs. Velasco, G.R. No.

153477, March 6, 200793. Co vs. Vargas, G.R. No. 195167, November

16, 2011

F. EMPLOYMENT OF CHILDRENG. EMPLOYMENT OF HOUSEHELPER

94. Ultra Villa Food Haus vs. Geniston, 309 SCRA 17 [1999]

95. Remington Industrial Sales Corp., vs. Castaneda, G.R. No. 169295-96, Nov. 20, 2006 citing Apex Mining

96. Co vs. Vargas, G.R. No. 195167, November 16, 2011

H. EMPLOYMENT OF HOMEWORKERS

I. EMPLOYMENT OF NON-RESIDENT ALIENS

J. EMPLOYMENT OF STUDENTS & WORKING SCHOLAR

K. EMPLOYMENT OF ACADEMIC/NON-ACADEMIC PERSONNEL IN PRIVATE EDUCATIONAL INSTITUTION97. University of the east et al., vs. Pepanio, G.r.

No. 193897, Jan. 23, 201398. Colegio Del Santisimo Rosario et al., vs.

Rojo, G.R. No. 170388, Sept. 4, 2013 citing Mercado et al., vs. AMA Computer College-Paranaque City, GR No. 183572, April 13, 2010

99. Herrera-Manaois vs. St. Scholasticas College, GR No. 188914, December 11, 2013

MEDICAL, DENTAL AND OCCUPATIONAL SAFETY

100.Tolosa vs. NLRC, G.R. No. 149578, April 10, 2003

101.U-Bix Corp., vs. Bandiola, 525 SCRA 566 [2007]

102.Ocean Builders Construction vs. Sps. Cubacub, GR No. 150898, April 13, 2011

MIGRANT WORKER'S ACT & OVERSEAS FILIPINO ACT OF 1995 & RECRUITMENT AND PLACEMENT

103.ISS Indochina Corp., vs. Ferrer, G.R. No. 156381, Oct. 14, 2005

104.People vs. Capt. Gasacao, G.R. No. 168449, Nov. 11, 2005

105.Acuna vs. CA, G.R. No. 159832, May 5, 2006

106.Asian International Manpower Services vs. CA, G.R. No. 169652, October 9, 2006

107.Sim vs. NLRC et al., G.R. No. 157376, October 2, 2007


LABOR STANDARDS LAW

108.Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008

109.Masangkay vs. Trans-Global Maritime Agency Inc., et al., G.R. No. 172800, October 17, 2008

110.Magsaysay Maritime Corp., et al., vs. Velasquez, et al., G.R. No. 179802, Nov 14, 2008

111.Serrano vs. Gallant Maritime Services et al., G.R. No. 167614, March 24, 2009 – En Banc

112.Becmen Service Exporter and Promotion Inc., vs. Spouses Cuaresma, GR Nos. 182978-79 & 184298-99, April 7, 2009

113.People vs. Domingo, GR No. 181475, April 7, 2009

114.ATCI Overseas Corp. et al., vs. Echin, GR No. 178551, Oct. 11, 2010

115.Yap vs. Thenamaris Ship Management et al., G.R. No. 179532, May 30, 2011

116.Skippers United Pacific vs. Doza et al., G.R. No. 175558, February 8, 2012

117.International Management Services vs. Logarta, G.R. No. 163657, April 18, 2012

118.Pert/Cpm Manpower Exponent Co., Inc. vs. Vinuya et al., G.R. No. 197528, September 8, 2012

119. Hon. Sto. Tomas, et al., vs. Salac et al., G.R. No. 152642 & 152710, November 13, 2012

120. Sameer Overseas Placement Agency Inc., vs Cabiles, GR No 170139 August 5, 2014, En Banc

121. Racelis vs. United Philippine Lines Inc. GR. No. 198408, November 12, 2014


LABOR STANDARDS LAW

1. T/SGP LARKINS VS. NLRC, G.R. NO. 92432, FEBRUARY 23, 1995

Facts:Petitioner was a member of the United States Air Force (USAF) assigned to oversee the dormitories of the Third Aircraft Generation Squadron (3 AGS) at Clark Air Base, Pampanga.On August 10, 1988, 3 AGS terminated the contract for the maintenance and upkeep of the dormitories with the De Guzman Custodial Services. The employees thereof, including private respondents, were allowed to continue working for 3 AGS. It was left to the new contractor, the JAC Maintenance Services owned by Joselito Cunanan, to decide whether it would retain their services.Joselito Cunanan, however, chose to bring in his own workers. As a result, the workers of the De Guzman Custodial Services were requested to surrender their base passes to Lt. Col. Frankhauser or to petitioner.On August 12, 1988, private respondents filed a complaint with the Regional Arbitration Branch No. III of the NLRC, San Fernando, Pampanga, against petitioner, Lt. Col. Frankhauser, and Cunanan for illegal dismissal and underpayment of wages. On September 9, 1988, private respondents amended their complaint and added therein claims for emergency cost of living allowance, thirteenth-month pay, service incentive leave pay and holiday premiums.Petitioner and Lt. Col. Frankhauser failed to answer the complaint and to appear at the hearings. They, likewise, failed to submit their position paper, which the Labor Arbiter deemed a waiver on their part to do so. The case was therefore submitted for decision on the basis of private respondents' position paper and supporting documents.On November 21, 1988, the Labor Arbiter rendered a decision granting all the claims of private respondents. He found both Lt. Col. Frankhauser and petitioner "guilty of illegal dismissal" and ordered them to reinstate private respondents with full back wages, or if that is no longer possible, to pay private respondents' separation pay.Petitioner appealed to the NLRC claiming that the Labor Arbiter never acquired jurisdiction over her person because no summons or copies of the complaints, both original and amended, were ever served on her.Issue: Whether or not Labor Arbiter acquired jurisdiction over petitioners’ person because no summons or copies of the complaints, both original and amended, were ever served.Ruling:Labor Arbiter acquired no jurisdiction over the case and the person of petitioner.Firstly, the "Agreement Between the Republic of the Philippines and the United States of America Concerning Military Bases," otherwise known as the R.P. — U.S. Military Bases Agreement, governed the rights, duties, authority, and the exercise thereof by Philippine and American nationals inside the U.S. military bases in the country.Article XIV is the governing procedure for service of summons on persons inside U.S. military bases.Summonses and other processes issued by Philippine courts and administrative agencies for United States Armed

Forces personnel within any U.S. base in the Philippines could be served therein only with the permission of the Base Commander. If he withholds giving his permission, he should instead designate another person to serve the process, and obtain the server's affidavit for filing with the appropriate court.Respondent Labor Arbiter did not follow said procedure. He instead, addressed the summons to Lt. Col. Frankhauser and not the Base Commander.Secondly, under Base Labor Agreement of May 27, 1968, any dispute or disagreement between the United States Armed Forces and Filipino employees should be settled under grievance or labor relations procedures established therein (Art. II) or by the arbitration process provided in the Romualdez-Bosworth Memorandum of Agreement dated September 5, 1985. If no agreement was reached or if the grievance procedure failed, the dispute was appealable by either party to a Joint Labor Committee established in Article III of the Base Labor Agreement.Therefore, no jurisdiction was ever acquired by the Labor Arbiter over the case and the person of petitioner and the judgment rendered is null and void (Filmerco Commercial Co. v. Intermediate Appellate Court,supra.; Sy v. Navarro, 81 SCRA 458 [1978]).Lastly, notices of hearing are not summonses. It is basic that the Labor Arbiter cannot acquire jurisdiction over the person without being served with summons. In the absence of service of summons or a valid waiver thereof, the hearings and judgment rendered by the Labor Arbiter are null and void (cf. Vda. de Macoy v. Court of Appeals,supra.)Petitioner, in the case at bench, appealed to the NLRC and participated in the oral argument before the said body. This, however, does not constitute a waiver of the lack of summons and a voluntary submission of her person to the jurisdiction of the Labor Arbiter. If an appearance before the NLRC is precisely to question the jurisdiction of the said agency over the person of the defendant, then this appearance is not equivalent to service of summons (De los Santos v. Montera, 221 SCRA 15 [1993]).The petition for certiorari is GRANTED.


LABOR STANDARDS LAW

2. UERM Memorial Medical Center vs. NLRC, G.R. No. 110419, March 3, 1997

FACTS:

On 12 April 1988, Policy Instruction No. 54 was issued by the SOLE, which reads:

“the personnel in subject hospitals and clinics are entitled to a full weekly wage of seven days if they have completed the 40-hour/5-day workweek in any given workweek.”

Petitioners challenged the validity of said Policy Instruction and refused to pay the salaries of the private respondents for Saturdays and Sundays.

Within the reglementary period for appeal, the petitioners filed their Notice and Memorandum of Appeal with a Real Estate Bond consisting of land and various improvements therein worth P102,345,650.

The private respondents moved to dismiss the appeal on the ground that Article 223 of the Labor Code, as amended, requires the posting of a cash or surety bond. The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal.

The NLRC directed petitioners to post a cash or surety bond of P17,082,448.56 with a warning that failure to do so would cause the dismissal of the appeal.

ISSUE: whether or not in perfecting an appeal to the National Labor Relations Commission (NLRC) a property bond is excluded by the two forms of appeal bond — cash or surety — as enumerated in Article 223 of the Labor Code.

HELD: The applicable law is Article 223 of the Labor Code, as amended by Republic Act No. 6715, which provides: "In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from."

We have given a liberal interpretation to this provision. In YBL (Your Bus Line) v. NLRC, 190 SCRA 164 (1990) we ruled: ". . . that while Article 223 of the Labor Code, as amended by Republic Act No. 6715, requiring a cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from for the appeal to be perfected, may be considered a jurisdictional requirement, nevertheless, adhering to the principle that substantial justice is better served by allowing the appeal on the merits threshed out by the NLRC, the Court finds and so holds

that the foregoing requirement of the law should be given a liberal interpretation."

Then too, in Oriental Mindoro Electric Cooperative, Inc. v. National Labor Relations Commission (246 SCRA 801 [1995]), we held: "The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected "only upon the posting of a cash or surety bond." The word "only" makes it perfectly clear, that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be perfected. The requirement is intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees' just and lawful claims. Considering, however, that the current policy is not to strictly follow technical rules but rather to take into account the spirit and intention of the Labor Code, it would be prudent for us to look into the merits of the case, especially since petitioner disputes the allegation that private respondent was illegally dismissed."

In the case at bar, the judgment involved is more than P17 million and its precipitate execution can adversely affect the existence of petitioner medical center. Likewise, the issues involved are not insignificant and they deserve a full discourse by our quasi-judicial and judicial authorities. We are also confident that the real property bond posted by the petitioners sufficiently protects the interests of private respondents should they finally prevail. It is not disputed that the real property offered by petitioners is worth P102,345,650. The judgment in favor of private respondent is only a little more than P17 million.

The case is remanded to the NLRC for continuation of proceedings.


LABOR STANDARDS LAW

3. PHIL. TRANCO SERVICES VS. NLRC, APRIL 1, 1998, G.R. NO. 124100

Facts:Nieva was employed as a driver by

petitioner assigned to the Legaspi City-Pasay City route. Nieva sideswiped an owner-type jeep and a criminal complaint was filed against him. Philtranco posted a bail bond for Nieva. After having been suspended, he was told to wait until his case was settled. The case was finally settled he was requested to file a new application as he was no longer considered an employee of Philtranco, allegedly for being absent without leave from October 19 to November 20, 1989.

Nieva filed a complaint for illegal dismissal and demanded for 13th month pay with the NLRC’s National Capital Region Arbitration Branch in Manila. Philtranco filed a motion to dismiss on the ground of improper venue, stating that the complaint should have been lodged with the NLRC’s Regional Arbitration Branch in Legaspi City, not only because Nieva was a resident thereof, but also because the latter was hired, assigned, and based in Legaspi City.

Issue:Whether or not NLRC’s NCR

Arbitration Branch in Manila was a proper venue for the filing of Nieva’s complaints for illegal dismissal

Ruling:The filing of the complaint with the

National Capital Region Arbitration Branch was proper, Manila being considered as part of Nieva’s workplace by reason of his plying the Legaspi City-Pasay City route. In fact, Section 1(a), Rule IV of the New Rules of Procedure of the NLRC is merely permissive. Provisions on venue are intended to assure convenience for the employee and his witnesses and to promote the ends of justice provided that it is not oppressive to the employer.

4. ST. MARTIN FUNERAL HOMES VS. NLRC, G.R. NO. 142351, NOV. 22, 2006

Facts:The owner of petitioner St. Martin

Funeral Homes, Inc. (St. Martin) is AmelitaMalabed. Prior to January 1996, Amelita’s mother managed the funeral parlor. In 1995, Aricayos was granted financial assistance by Amelita’s mother. As a sign of appreciation, respondent extended assistance in managing St. Martin without compensation and no written employment contract between Amelita’s mother and respondent Aricayos; furthermore, respondent Aricayos was not even listed as an employee in the Company’s payroll.

When Amelita’s mother died in January 1996, Amelita took over as manager of St. Martin. Much to her chagrin, she found out that St. Martin had arrearages in the payment of BIR taxes and other fees owing to the government, but company records tended to show that payments were made thereon. As a result, Amelita removed the authority from respondent Aricayos and his wife from taking part in managing St. Martin’s operations.

Aggrieved, respondent Aricayos accused St. Martin of his illegal dismissal as Operations Manager of the company. He believed that the cause of his termination was Amelita’s suspicion that he pocketed PhP 38,000.00 which was set aside for payment to the BIR of St. Martin’s valued added taxes.On October 25, 1996, the Labor Arbiter rendered a Decision, in favor of petitioner declaring that his office had no jurisdiction over the case.

NLRC issued a Resolution annulling the Arbiter’s Decision and remanded the case to him for appropriate proceedings, to determine the factual issue of the existence of employer-employee relationship between the parties. When its motion for reconsideration was rejected by the NLRC, petitioner filed a petition for certiorari under Rule 65 before this Court, docketed as G.R. No. 130866.

On September 16, 1998, this Court through Justice Jose Vitug, rendered the landmark Decision in this case then docketed as G.R. No. 130866, holding for the first time that


LABOR STANDARDS LAW

all petitions for certiorari under Rule 65 assailing the decisions of the NLRC should henceforth be filed with the CA

Issue: WON a petitioner can file his petition for certiorari under Rule65 to assail the decision of a lower court like NLRC.

Ruling:A petition for certiorari under Rule65

must first be filed at the Court of Appeals. Said court has a concurrent jurisdiction on petitions for certiorari, mandamus, prohibitions. This is in consonance with the hierarchy of courts.

5. LUDO & LUYM CORP., VS. SAORNIDO, G.R. NO. 140960, JANUARY 20, 2003

Facts:

Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation engaged in the manufacture of coconut oil, corn starch, glucose and related products. It operates a manufacturing plant located at Tupas Street, Cebu City and a wharf where raw materials and finished products are shipped out

In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly, several arrastre workers were deployed by CLAS to perform the services needed by LUDO

These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees of LUDO every time the latter needed additional manpower services. Said employees thereafter joined respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of the rank-and-file employees.On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO which provides certain benefits to the employees, the amount of which vary according to the length of service rendered by the availing employee.the union requested LUDO to include in its members’ period of service the time during which they rendered arrastre services to LUDO through the CLAS so that they could get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.The parties accordingly executed a submission agreement raising the sole issue of the date of regularization of the workers for resolution by the Voluntary Arbitrator.decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-only contractor of petitioner.[2] It disposed of the case thus:

the 214 complainants, as listed in the Annex A, shall be considered regular employees of the respondents six (6) months from the first day of service at CLAS;

the said complainants, being entitled to the CBA benefits during the regular employment, are awarded a) sick leave, b) vacation leave & c) annual wage and salary increases during such period in the amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND SIXTY ONE CENTAVOS (P5,707,261.61)

petitioner raises the following issues:

WHETHER OR NOT BENEFITS CONSISTING OF SALARY INCREASES, VACATION LEAVE AND SICK LEAVE BENEFITS FOR THE YEARS 1977 TO 1987 ARE ALREADY BARRED BY PRESCRIPTION WHEN PRIVATE RESPONDENTS FILED THEIR CASE IN JANUARY 1999

Petitioner contends that the appellate court gravely erred when it upheld the award of benefits which were beyond the terms of submission agreement. Petitioner asserts that the arbitrator must confine its adjudication to those issues submitted by the parties for arbitration, which in this case is the sole issue of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was done in excess of jurisdiction

Respondents, for their part, aver that the three-year prescriptive period is reckoned only from the time the obligor declares his refusal to comply with his obligation in clear and unequivocal terms. In this case, respondents maintain that LUDO merely promised to review the company records in response to respondents’ demand for adjustment in the date of their regularization without making a categorical statement of refusal

Ruling

we held in San Jose vs. NLRC, that the jurisdiction of the Labor Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in the Labor Code, Articles 217, 261 and 262, can possibly include money claims in one form or another.] Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC compulsory arbitration has been defined both as “the process of settlement of labor disputes by a government agency which has the authority to investigate and to make an award which is binding on all the parties, and as a mode of arbitration where the


LABOR STANDARDS LAW

parties are compelled to accept the resolution of their dispute through arbitration by a third party

In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement

While the submission agreement mentioned only the determination of the date or regularization, law and jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative to accomplish the reason for which the law on voluntary arbitration was created – speedy labor justice.

Since the parties had continued their negotiations even after the matter was raised before the Grievance Procedure and the voluntary arbitration, the respondents had not refused to comply with their duty. They just wanted the complainants to present some proofs. The complainant’s cause of action had not therefore accrued yet. Besides, in the earlier voluntary arbitration case aforementioned involving exactly the same issue and employees similarly situated as the complainants’, the same defense was raised and dismissed by Honorable Thelma Jordan, Voluntary Arbitrator.

6. HANSIN ENGINEERING & CONSTRUCTION VS. CA, G.R. NO. 165910, APRIL 10, 2006

Facts:

Hanjin is a construction company that had been contracted by the Philippine Government for the construction of various foreign-financed projects. Hanjin and the Philippine Government entered into contracts for the construction of the Malinao Dam at Pilar, Bohol, with a projected completion period of 1,050 calendar days, including main canal and lateral projects for 750 days. From August 1995 to August 1996, Hanjin contracted the services of 712 carpenters, masons, truck drivers, helpers, laborers, heavy equipment operators, leadmen, engineers, steelmen, mechanics, electricians and others.

In April 1998, 712 employees filed complaints for illegal dismissal and for payment of benefits against petitioners, before the NLRC. The complainants averred that they were regular employees of Hanjin and that they were separated from employment without any lawful or just cause. Only 521 of the complainants affixed their signatures in the complaints.

Petitioners alleged that the complainants were mere project employees in its Bohol Irrigation Project and that 2 of the workers were charged with qualified theft before the RTC. Some of the complainants had already migrated to USA or had died, while 117 of them were still under the employ of Hanjin. Petitioner stated that some of the complainants had voluntarily resigned; 14 were absent without prior approved leave; 15 had signed a Motion to Withdraw from the complaint; and many of the complainants were separated on account of the completion of the project. However, petitioners failed to append any document to support their claim.

Labor Arbiter rendered judgment in favor of the 428 complainants, granting separation pay and attorney's fees to each of them stating that the complainants were regular employees of petitioner and their claims for underpayment, holiday pay, premium pay for holiday and rest day, 13th month pay, and service incentive leave would be computed after sufficient data were made available. Petitioners


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appealed the decision to the NLRC, which affirmed with modification the Labor Arbiter's ruling. Petitioners filed a Motion for the Reconsideration of the decision (with a motion to conduct clarificatory hearings)

NLRC partially granted petitioners' motion. Unsatisfied, petitioners filed a Petition for Certiorari under Rule 65 of the Revised Rules of Court in the CA. CA dismissed the petition and affirmed the NLRC's ruling that the dismissed employees were regular employees. The CA stressed that petitioners failed to refute the claim of the respondents that they were regular employees. Petitioners moved to reconsider the decision, which the CA denied.

Issue:

WON respondents are project employees.

Ruling:

While respondent alleged that "complainants all signed a contract of employment at the time they were hired indicating therein the particular project they will be working on, the period and other conditions provided in their contracts which complainants fully knew and understood," nowhere in the records can the said contracts be found. Moreover, let it be stressed that under DO No. 19, Series of 1993 on project employment, six (6) indicators are enumerated therein and one of which is that: "(T)he termination of his employment in the particular project/undertaking is reported to the Department of Labor and Employment (DOLE) Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work x x x."

In this particular case, the records do not show that a similar report was ever made by respondent to the Department of Labor and Employment. Such failure of respondent employer to report to the nearest employment office of the Department of Labor, the termination of the workers it claimed as project employees at the time it completed the project, is proof that complainants were not project employees.

The principal test for determining whether particular employees are properly characterized as project employees is: whether or not the project employees were assigned to carry out a specific project or undertaking, the duration of which were specified at the time the employees were engaged for that project. Predetermination of the duration or period of project employment is essential in resolving whether one is a project employee or not. In the instant case, the completion of the project for which the complainants were hired was not determined at the start of their employment, there being no substantial proof thereof. The fact that complainants had rendered more than one year of service at the time of their dismissal and there being no substantial evidence to support that they were engaged to work on a specific project or undertaking, overturns respondent’s allegation that complainants were project employees hired for a specific fixed project for a limited period of time.

Complainants herein were, therefore, non-project employees, but regular employees. Admittedly, being a duly licensed contractor firm in the Philippines, respondent is the awardee of several construction projects and in many occasions it has been given the priority in the awarding of subsequent projects.

In the light of the above facts and circumstances, the respondent's main defense that completion of the project worked on by the complainants constitute a valid cause of termination is unsustainable. To repeat, there is no substantial evidence on record to sustain this contention. The mere allegation of the respondents that under their employment contracts the complainants were made to understand that they were project employees is definitely not persuasive or unworthy of credence. The best evidence of which would have been the alleged contracts. These employees signed duly notarized waivers/quitclaims and who did not recant later. In the absence of evidence showing the contrary, said quitclaims were executed voluntarily and without any force or intimidation.

Petitioners submitted to the NLRC dubious machine copies of only some of respondents? contracts, including alleged employment termination reports submitted to the DOLE. The NLRC found the contracts barren of probative weight and utterly insufficient to buttress the contention of petitioners that respondents were only project employees.

Contrary to the representation of respondent's counsel, the original copies of the reports made to DOLE were never produced and submitted to this Commission. Neither were they presented for comparison with the machine copies. These machine copies were not also certified as true copies by the DOLE.

The actual continuous employment of complainants by respondent Hanjin since 1991 until 1995 overcomes the piecemeal "appointments" covering for periods of six (6) months or less. From these short term but repeated "appointments," it is apparent that the periods have been imposed to preclude the acquisition of tenurial security by the employee and which kind of employment contracts should be disregarded for being contrary to public policy.

The appellate court, the NLRC and the Labor Arbiter are thus one in finding that respondents were not project employees, and in sustaining respondents' claim of illegal dismissal due to petitioners? failure to adduce contrary evidence. Well-settled is the rule that findings of fact of quasi-judicial agencies, like the NLRC, are accorded not only respect but at times even finality if such findings are supported by substantial evidence. Such findings of facts can only be set aside upon showing of grave abuse of discretion, fraud or error of law, none of which have been shown in this case.


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7. G.R. No. 166421, PHILIPPINE JOURNALISTS, INC., vs.NATIONAL LABOR RELATIONS COMMISSION

The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in the publication and sale of newspapers and magazines. The exclusive bargaining agent of all the rank-and-file employees in the company is the Journal Employees Union (Union for brevity).

Sometime in April 2005, the Union filed a notice of strike before the National Conciliation and Mediation Board (NCMB), claiming that PJI was guilty of unfair labor practice. PJI was then going to implement a retrenchment program due to "over-staffing or bloated work force and continuing actual losses sustained by the company for the past three years resulting in negative stockholders equity of P127.0 million.

After submitting their respective papers, in its resolution dated May 31, 2001, the NLRC declared that the 31 complainants were illegally dismissed and that there was no basis for the petitioners retrenchment program thus it ordered their reinstatement to their former position without loss of seniority rights and other other benefits, with payment of unpaid salaries, bonuses and backwages.

Thereafter, the parties executed a Compromise Agreement dated July 9, 2001, where PJI undertook to reinstate the 31 complainant-employees effective July 1, 2001 without loss of seniority rights and benefits; 17 of them who were previously retrenched were agreed to be given full and complete payment of their respective monetary claims, while 14 others would be paid their monetary claims minus what they received by way of separation pay. The compromise agreement was submitted to the NLRC for approval. The compromise agreement was approved and was deemed closed and terminated.

The Union filed another Notice of Strike on July 1, 2002 claiming that 29 employees where illegally dismissed. After the retrenchment program was implemented, the members-employees who continued working were made to sign 5 month contract and was threatened to be dismissed if they refused to conform to 40% to 50% salary deduction.

The NLRC forthwith issued another Resolution on July 25, 2002, declaring that the Clarificatory Motion of complainants Floro Andrin, Jr. and Jazen M. Jilhani had been mooted by the compromise agreement as they appeared to be included in paragraph 2.c and paragraph 2.d, respectively thereof. As to the seven others who had filed a motion for clarification, the NLRC held that they should have filed individual affidavits to establish their claims or moved to consolidate their cases with the certified case. Thus, the NLRC granted the computation of their benefits as shown in the individual affidavits of the complainants. However, as to the prayer to declare the Union guilty of unfair labor practice, to continue with the CBA negotiation and to pay moral and exemplary damages, the NLRC ruled that there was no sufficient factual and legal basis to modify its resolution. Thus, the compromise agreement was approved and NCMB-NCR-NS-03-087-00 was deemed closed and terminated.

In its Resolution dated July 31, 2003, the NLRC ruled that the complainants were not illegally dismissed. The May 31, 2001 Resolution declaring the retrenchment program illegal did not attain finality as "it had been academically mooted by the compromise agreement entered into between both parties on July 9, 2001." According to the Commission, it was on the basis of this agreement that the July 25, 2002 Resolution which declared the case closed and terminated was issued. Thus, the May 31, 2001 Resolution could not be made the basis to justify the alleged continued employment regularity of the 29 complainants subsequent to their retrenchment.

The NLRC also declared that by their separate acts of entering into fixed-term employment contracts with petitioner after their separation from employment by virtue of retrenchment, they are deemed to have admitted the validity of their separation from employment and are thus estopped from questioning it. The NLRC dismissed the case for lack of merit, but directed the company to "give preference to the separated 29 complainants should they apply for re-employment."

In its Decision dated August 17, 2004, the appellate court held that the NLRC gravely abused its discretion in ruling for PJI. The compromise agreement referred only to the award given by the NLRC to the complainants in the said case, that is, the obligation of the employer to the complainants. The CA also ruled that the dismissed employees were not barred from pursuing their monetary claims despite the fact that they had accepted their separation pay and signed their quitclaims.

Issue:

The primary issue before the Court is whether an NLRC Resolution, which includes a pronouncement that the members of a union had been illegally dismissed, is abandoned or rendered “moot and academic” by a compromise agreement subsequently entered into between the dismissed employees and the employer and if such a compromise agreement constitutes res judicata to a new complaint later filed by other union members-employees,


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not parties to the agreement, who likewise claim to have been illegally dismissed.

Held:

Article 227 of the Labor Code of the Philippines authorizes compromise agreements voluntarily agreed upon by the parties, in conformity with the basic policy of the State "to promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of settling labor or industrial disputes.

ART. 227 Compromise Agreements. – Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final and binding upon the parties. The National Labor Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of noncompliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

Thus, a judgment rendered in accordance with a compromise agreement is not appealable, and is immediately executory unless a motion is filed to set aside the agreement on the ground of fraud, mistake, or duress, in which case an appeal may be taken against the order denying the motion. Under Article 2037 of the Civil Code, "a compromise has upon the parties the effect and authority of res judicata," even when effected without judicial approval; and under the principle of res judicata, an issue which had already been laid to rest by the parties themselves can no longer be relitigated.

Adjective law governing judicial compromises annunciate that once approved by the court, a judicial compromise is not appealable and it thereby becomes immediately executory but this rule must be understood to refer and apply only to those who are bound by the compromise and, on the assumption that they are the only parties to the case, the litigation comes to an end except only as regards to its compliance and the fulfillment by the parties of their respective obligations thereunder. The reason for the rule, said the Court in Domingo v. Court of Appeals [325 Phil. 469], is that when both parties so enter into the agreement to put a close to a pending litigation between them and ask that a decision be rendered in conformity therewith, it would only be "natural to presume that such action constitutes an implicit waiver of the right to appeal" against that decision. The order approving the compromise agreement thus becomes a final act, and it forms part and parcel of the judgment that can be enforced by a writ of execution unless otherwise enjoined by a restraining order.

Thus, contrary to the allegation of petitioners, the execution and subsequent approval by the NLRC of the agreement forged between it and the respondent Union did not render the NLRC resolution ineffectual, nor rendered it "moot and academic." The agreement becomes part of the judgment of the court or tribunal, and as a logical

consequence, there is an implicit waiver of the right to appeal.

In any event, the compromise agreement cannot bind a party who did not voluntarily take part in the settlement itself and gave specific individual consent. It must be remembered that a compromise agreement is also a contract; it requires the consent of the parties, and it is only then that the agreement may be considered as voluntarily entered into.

A careful perusal of the wordings of the compromise agreement will show that the parties agreed that the only issue to be resolved was the question of the monetary claim of several employees.

The findings of the appellate court are in accord with the evidence on record, and we note with approval the following pronouncement:

Respondents alleged that it hired contractual employees majority of whom were those retrenched because of the increased but uncertain demand for its publications. Respondent did this almost immediately after its alleged retrenchment program. Another telling feature in the scheme of respondent is the fact that these contractual employees were given contracts of five (5) month durations and thereafter, were offered regular employment with salaries lower than their previous salaries. The Labor Code explicitly prohibits the diminution of employee’s benefits. Clearly, the situation in the case at bar is one of the things the provision on security of tenure seeks to prevent.

Lastly, it could not be said that the employees in this case are barred from pursuing their claims because of their acceptance of separation pay and their signing of quitclaims. It is settled that “quitclaims, waivers and/or complete releases executed by employees do not stop them from pursuing their claims – if there is a showing of undue pressure or duress. The basic reason for this is that such quitclaims, waivers and/or complete releases being figuratively exacted through the barrel of a gun, are against public policy and therefore null and void ab initio (ACD Investigation Security Agency, Inc. v. Pablo D. Daquera, G.R. No. 147473, March 30, 2004).” In the case at bar, the employees were faced with impending termination. As such, it was but natural for them to accept whatever monetary benefits that they could get.


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8. BALAGTAS MULTI PURPOSE COOP. VS. CA, G.R. NO. 159268, OCT. 27, 2006

Facts:Balagtas Multi-Purpose Cooperative,

Inc. is a duly organized and existing cooperative under the laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, as part time manager in its office. Subsequently, Josefina made known of her intention to take a leave of absence. Her proposal was immediately approved. However, after the lapse of her leave of absence, Josefina did not report for work anymore. Later on, she filed her resignation.

Consequently Josefina filed a complaint with the Provincial Office of the Department of Labor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus. She also prayed for reinstatement and paid backwages as well as moral damages.

The Labor Arbiter rendered judgment in favor of complainant and against respondents and ordered the latter to pay the former 13th month pay, backwages and separation pay. Aggrieved, herein petitioners appealed the decision to NLRC but failed to post either a cash or surety bond as required by Article 223 of the Labor Code. They filed a manifestation and motion instead, stating, that under Republic Act No. 6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are exempt from putting up a bond in an appeal from the decision of the inferior court. NLRC ordered respondents to post a cash or surety bond in the amount of P218,000.00, within 10 inextendible days from receipt of the Order, failure of which shall constitute a waiver and non-perfection of the appeal. Balagtas appealed to CA, which dismissed the petition holding that the exemption from putting up a bond by a cooperative applies to cases decided by inferior courts only.

Issues:

1. WON cooperatives are exempted from filing a cash or surety bond required to perfect an employer’s appeal under Section 223 of Presidential Decree No. 442 (the Labor Code);

2. WON a certification issued by the Cooperative Development Authority constitutes substantial compliance with the requirement for the posting of a bond.

Ruling:1. No. Petitioners argue that there are certain

benefits and privileges expressly granted to cooperative under the Cooperative Code. It invoked the provision on Article 62 regarding the exemption from payment of an appeal bond, to wit: (7)All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond.

However, it is only one among a number of such privileges which appear under the article entitled “Tax and Other Exemptions” of the code. The provision cited by petitioners cannot be taken in isolation and must be interpreted in relation to the Cooperative Code in its entirety. Exceptions are to be strictly but reasonably construed; they extend only so far as their language warrants, and all doubts should be resolved in favor of the general provision rather than the exceptions.

2. No. Article 119 of the Cooperative Code itself expressly embodies the legislative intention to extend the coverage of labor statutes to cooperatives. For this reason, petitioners must comply with the requirement set forth in Article 223 of the Labor Code in order to perfect their appeal to the NLRC. It must be pointed out that the right to appeal is not a constitutional, natural or inherent right. It is a privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party.

In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the employee under the judgment if the latter is subsequently affirmed.

Therefore, no error can be ascribed to the CA for holding that the phrase “inferior


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courts” appearing in Article 62 paragraph (7) of the Cooperative Code does not extend to “quasi-judicial agencies” and that, petitioners are not exempt from posting the appeal bond required under Article 223 of the Labor Code.

9. ST. MARTIN FUNERAL HOMES vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) (Nov. 22, 2006)

FACTS:

Complainant, herein private respondent Aricayos, filed a petition for illegal dismissal with prayer for reinstatement, payment of back wages and damages against petitioner St. Martin Funeral Homes. The initiatory pleading was filed before the NLRC RAB.

The owner of St. Marting Funeral Homes is Amelita Malabed. Amelita’s mother managed the funeral parlor. Respondent Aricayos, on the other hand, was formerly an overseas contract worker. Aricayos, in 1995, was granted financial assistance by Amelita’s mother. As a sign of appreciation, Aricayos extended assistance to Amelita’s mother in managing St. Martin without compensation. There was no written employment contract between them, Aricayos was not even listed as an employee in the Company’s payroll.

When Amelita took over, after her mother’s death, she saw that there were some arrears in the payment of BIR taxes. Thus, Amelita removed the authority from Aricayos and his wife from taking part in managing St. Martin’s operations. Thus, Aricayos accused St. Martin of his illegal dismissal as Operations Manager on the ground of Amelita’s suspicion that he pocketed money for payment of BIR taxes.

LA rendered a decision in favor of St. Martins stating that it had no jurisdiction over the case, citing Dela Salle University vs. NLRC , as it is the civil court which has jurisdiction to determine whether there is an employer-employee relationship. NLRC, however, reversed the decision stating that LA is so authorized to threshed out the issue of the existence of employer-employee relationship when the facts are not too clear so as the ends of justice

would better be served. MR of petitioner was denied by NLRC. P filed for certiorari under Rule 65. The case was remanded to the CA and CA affirmed the decision of NLRC.

Petitioner asserts that LA already concluded that there was no EE-ER relationship based on the position papers and memoranda of the parties. On the other hand, respondent Aricayos supports the pronouncement of the NLRC as affirmed by the CA that there was no determination of the existence of EE-ER relationship.

Thus, this is petition for review on certiorari under Rule 45 seeking to reverse the decision of the CA which affirmed the NLRC in remanding the complaint of respondent Aricayos to the Labor Arbiter.

ISSUE:

WON the LA made a determination of the presence of an EE-ER relationship between St. Martin and Aricayos based on the evidence on record. Further, WON it is within the authority of the LA to set the labor case for hearing to be able to determine the veracity of the conflicting positions of the parties.

RULING:

While a formal trial or hearing is discretionary on the part of the Labor Arbiter, when there are factual issues that require a formal presentation of evidence in a hearing, the Labor Arbiter cannot simply rely on the position papers, more so, on mere unsubstantiated claims of parties.

APPLICATION:

In In the case at bar, there are certain admissions by petitioner St. Martin that should have prodded the Labor Arbiter to conduct a hearing for a more in-depth examination of the contrasting positions of the parties, namely:

1. That respondent helped Amelita's mother manage the funeral parlor business by running errands for her,

2. Overseeing the business from 1995 up to January 1996 when the mother died,

3. And that after Amelita made changes in the business operation, private respondent and his wife were no longer allowed to participate in the management of St. Martin.

These facts, as admitted by the petitioner and the affidavits of St. Martin's witnesses, could have been examined more in detail by the Labor Arbiter in a hearing to convince himself that there was indeed no employment relationship between the parties as he originally found.CA decision affirmed. Petition DENIED.


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10. DOLE PHILIPPINES, INC. VS. MEDEL ESTEVA, ET AL. [GR NO. 161115 NOVEMBER 30, 2006]

FACTS:

Petitioner is a corporation engaged principally in the production and processing of pineapple for the export market. Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines. Pursuant to the Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner. DOLE organized a Task Force that conducted an investigation into the alleged labor-only contracting activities of the cooperatives. The Task Force identified six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO.

In this case, respondents alleged that they started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were

still working for petitioner, others were put on “stay home status” on varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. Together, respondents filed a Complaint with the NLRC for illegal dismissal, regularization, wage differentials, damages and attorney’s fees. Petitioner denied that respondents were its employees. It explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, in which petitioner was accused of preventing the regularization of such workers.

ISSUES:

1. Whether or not the court of appeals was correct when it made its own factual findings and disregarded the factual findings of the labor arbiter and the NLRC.

2. Whether or not CAMPCO was a mere labor-only contractor.

RULING:

Yes. The Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC.

Yes. CAMPCO was a mere labor-only contractor. First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to remember that such were amassed in the years following its establishment. In 1993, when CAMPCO was established and the Service Contract between petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered substantial. It only managed to increase its capitalization and assets in the succeeding years by continually and defiantly engaging in what had been declared by authorized DOLE officials as labor-only contracting. Second, CAMPCO did


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not carry out an independent business from petitioner. It was precisely established to render services to petitioner to augment its workforce during peak seasons. Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these were mainly used for administrative purposes; the tools, machineries, and equipment actually used by CAMPCO members when rendering services to the petitioner belonged to the latter. Third, petitioner exercised control over the CAMPCO members, including respondents. Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere presence within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code, as amended, required for permissible job contracting that the contractor undertakes the contract work on his account, under his own responsibility, according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. As alleged by the respondents, and unrebutted by petitioner, CAMPCO members, before working for the petitioner, had to undergo instructions and pass the training provided by petitioner’s personnel. It was petitioner who determined and prepared the work assignments of the CAMPCO members. CAMPCO members worked within petitioner’s plantation and processing plants alongside regular employees performing identical jobs, a circumstance recognized as an indicium of a labor-only contractorship. Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning members to petitioner. Apart from that, no other particular job, work or service was required from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a recruitment agency for petitioner. Since the undertaking of CAMPCO did not involve the performance of a specific job, but rather the supply of manpower only, CAMPCO clearly conducted itself as a labor-only contractor. Lastly, CAMPCO members, including respondents, performed activities directly related to the principal business of petitioner. They worked as can processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions which were, not only directly related, but were very vital to petitioner’s business of production and processing of pineapple products for export. The

declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only contracting, then consequently, an employer-employee relationship is deemed to exist between petitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner.

Since respondents are now recognized as employees of petitioner, this Court is tasked to determine the nature of their employment. In consideration of all the attendant circumstances in this case, this Court concludes that respondents are regular employees of petitioner. As such, they are entitled to security of tenure. They could only be removed based on just and authorized causes as provided for in the Labor Code, as amended, and after they are accorded procedural due process. Therefore, petitioner’s acts of placing some of the respondents on “stay home status” and not giving them work assignments for more than six months were already tantamount to constructive and illegal dismissal.

11. G.R. NO. 151407, FEBRUARY 6, 2007, INTERCONTINENTAL BROADCASTING CORP. VS. PANGANIBAN

FACTS: Ireneo Panganiban (respondent) was employed as Assistant General Manager of the Intercontinental Broadcasting Corporation (petitioner) from May 1986 until his preventive suspension on August 26, 1988. Respondent resigned from his employment on September 2, 1988. On April 12, 1989, respondent filed a civil case with the RTC of Quezon City, Branch 93 against the members of the Board of Administrators (BOA) of petitioner alleging, among others, non-payment of his unpaid commissions. A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of lack of jurisdiction, as respondent’s claim was a labor money claim, but this was denied by the RTC. Thus, Santiago filed a petition for certiorari with the CA which granted Santiago’s petition for lack of jurisdiction and set aside the RTC’s Orders.


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Thereafter, respondent was elected by the BOA as Vice-President for Marketing in July 1992. He resigned in April 1993. On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal, separation pay, retirement benefits, unpaid commissions, and damages. The Labor Arbiter (LA) ordered respondent’s reinstatement with full backwages, and the payment of his unpaid commission, damages and attorney’s fees. Petitioner appealed to the NLRC but due to petitioner’s failure to post a bond, the appeal was dismissed. The decision was deemed final and executory.ISSUE: WON respondent’s claim for unpaid commissions has already prescribed.RULING: Yes. Respondent’s claim had already prescribed as of September 1991. In addition, the claims of private respondent for reinstatement, backwages and benefits in conjunction with his employment from 1986 to 1988 have prescribed.The applicable law in this case is Article 291 of the Labor Code which provides that “all money claims arising from employer-employee relations accruing during the effectivity of this Code shall be filed within three (3) years from the time the cause of action accrued; otherwise they shall be forever barred.” The term “money claims” covers all money claims arising from an employer-employee relation the prescription of an action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor. On this point, the Court ruled that although the commencement of a civil action stops the running of the statute of prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the parties in exactly the same position as though no action had been commenced at all. Hence, while the filing of Civil Case could have interrupted the running of the three-year prescriptive period, its consequent dismissal by the CA due to lack of jurisdiction effectively canceled the tolling of the prescriptive period within which to file his money claim, leaving respondent in exactly the same position as though no civil case had been filed at all. The running of the three-year prescriptive period not having been interrupted by the filing of Civil Case respondent’s cause of action had already prescribed on September 2, 1991, three years after his cessation of employment on September 2, 1988. Consequently, when respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his claim, clearly, had already been barred by prescription.

12. G.R. NO. 162813, FEBRUARY 12, 2007, FAR EAST AGRICULTURAL SUPPLY, INC. AND/OR ALEXANDER UY VS. JIMMY LEBATIQUE AND THE HONORABLE COURT OF APPEALS

FACTS:

The case originated from a complaint for illegal dismissal and nonpayment of overtime pay filed by Jimmy Lebatique, a truck driver against his employer, Far East Agricultural Supply Inc.

Lebatique was employed March 1996 and was tasked to deliver animal feeds to the company’s clients.

On January 24, 200o, Lebatique complained about not being payed overtime pay. That same day when he complained, he was suspended by Far East’s General Manager Manuel Uy for his alleged illegal use of company vehicle, and was prohibited from entering the company premises when he reported to work the next day.

Lebatique sought the assistance of the DOLE Public Assistance and Complaints Unit for the issue on the nonpayment of his Overtime pay.

Two days after seeking the assistance of the DOLE, he received a telegram from Far East requiring him to report to


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work. Upon his return, Alexander Uy confronted him about his complaint and after talking to Manuel, Alexander terminated Lebatique.

The Labor Arbiter ruled in favor of Lebatique but this decision was overturned by the NLRC who stated that Lebatique was merely suspended and that he is a field personnel not entitled to overtime pay, service incentive leave pay and 13th month pay. The Court of Appeals reinstated the Arbiter’s ruling so petitioner appealed to the Supreme Court by way of review on certiorari.

ISSUE/S:

The case revolves around two specific points on (1) whether or not Lebatique was illegally dismissed and on (2) whether or not he is a field personnel who is not entitled to overtime pay.

RULING:

The case was remanded to the Labor Arbiter for further proceedings to determine

the amount of overtime pay and other monetary benefits due to Lebatique because:

Lebatique was illegally dismissed

In cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid cause and in this case the petitioners failed to discharge such burden.

As to the petitioner’s claims that Lebatique was not dismissed but that he abandoned his work after being suspended, “an employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned his work”. Lebatique’s filing of the complaint is “proof enough of his desire to return to work, thus negating any suggestion of abandonment.”

Lebatique is not a field personnel

The definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee’s performance is unsupervised by the employer. A field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. In order to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer.

Given the above definition, Lebatique is not a field personnel for the following reasons:

(1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place;

(2) they are not given the discretion to solicit, select and contact prospective clients; and

(3) Far East issued a directive that company drivers should stay at the client’s premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.

13. LETRAN CALAMBA FACULTY and EMPLOYEES ASSOCIATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and COLEGIO DE SANJUAN DE LETRAN CALAMBA, INC.,respondent.

FACTS: On October 8, 1992, the Letran

Calamba Faculty and Employees Association filed with Regional Arbitration Branch No. IV of the NLRC a Complaint against Colegio de San Juan de Letran, Calamba, Inc for collection of various monetary claims due its members. The complaint alleges among many things, that in the computation for 13th month pay of its academic personnel respondent does not include as basis therefor their compensation for overloads, that respondent has not paid the wage increase, the salary increase due to the non-academic personnel as a result of job grading has not been given, that the acts of the respondent has resulted in diminution of benefits of the faculty members. In its position paper, respondent denied all the allegations.

Prior to the filing of the above-mentioned complaint, petitioner filed a separate complaint against the respondent for money


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claims with Regional Office No. IV of the Department of Labor and Employment (DOLE). On the other hand, pending resolution in another NLRC case, responden school filed with Regional Arbitration Branch No. IV of the NLRC a petition to declare as illegal the strike staged by petitioner.

On September 28, 1998, the Labor Arbiter (LA) handling the consolidated cases rendered a Decision dismissing the money claims and declaring the strike illegal. Upon appeal to the NLRC, the petition was dismissed. Petitioner then availed of an action for certiorari with the CA but was also dismissed.

ISSUES:1. Whether or nor the CA erred in holding that the

factual findings of the NLRCcannot be revied in certiorari proceedings?

2. Whether or not the teaching overload should be included in the basis in the computation of their 13th month pay?

RULING: On the first issue…

The Court finds no error in the ruling of the CA that since nowhere in the petition is there any acceptable demonstration that the LA or the NLRC acted either with grave abuse of discretion or without or in excess of its jurisdiction, the appellate court has no reason to look into the correctness of the evaluation of evidence which supports the labor tribunals' findings of fact.

The findings of the Labor Arbiter, when affirmed by the NLRC and the CA, are binding on the Supreme Court unless patently erroneous. Thus, in a petitioner for review on certiorari, this Court’s jurisdiction is limited to reviewing errors of law in the absence of any showing that the factual findings complained of are devoid of support in the records or are glaringly erroneous.

In petitions for review on certiorari like the instant case, the Court invariably sustains the unanimous factual findings of the LA, the NLRC and the CA, specially when such findings are supported by substantial evidence and there is no cogent basis to reverse the same, as in this case.22

On the second issueSettled is the doctrine that when an

administrative or executive agency renders an opinion or issues a statement of policy, it merely interprets a pre-existing law and the administrative interpretation is at best advisory for it is the courts that finally determine what the law means. Hence, while the DOLE order may not be applicable, the Court finds that overload pay should be excluded from the computation of the 13th month pay of petitioner’s members.

In the same manner that payment for overtime work and work performed during special holidays is considered as additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is being paid for additional work performed in excess of the regular teaching load.

14. METRO TRANSIT ORGANIZATION VS. PIGLAS NFWU-KMU ET AL., G.R. NO. 175460, APRIL 14, 2008

Facts:

Petitioner Metro Transit Organization, Inc. (MTO) is a government owned and controlled corporation which entered into a Management and Operations Agreement (MOA) with the Light Rail Transit Authority (LRTA) for the operation of the Light Rail Transit (LRT)


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Baclaran-Monumento Line. For purposes of collective bargaining agreement (CBA), petitioner MTO’s rank and file employees formed the Pinag-isang Lakas ng Manggagawa sa Metro, Inc.-National Federation of Labor (PIGLAS).

Petitioners MTO and PIGLAS entered into a CBA covering the period of 13 February 1995 to 13 February 2000. Thereafter, PIGLAS renegotiated the CBA demanding higher benefits.

On 25 July 2000, due to a bargaining deadlock, PIGLAS filed a Notice of Strike before the National Conciliation and Mediation Board (NCMB).

The striking PIGLAS members refused to accede to the Return to Work Order. Following their continued non-compliance, on 28 July 2000, the LRTA formally informed petitioner MTO that it had issued a Board Resolution which: (1) allowed the expiration after 31 July 2000 of LRTA’s MOA with petitioner MTO; and (2) directed the LRTA to take over the operations and maintenance of the LRT Line. By virtue of said Resolution, petitioner MTO sent termination notices to its employees, including herein respondents.

Resultantly, respondents filed with the Labor Arbiter Complaints[4] against petitioners and the LRTA for the following: (1) illegal dismissal; (2) unfair labor practice for union busting; (3) moral and exemplary damages; and (4) attorney’s fees.

On 13 September 2004, the Labor Arbiter rendered judgment in favor of respondents.

Petitioners appealed to the National Labor Relations Commission (NLRC). In a Resolution dated 19 May 2006, the NLRC dismissed petitioners’ appeal for non-perfection since it failed to post the required bond.

Without filing a Motion for Reconsideration of the afore-quoted NLRC Resolution, petitioners filed a Petition for Certiorari with the Court of Appeals assailing the same.

They have not, however, filed a motion for reconsideration of the ruling prior to filing the petition. This renders the petition fatally defective.

Issue:Whether or not the non-filing of motion

of reconsideration to the NLRC is a ground for dismissal of the appeal

Held:

We agree in the Court of Appeals’ finding that petitioners’ case does not fall under any of the recognized exceptions to the filing of a motion for reconsideration, to wit: (1) when the issue raised is purely of law; (2) when public interest is involved; (3) in case of urgency; or when the questions raised are the same as those that have already been squarely argued and exhaustively passed upon by the lower court. As the Court of Appeals reasoned, the issue before the NLRC is both factual and legal at the same time, involving as it does the requirements of the property bond for the perfection of the appeal, as well as the finding that petitioners failed to perfect the same. Evidently, the burden is on petitioners seeking exception to the rule to show sufficient justification for dispensing with the requirement. Certiorari cannot be resorted to as a shield from the adverse consequences of petitioners' own omission of the filing of the required motion for reconsideration.

Nonetheless, even if we are to

disregard the petitioners’ procedural faux pas with the Court of Appeals, and proceed to review the propriety of the 19 May 2006 NLRC Resolution, we still arrive at the conclusion that the NLRC did not err in denying petitioners’ appeal for its failure to file a bond in accordance with the Rules of Procedure of the NLRC.

In cases involving a monetary award,

an employer seeking to appeal the decision of the Labor Arbiter to the NLRC is unconditionally required by Article 223of the Labor Code to post a cash or surety bond equivalent to the amount of the monetary award adjudged. It should be stressed that the intention of lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The word “only” makes it perfectly clear that the lawmakers intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer’s appeal may be perfected. Moreover, it bears stressing that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and failure to conform to the rules will render the judgment sought to be reviewed final and unappealable. It cannot be overemphasized that the NLRC Rules, akin to the Rules of Court, promulgated by authority of law, have the force and effect of law.[

As borne by the records, petitioners

filed a property bond which was conditionally accepted by the NLRC subject to the following


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conditions specified in its 24 February 2006Order:

The conditional acceptance of petitioner’s property bond was subject to the submission of the following: 1) Certified copy of Board Resolution or a Certificate from the Corporate Secretary of Light Rail Transit Authority stating that the Corporation President is authorized by a Board Resolution to submit title as guarantee of judgment award; 2) Certified Copy of the Titles issued by the Registry of Deeds of Pasay City; 3) Certified Copy of the current tax declarations of Titles; 4) Tax clearance from the City Treasurer of Pasay City; 5) Appraisal report of an accredited appraisal company attesting to the fair market value of property within ten (10) days from receipt of this Order. Failure to comply therewith will result in the dismissal of the appeal for non-perfection thereof.

15. J. K. MERCADO & SONS AGRICULTURAL ENTERPRISES, INC., vs. STO. TOMAS

FACTS:

On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI, issued Wage Order No. RTWPB-XI-03, granting a Cost of Living Allowance (COLA) to covered workers.On January 28, 1994, petitioner filed an application for exemption from the coverage of the aforesaid wage order. Thus, however, was denied by the regional wage board in an Order dated April 11, 1994. Notwithstanding the said order, private respondents were not given the benefits due them under Wage Order No. RTWPB-XI-03. On July 10, 1998, private respondents filed an Urgent Motion for Writ of Execution, and Writ of Garnishment seeking the enforcement of subject wage order against several entities including herein petitioner.On October 7, 1998, the OIC-Regional Director, Region XI, issued a Writ of Execution for the enforcement of the Order dated April 11, 1994 of the Regional Tripartite Wages and Productivity Board.On November 17, 1998 and November 23, 1998, respectively, petitioner filed a Motion to Quash the Writ of Execution and a Supplemental Motion to the Motion to Quash. Petitioner argued that herein private respondents' right had already prescribed due to their failure to move for the execution of the April 11, 1994 Order within the period provided under Article 291 of the Labor Code, as amended, or within three (3) years from the finality of the said order.Ruling that the benefits which remained unpaid have not prescribed and that the private respondents need not file a claim to be entitled thereto, the Regional Director denied the Motion to Quash in an Order dated January 7, 1999. Not satisfied with the denial of its motion to quash, petitioner filed a Notice of Appeal on January 29, 1999.Petitioner argued on appeal that the Regional Director abused his discretion in issuing the writ of execution since it was not a party to the case. Petitioner likewise argued that the Regional Director abused his discretion in issuing the writ of execution in the absence of any motion filed by private respondents. Petitioner likewise claimed that since more than three (3) years have already elapsed from the time of the finality of the order dated April 11, 1994, the right of private respondents to claim the benefits under the same had already prescribed.However, the appeal to the CA was denied. On March 2, 2001, petitioner filed a Motion for Reconsideration but the same was denied for lack of merit by public respondent in an Order dated March 14, 2002. Hence, this petition.

ISSUES:


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WON the claim of the private respondents for cost of living allowance (COLA) pursuant to Wage Order No. RTWPB-XI-03 has already prescribed because of the failure of the respondents to make the appropriate claim within the three (3) year prescriptive period provided by Article 291 of the Labor Code, as amended.WON a money claim must be filed first by private respondents against petitioner for the latter's refusal to pay the COLA granted under WO

RULING:

A. NO. Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year prescriptive period to file them.

On the other hand, respondent employees' money claims in this case had been reduced to a judgment, in the form of a Wage Order, which has become final and executory. The prescription applicable, therefore, is not the general one that applies to money claims, but the specific one applying to judgments. Thus, the right to enforce the judgment, having been exercised within five years, has not yet prescribed.Stated otherwise, a claimant has three years to press a money claim. Once judgment is rendered in her favor, she has five years to ask for execution of the judgment, counted from its finality. This is consistent with the rule on statutory construction that a general provision should yield to a specific one and with the mandate of social justice that doubts should be resolved in favor of labor.

B. NO. Clearly, petitioner's contention is premised on the mistaken belief that the right of private respondents to recover their wage differential or COLA under Wage Order No. 03 is still a contestable issue.

It must be emphasized that the order dated April 11, 1994 had long become final and executory. Petitioner did not appeal the said order. Having failed to avail of the remedy of appeal of the said order, petitioner cannot belatedly avoid its duty to comply with the said order by insisting that a money claim must first be filed by herein private respondents. A contrary ruling would result to absurdity and would even unjustly benefit petitioner who for quite sometime had exerted every effort to avoid the obligation of giving the wage differential or COLA granted under Wage Order No. 3.

16. J. PHIL. MARINE INC., VS. NLRC, G.R. NO. 1753661, AUGUST 11, 2008

Facts: Warlito E. Dumalaog (respondent),

who served as cook aboard vessels plying overseas, filed on March 4, 2002 before the National Labor Relations Commission (NLRC) a pro-forma complaint1 against petitioners ─ manning agency J-Phil Marine, Inc. (J-Phil), its then president Jesus Candava, and its foreign principal Norman Shipping Services ─ for unpaid

money claims, moral and exemplary damages, and attorney’s fees.

Respondent thereafter filed two amended pro forma complaints2 praying for the award of overtime pay, vacation leave pay, sick leave pay, and disability/medical benefits, he having, by his claim, contracted enlargement of the heart and severe thyroid enlargement in the discharge of his duties as cook which rendered him disabled.

Respondent’s total claim against petitioners was P864,343.30 plus P117,557.60 representing interest and P195,928.66 representing attorney’s fees.3

By Decision4 of August 29, 2003, Labor Arbiter Fe Superiaso-Cellan dismissed respondent’s complaint for lack of merit.

On appeal,5 the NLRC, by Decision of September 27, 2004, reversed the Labor Arbiter’s decision and awarded US$50,000.00 disability benefit to respondent. It dismissed respondent’s other claims, however, for lack of basis or jurisdiction.6 Petitioners’ Motion for Reconsideration7 having been denied by the NLRC,8 they filed a petition for certiorari9 before the Court of Appeals.

By Resolution10 of September 22, 2005, the Court of Appeals dismissed petitioners’ petition for, inter alia, failure to attach to the petition all material documents, and for defective verification and certification. Petitioners’ Motion for Reconsideration of the appellate court’s Resolution was denied;11 hence, they filed the present Petition for Review on Certiorari.

During the pendency of the case before this Court, respondent, against the advice of his counsel, entered into a compromise agreement with petitioners. He thereupon signed a Quitclaim and Release subscribed and sworn to before the Labor Arbiter.

Issues:WON the compromise agreement is valid even without the intervention of the counsel.

Held: Yes. The compromise agreement is valid even without the intervention of the counsel.

Article 227 of the Labor Code provides:

Any compromise settlement, including those involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the Department of Labor, shall be final and binding upon the parties. The National Labor


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Relations Commission or any court shall not assume jurisdiction over issues involved therein except in case of non-compliance thereof or if there is prima facie evidence that the settlement was obtained through fraud, misrepresentation, or coercion.

That a client has undoubtedly the right to compromise a suit without the intervention of his lawyer24 cannot be gainsaid, the only qualification being that if such compromise is entered into with the intent of defrauding the lawyer of the fees justly due him, the compromise must be subject to the said fees.25 In the case at bar, there is no showing that respondent intended to defraud his counsel of his fees. In fact, the Quitclaim and Release, the execution of which was witnessed by petitioner J-Phil’s president Eulalio C. Candava and one Antonio C. Casim, notes that the 20% attorney’s fees would be "paid 12 April 2007 – P90,000."

17. SY VS. ALC INDUSTRIES, G.R. NO. 168339, OCTOBER 10, 2008

Facts:Petitioner was hired by respondent corporation

ALCII as a supervisor in its purchasing office. She was thereafter assigned to ALCII's construction project in Davao City as business manager and supervisor of the Administrative Division. Her Davao assignment was from May 1997 to April 15, 1999.

Petitioner alleged that respondents refused to pay her salary beginning August 1998 and allowances beginning June 1998, despite her almost weekly verbal follow-up. Petitioner filed a complaint before the labor arbiter for unpaid salaries and allowances. Despite several notices and warnings, respondents did not file a position paper to controvert petitioner's claims. The case was submitted for resolution based solely on petitioner's allegations and evidence.

In his June 30, 2000 decision, the labor arbiter ordered ALCII and/or Dexter Ceriales to pay petitioner P282,560 representing her unpaid salary and allowance.

Respondents filed an appeal with motion for reduction of bond in the National Labor Relations Commission (NLRC) without posting any cash or surety bond. In a resolution dated September 6, 2001, the NLRC dismissed respondents' appeal. It ruled that respondents failed to adduce substantial evidence to support their arguments of non-liability. Moreover, it found no justifiable reason to grant a reduction in the required bond.

Respondents were able to file a motion for reconsideration on time, accompanied by a joint undertaking/declaration in lieu of the cash or surety bond. Nevertheless, respondents' motion for reconsideration was denied.

On August 2, 2002, respondents filed a motion for clarification but this was likewise denied. Respondents questioned the NLRC's denial of their motion for clarification and reconsideration in the CA via a petition for certiorari and prohibition.

In its March 30, 2005 decision, the CA set aside the resolutions of the NLRC and the decision of the labor arbiter and dismissed petitioner's complaint.

Issue: WON the decision of the Labor Arbiter has become final and executory.

Ruling: Article 223. APPEAL. - Decisions, awards, or

orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten calendar days from receipt of such decisions, awards, or orders. xxx.




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In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. (emphasis supplied)

Section 1, Rule VI of the Rules of Procedure of the NLRC, as amended, likewise provides that the appeal must be filed within ten days from receipt of the decision, resolution or order of the labor arbiter. Moreover, Section 6 of the same rules provides that an appeal by the employer may be perfected only upon the posting of a cash or surety bond. As the right to appeal is merely a statutory privilege, it must be exercised only in the manner and in accordance with the provisions of the law. Otherwise, the right to appeal is lost.

In a long line of cases, we have ruled that the payment of the appeal bond is a jurisdictional requisite for the perfection of an appeal to the NLRC. The lawmakers intended to make the posting of a cash or surety bond by the employer the exclusive means by which an employer's appeal may be perfected. The rationale for this rule is:

The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employers' appeal. It was intended to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employee's just and lawful claims.

The explanation advanced by respondents for their failure to pay the appeal bond belies their claim. The NLRC found that respondents did not pay the appeal bond on the mistaken notion that they were not liable for the monetary award and had already ceased operations due to bankruptcy. Respondents belatedly filed a bond with their motion for reconsideration of the NLRC's dismissal of their appeal. We cannot countenance such flagrant disregard of established rules of procedure on appeals.

Moreover, the filing of a joint undertaking/declaration, filed way beyond the ten-day reglementary period for perfecting an appeal and as a substitute for the cash or surety bond, did not operate to validate the lost appeal.

The decision of the labor arbiter therefore became final and executory for failure of respondents to perfect their appeal within the reglementary period. Clearly, the CA no longer had jurisdiction to entertain respondents' appeal from the labor arbiter's decision.

Respondents point out that we have occasionally allowed exceptions to mandatory and jurisdictional

requirements in the perfection of appeals, such as disregarding unintended lapses on the basis of strong and compelling reasons. This is true. However, the obvious motive behind respondents' plea for liberality is to thwart petitioner's claims. This we cannot allow. Respondents' lapses were far from unintentional. They were deliberate attempts to circumvent established rules.

Respondents' other contention that they were deprived of due process is likewise devoid of merit. Due process is satisfied when the parties are afforded fair and reasonable opportunity to explain their respective sides of the controversy. In Mariveles Shipyard Corp. v. CA, we held:

The requirements of due process in labor cases before a Labor Arbiter is satisfied when the parties are given the opportunity to submit their position papers to which they are supposed to attach all the supporting documents or documentary evidence that would prove their respective claims, in the event that the Labor Arbiter determines that no formal hearing would be conducted or that such hearing was not necessary. (emphasis supplied).

We ruled in Times Transportation Company, Inc. v. Sotelo: To extend the period of appeal is to prolong the resolution of the case, a circumstance which would give the employer the opportunity to wear out the energy and meager resources of the workers to the point that they would be constrained to give up for less than what they deserve in law.


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18. PCI TRAVEL CORPORATION, VS NLRC

Facts:Sometime in 1994, respondent NUBE-

AMEXPEA/PCI Travel Employees Union filed a Complaint for unfair labor practice against petitioner PCI Travel Corporation. It claimed that petitioner had been filling up positions left by regular rank-and-file with contractual employees, but were performing work which were usually necessary and desirable in the usual business or trade of the petitioner. Respondent prayed that the Labor Arbiter order the petitioner to pay the “contractual employees” the differentials between the wages/benefits of regular employees and the actual wages/benefits paid to them from the first day of their employment, plus moral and exemplary damages, and attorney’s fees of not less than P300,000.00 per employee.

Petitioner moved to dismiss the complaint on the ground that the Union was not the real party-in-interest. Subsequently, petitioner manifested that while it was ready and willing to prove that said employees were provided by independent legitimate contractors and that it was not engaged in labor-only contracting in a position paper yet to be submitted, petitioner prayed that the Labor Arbiter first resolve the issues raised in their motion to dismiss.

Labor Arbiter ruled that motion to dismiss is a prohibited pleading. Labor arbiter decided that the petitioner is guilty of unfair labor practices.

Petitioner filed petition for certiorari with the Court of Appeals. However, the CA dismissed the appeal for failure of the petitioner to attach the necessary documents and pleading in support for the relief they sought. Additionally, the verification for non-forum shopping was signed by Company’s President without proof that he is authorized by the corporation to sign it trough resolution.

Issue: WON the CA was correct in

dismissing the case based on the aforementioned technical grounds.

Ruling. No. the Court of Appeals erred in its decision. The case must be remanded to the CA for resolution on the merits. Reasoning.

President of the corporation can sign the verification and certification without need of a board resolution, there thus exists a compelling reason for the reinstatement of the petition before the Court of Appeals. A perusal of the

petition for certiorari would reveal that petitioner intended to show the grave abuse of discretion committed by the labor tribunals in not allowing the petitioner the ample opportunity to submit its position paper on the alleged violation of the CBA. The Labor Arbiter and the NLRC viewed it as a waiver on its part and hastened to rule that ”since the complainant’s allegations remain unrebutted, they are deemed correct and valid.” Due process dictates that a person should be given the opportunity to be heard. Unfortunately, this was not accorded to the petitioner and such right was even foreclosed when the appellate court dismissed the petition before it on technical grounds. The policy of our judicial system is to encourage full adjudication of the merits of an appeal. Ends of justice are better served when both parties are heard and the controversy decided on its merits. Thus, in the exercise of its equity jurisdiction, the Court will not hesitate to reverse the dismissal of appeals that are grounded merely on technicalities.


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19. LOLITA LOPEZ ET AL. VS. QUEZON CITY SPORTS CLUB, INC.

Facts:

In this case, there are two actions. First, the one initiated by the labor organization and the other initiated by the employer. In the first case, the Kasapiang Manggagawa sa Quezon City Sports Club (union) claims that it is a registered independent labor organization and the incumbent collective bargaining agent of Quezon City Sports Club (QCSC). They filed a complaint for unfair labor practice against QCSC on 12 November 1997.

The Union averred that it was ordered to submit a new information sheet. It immediately wrote a letter addressed to the general manager, Angel Sadang, to inquire about the information sheet, only to be insulted by the latter. The members of the union were not paid their salaries on 30 June 1997. A QCSC board member, Antonio Chua allegedly harassed one of the employees and told him not to join the strike and even promised a promotion. On 4 July 1997, the union wrote a letter to the management for the release of the members’ salaries for the period 16-30 June 1997, implementation of Wage Order No. 5, and granting of wage increases mandated by the Collective Bargaining Agreement (CBA). When its letter went unanswered, the union filed a notice of strike on 10 July 1997 for violation of Article 248 (a)(c)(e) of the Labor Code, nonpayment of overtime pay, refusal to hear its grievances, and malicious refusal to comply with the economic provisions of the CBA. After conducting a strike vote, it staged a strike on 12 August 1997. On 16 August 1997, the QCSC placed some of its employees under temporary lay-off status due to redundancy.

The second case: It appears that on 22 December 1997, QCSC also filed a petition for cancellation of registration against the union and to declare the union’s strike on August 12, 1997 as illegal. This action by QCSC is docketed as NLRC CASE NO. 00-09-0663-97. The Labor Arbiter Ernesto Dinopol declared the strike of the union illegal in its decision dated October 9, 1998 (Dinopol decision). The dispositive reads:

WHEREFORE, in view of the Union’s having violated the no-strike-no-lockout provision of the Collective Bargaining Agreement, the strike it staged on August 12, 1998 is hereby declared illegal and consequently, pursuant to Article 264 of the Labor Code, the individual respondents, namely: RONILO C. LEE, EDUARDO V. SANTIA, CECILLE C. PANGAN, ROMEO M. MORGA, GENARO C. BANDO AND ALEX J.

SANTIAGO, who admitted in paragraph 1 of their position paper that they are officers/members of the complaining Union are hereby declared to have lost their employment status.

Back to the first case, the Labor Arbiter (Joel Lustria) found QCSC guilty of unfair labor practice. QCSC appealed from the labor arbiter’s decision. It also filed a motion for reduction of the appeal bond to P4,000,000.00. The NLRC ordered the posting of an additional P6,000,000.00). QCSC filed a supplement to its appeal, citing the Dinopol decision.

Meanwhile, the National Labor Relations Commission (NLRC) rendered a decision granting the appeal and reversing the Lustria decision. The NLRC said that the Dinopol Decision in the illegal strike case must prevail over the Lustria Decision because of the established doctrine of primacy and finality of decision. In the illegal strike case, Ronilo Lee, Eduardo Santia, Cecille Pangan, Romeo Morga, Genaro Bando and Alex Santiago lost or forfeited their employment on the day the illegal strike was staged. The NLRC said that the forfeiture of their employment status carries with it the extinction of their right to demand for and be entitled to the economic benefits accorded to them by law and the existing CBA.

The other complainants (petitioners) meanwhile filed a motion for reconsideration, which was denied by the NLRC. They filed a petition for certiorari under Rule 65 before the Court of Appeals but was denied.

Issues:

1. Do the simultaneous filing of the motion to reduce the appeal bond and posting of the reduced amount of bond within the reglementary period for appeal constitute substantial compliance with Article 223 of the Labor Code?

2. Whether the NLRC erred in declaring them to have lost their employment contrary to the Dinopol decision which only affected a few of the employees who were union members.

Ruling:

First issue:

Under the Rules, appeals involving monetary awards are perfected only upon compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing of the memorandum of appeal; and (3) payment of the required cash or surety bond.

Thus, the posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards from the decision of the labor arbiter. The filing of the bond is not only mandatory but also a jurisdictional requirement that must be complied with in order to confer


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jurisdiction upon the NLRC. Non-compliance with the requirement renders the decision of the labor arbiter final and executory. This requirement is intended to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer’s appeal. It is intended to discourage employers from using an appeal to delay or evade their obligation to satisfy their employees’ just and lawful claims.

However, Section 6 of the New Rules of Procedure of the NLRC also mandates, among others, that no motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. Hence, the NLRC has the full discretion to grant or deny the motion to reduce the amount of the appeal bond.

In the case of Nicol v. Footjoy Industrial Corporation ruled that the bond requirement on appeals involving monetary awards had been and could be relaxed in meritorious cases such as: (1) there was substantial compliance with the Rules; (2) the surrounding facts and circumstances constitute meritorious grounds to reduce the bond; (3) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or (4) the appellants, at the very least, exhibited their willingness and/or good faith by posting a partial bond during the reglementary period. Applying these jurisprudential guidelines, we find and hold that the NLRC did not err in reducing the amount of the appeal bond and considering the appeal as having been filed within the reglementary period.

The posting of the amount of P4,000,000.00 simultaneously with the filing of the motion to reduce the bond to that amount, as well as the filing of the memorandum of appeal, all within the reglementary period, altogether constitute substantial compliance with the Rules.

Second issue:

We rule in favor of petitioners.

The assailed Dinopol decision involves a complaint for illegal strike filed by QCSC on the ground of a “no-strike no lockout” provision in the CBA. The challenged decision was rendered in accordance with law and is supported by factual evidence on record. In the notice of strike, the union did not state in particular the acts, which allegedly constitute unfair labor practice. Moreover, by virtue of the “no-strike no lockout” provision in the CBA, the union was prohibited from staging an economic strike, i.e., to force wage or other concessions from the employer, which he is not required by law to grant. However, it should be noted that while the strike declared by the union was held illegal, only the union officers were declared as having lost their employment status. In effect, there was a ruling only with respect to some union members while the status of all others had remained disputed.

There is no conflict between the Dinopol and the Lustria decisions. While both rulings involve the same parties and

same issues, there is a distinction between the remedies sought by the parties in these two cases. In the Dinopol decision, it was QCSC which filed a petition to declare the illegality of the 12 August 1997 strike by the union. The consequence of the declaration of an illegal strike is termination from employment, which the Labor Arbiter did so rule in said case. However, not all union members were terminated. In fact, only a few union officers were validly dismissed in accordance with Article 264 of the Labor Code (the six named). Corollarily, the other union members who had merely participated in the strike but had not committed any illegal acts were not dismissed from employment. Hence, the NLRC erred in declaring the employment status of all employees as having been lost or forfeited by virtue of the Dinopol decision.

On the other hand, the Lustria decision involved the unfair labor practices alleged by the union with particularity. In said case, Labor Arbiter Lustria sided with the Union and found QCSC guilty of such practices. As a consequence, the affected employees were granted backwages and separation pay. The grant of backwages and separation pay however was not premised on the declaration of the illegality of the strike but on the finding that these affected employees were constructively dismissed from work, as evidenced by the layoffs effected by the company.

Therefore, with respect to petitioners and union officers Alex J. Santiago, Ma. Cecilia Pangan, Ronilo E. Lee, and Genaro Bando, who apparently had been substituted by present petitioner Teresita Bando, the Dinopol decision declaring them as having lost their employment status still stands.

To recapitulate, the NLRC erred in setting aside the Lustria decision, as well as in deleting the award of backwages and separation pay, despite the finding that the affected employees had been constructively dismissed.

Based on the foregoing, the Lustria decision should be upheld and therefore reinstated except as regards the four petitioners.


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20. LOCKHEED DETECTIVE & WATCHMAN AGENCY VS UP G.R. NO. 185918, APRIL 18, 2012

Facts: Petitioner entered into a contract for security services with respondent. An NLRC Decision holding respondent solidarily liable with petitioner to security guards for P12,142,522.69 became final and executory.

A writ of execution was issued by the Labor Arbiter, which was later on quashed upon motion by respondent. The quashal was reversed by the NLRC. Upon reconsideration, the NLRC reconsidered and modified that the satisfaction of the award will be only against the funds of respondent which are not identified as public funds. The NRLC’s order and resolution having become final, an alias writ of execution was issued. A notice of garnishment was served upon PNB Diliman Branch. Upon learning of the notice, respondent filed an urgent motion to quash garnishment which was dismissed by the Labor Arbiter. Funds from PNB were withdrawn by the sheriff. Respondent filed a petition for certiorari with the Court of Appeals. The CA dismissed the petition ruling that the funds are not public funds but on reconsideration, amended its decision holding still that the funds are not public funds but the petition is granted because of the case of National Electrification Administration vs Morales(NEA case) that all money claims against the government must be first filed with the Commission on Audit. Petitioner moved for reconsideration but was denied. The Amended Decision and Resolution are now being assailed in this petition for review on certiorari.

Issue: Whether or not the funds of respondent were properly garnished?

Ruling: No, the funds of respondent were not properly garnished. The Court ruled that the CA correctly cited the NEA case. Respondent is a juridical personality separate and distinct from the government and has the capacity to sue and be sued. Thus, it cannot evade execution, and its funds may be subject to garnishment or levy. However, before execution may be had, a claim for payment of the judgment award must first be filed with COA pursuant to Commonwealth Act No. 327.

21. PORTILLO VS. RUDOLF LIETZ, INC. ET AL., G.R. NO. 196539, OCTOBER 10, 2012

Facts:Portillo was a Sales Representative of Rudolf Lietz, Inc. pharmaceutical business. Portillo signed an employment contract containing a ‘Goodwill Clause” as follows:

“It remains understood and you agreed that, on the termination of your employment by act of either you or [Lietz Inc.], and for a period of three (3) years thereafter, you shall not engage directly or indirectly as employee, manager, proprietor, or solicitor for yourself or others in a similar or competitive business or the same character of work which you were employed by [Lietz Inc.] to do and perform. Should you breach this good will clause of this Contract, you shall pay [Lietz Inc.] as liquidated damages the amount of 100% of your gross compensation over the last 12 months, it being agreed that this sum is reasonable and just.”

Portillo subsequently resigned from her employment with Lietz. She demanded from Lietz Inc. for the payment of her remaining salaries and commissions, which were not paid to her upon such resignation. Later, and within the 3-year prohibitory period, Lietz learned that Portillo was hired by Ed Keller Philippine as head of its Pharma Raw Material Department. Ed Keller is direct competitor of Lietz.

As Portillo’s demand for remaining salaries and commissions from Lietz still went unheeded, she filed a complaint with the NLRC for non-payment of 1½ months’ salary, 2 months’ commission, 13th month pay, plus moral, exemplary and actual damages and attorney’s fees.

In its position paper, Lietz admitted liability for Portillo’s money claims. However, Lietz raised the defense of legal compensation: Portillo’s money claims should be offset against her liability to Lietz for liquidated damages for Portillo’s breach of the “Goodwill Clause” in the employment contract when she became employed with Ed Keller.

Issue:Should the claims of Portillo against Lietz for unpaid wages, commissions, etc. be offset against her liability to Lietz for damages from breach of the “Goodwill Clause” in the contract?

Ruling:No, it should not be offset.


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While Portillo’s claim for unpaid salaries is a money claim that arises out of or in connection with an employer-employee relationship, Lietz’ claim against Portillo for violation of the goodwill clause is a money claim based on an act done after the cessation of the employment relationship. And, while the jurisdiction over Portillo’s claim is vested in the labor arbiter, the jurisdiction over Lietz Inc.’s claim rests on the regular courts.

The difference in the nature of the credits that one has against the other, conversely, the nature of the debt one owes another, which difference in turn results in the difference of the forum where the different credits can be enforced, prevents the application of compensation. The labor tribunal does not have jurisdiction over the civil case of breach of contract.

22. BUILDING CARE CORP. VS. MACARAEG, G.R. NO. 198357, DECEMBER 10, 2012

Petitioners are in the business of providing security services to their clients. They hired respondent as a security guard beginning August 25, 1996, assigning her at Genato Building in Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was allegedly no longer given any assignment. Thus, on September 9, 2008, respondent filed a complaint against petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond. Conciliation and mediation proceedings failed, so the parties were ordered to submit their respective position papers.

Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to constructive dismissal, and this compelled her to file the complaint for illegal dismissal.

On the other hand, petitioners that respondent was relieved from her post as requested by the client because of her habitual tardiness, persistent borrowing of money from employees and tenants of the client, and sleeping on the job. Respondent filed a complaint for illegal dismissal with the Labor Arbiter.

The Labor Arbiter (LA) in favor of petitioners, holding that the dismissal of Macaraeg was valid, but ordered the former to pay a certain sum as financial assistance. The Appeal which respondent filed with the NLRC was for having been filed out of time. Hence, NLRC declared that the LA's Decision had become final and executory on June 16, 2009.

Respondent elevated the case to the CA via a petition for certiorari. The CA reversed and set aside the decision of NLRC and declared Macaraeg to have been illegally dismissed. Petitioners were ordered to reinstate petitioner without loss of seniority rights, benefits and privileges; and to pay her backwages and other monetary benefits during the period of her illegal dismissal up to actual reinstatement. Petitioners' motion for reconsideration was denied. Hence, the present petition.

ISSUE:

Whether the CA erred in liberally applying the rules of procedure and ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out of time.


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RULING:

The Court cannot sustain the CA's Decision. It should be emphasized that the resort to a liberal application, or suspension of the application of procedural rules, must remain as the exception to the well-settled principle that rules must be complied with for the orderly administration of justice. In Marohomsalic v. Cole, the Court stated: While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in the interest of justice was never intended to be a license for erring litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be invoked only in proper cases and under justifiable causes and circumstances. While litigation is not a game of technicalities, every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.

The later case of Daikoku Electronics Phils., Inc. v. Raza, further explained that:

To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it. To merit liberality, petitioner must show reasonable cause justifying its non-compliance with the rules and must convince the Court that the outright dismissal of the petition would defeat the administration of substantial justice. x x x The desired leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse. x x x

In this case, the justifications given by the CA for its liberality by choosing to overlook the belated filing of the appeal are, the importance of the issue raised, i.e., whether respondent was illegally dismissed; and the belief that respondent should be "afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities," considering that the belated filing of respondent's appeal before the NLRC was the fault of respondent's former counsel. Note, however, that neither respondent nor her former counsel gave any explanation or reason citing extraordinary circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted that she had not been remiss in following up her case with said lawyer. It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A departure from this rule would bring about never-ending suits, so long as lawyers could allege their own fault or negligence to support the client’s case and obtain remedies and reliefs already lost by the operation of law.

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the case is also an essential part of public policy and the orderly administration of justice. Hence, such right is just as weighty or equally important as the right of the losing party to appeal or seek reconsideration within the prescribed period.

When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment.

23. MCBURNIE VS GANZON, GR NO. 178034/1718117, OCTOBER 17, 2013, EN BANC

FACTS: On October 4, 2002, McBurnie, an Australian national, instituted a complaint for illegal dismissal and other monetary claims against the respondents. McBurnie claimed that on May 11, 1999, he signed a five-year employment agreement5 with the company EGI as an Executive Vice-President who shall oversee the management of the company’s hotels and resorts within the Philippines. He performed work for the company until sometime in November 1999, when he figured in an accident that compelled him to go back to Australia while recuperating from his injuries. While in Australia, he was informed by respondent Ganzon that his services were no longer needed because their intended project would no longer push through.The respondents opposed the complaint, contending that their agreement with McBurnie was to jointly invest in and establish a company for the management of hotels. They did not intend to create an employer-employee relationship, and the execution of the employment contract that was being invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain an alien work permit in the Philippines. At the time McBurnie left for Australia for his medical treatment, he had not yet obtained a work permit.

In a Decision6 dated September 30, 2004, the Labor ArbiterLA declared McBurnie as having been illegally dismissed from employment. Feeling aggrieved, the respondents appealed the Labor ArbiterLA’s Decision to the NLRC.7 On November 5, 2004, they filed their Memorandum of Appeal8 and Motion to Reduce Bond9, and posted an appeal bond in the amount of P100,000.00. The respondents contended in their Motion to Reduce Bond, inter alia, that the monetary awards of the Labor ArbiterLA were null and excessive, allegedly with the intention of rendering them incapable of posting the necessary appeal bond. On February 16, 2007, the CA issued a Resolution18 granting the respondents’ application for a writ of preliminary injunction. It directed the NLRC, McBurnie, and all persons acting for and under their authority to refrain from causing the execution and enforcement of the LA’s decision in favor of McBurnie, conditioned upon the respondents’ posting of a bond in the amount of P10,000,000.00. McBurnie sought reconsideration of the issuance of the writ of preliminary injunction, but this was denied by the CA in its Resolution dated May 29, 2007.19 dated May 29, 2007.On September 18, 2009, the Third Division of thise Court rendered its Decision37 which reversed the CA Decision dated October 27, 2008 and Resolution dated March 3, 2009.


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The respondents’ first motion for reconsideration41 was denied by the Court for lack of merit via a Resolution42 dated December 14, 2009.Meanwhile, on the basis of the Court’s Decision, McBurnie filed with the NLRC a motion for reconsideration with motion to recall and expunge from the records the NLRC Decision dated November 17, 2009.43 The motion was granted by the NLRC in its Decision44 dated January 14, 2010.On March 27, 2012, the respondents filed a Motion for Leave to File Attached Third Motion for Reconsideration, with an attached Motion for Reconsideration (on the Honorable Court’s 25 January 2012 Resolution) with Motion to Refer These Cases to the Honorable Court En Banc. ISSUE: The crucial issue in this case concerns the sufficiency of the appeal bond that was posted by the respondents.RULING: The present rule on the matter is Section 6, Rule VI of the 2011 NLRC Rules of Procedure, which was substantially the same provision in effect at the time of the respondents’ appeal to the NLRC. To clarify, the prevailing jurisprudence on the matter provides that the filing of a motion to reduce bond, coupled with compliance with the two conditions emphasized in Garcia v. KJ Commercial78 for the grant of such motion, namely, (1) a meritorious ground, and (2) posting of a bond in a reasonable amount, shallsuffice to suspend the running of the period to perfect an appeal from the labor arbiter’s decision to the NLRC.79 To require the full amount of the bond within the 10-day reglementary period would only render nugatory the legal provisions which allow an appellant to seek a reduction of the bond.

24. INDOPHIL TEXTILE MILLS INC. VS ENGR. ADVIENTO, GR. NO. 171212, AUGUST 4, 2014

FACTS: Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business of manufacturing thread for weaving.3 On August 21, 1990, petitioner hired respondent Engr. Salvador Adviento as Civil Engineer to maintain its facilities in Lambakin, Marilao, Bulacan.4cralawred

On August 7, 2002, respondent consulted a physician due to recurring weakness and dizziness.5 Few days later, he was diagnosed with Chronic Poly Sinusitis, and thereafter, with moderate, severe and persistent Allergic Rhinitis.6 Accordingly, respondent was advised by his

doctor to totally avoid house dust mite and textile dust as it will transmute into health problems.

Distressed, respondent filed a complaint against petitioner with the National Labor Relations Commission (NLRC), San Fernando, Pampanga, for alleged illegal dismissal and for the payment of backwages, separation pay, actual damages and attorney’s fees. The said case, docketed as NLRC Case No. RAB-III-05-5834-03, is still pending resolution with the NLRC at the time the instant petition was filed.8cralawred

Subsequently, respondent filed another Complaint9 with the Regional Trial Court (RTC) of Aparri, Cagayan, alleging that he contracted such occupational disease by reason of the gross negligence of petitioner to provide him with a safe, healthy and workable environment.

In reply, petitioner filed a Motion to Dismiss22 on the ground that: (1) the RTC has no jurisdiction over the subject matter of the complaint because the same falls under the original and exclusive jurisdiction of the Labor Arbiter (LA) under Article 217(a)(4) of the Labor Code; and (2) there is another action pending with the Regional Arbitration Branch III of the NLRC in San Fernando City, Pampanga, involving the same parties for the same cause.

On December 29, 2003, the RTC issued a Resolution23 denying the aforesaid Motion and sustaining its jurisdiction over the instant case.

After the submission by the parties of their respective Memoranda, the CA rendered a Decision27 dated May 30, 2005 dismissing petitioner’s Petition for lack of merit.

ISSUE: whether or not the RTC has jurisdiction over the subject matter of respondent’s complaint praying for moral damages, exemplary damages, compensatory damages, anchored on petitioner’s alleged gross negligence in failing to provide a safe and healthy working environment for respondent.

RULING: The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code, as amended by Section 9 of Republic Act (R.A.) No. 6715. It also bears stressing that respondent is not praying for any relief under the Labor Code of the Philippines. He neither claims for reinstatement nor backwages or separation pay resulting from an illegal termination. The cause of action herein pertains to the consequence of petitioner’s omission which led to a work-related disease suffered by respondent, causing harm or damage to his person. Such cause of action is within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts.


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25. MANILA MINING CORP., VS. AMOR, GR.NO. 182800, APRIL 20, 2015

FACTS: Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez and Fermin Tabili, Jr. were regular employees of petitioner Manila Mining Corporation, a domestic corporation which operated a mining claim in Placer, Surigao del Norte, in pursuit of its business of large-scale open-pit mining for gold and copper ore. In compliance with existing environmental laws, petitioner maintained Tailing Pond No. 7 (TP No. 7), a tailings containment facility required for the storage of waste materials generated by its mining operations. When the mine tailings being pumped into TP No. 7 reached the maximum level in December 2000, petitioner temporarily shut down its mining operations pending approval of its application to increase said facilty’s capacity by the Department of Environment and Natural Resources-

Environment Management Bureau (DENR-EMB), Butuan City. Although the DENR-EMB issued a temporary authority on 25 January 2001 for it to be able to continue operating TP No. 7 for another six (6) months and to increase its capacity, petitioner failed to secure an extension permit when said temporary authority eventually lapsed.4

On 27 July 2001, petitioner served a notice, informing its employees and the Department of Labor and Employment Regional Office No. XII (DOLE) of the temporary suspension of its operations for six months and the temporary lay-off of two-thirds of its employees.5 After the lapse of said period, petitioner notified the DOLE on 11 December 2001 that it was extending the temporary shutdown of its operations for another six months.6 Adversely affected by petitioner’s continued failure to resume its operations, respondents filed the complaint for constructive dismissal and monetary claims which was docketed as NLRC Case No. RAB-13-10-00226-2003 before the Regional Arbitration Branch No. XIII of the National Labor Relations Commission (NLRC). On 25 October 2004, Executive Labor Arbiter Benjamin E. Pelaez rendered a Decision holding petitioner liable for constructive dismissal in view of the suspension of its operations beyond the six-month period allowed under Article 2867 of the Labor Code of the Philippines. Aggrieved, petitioner filed its memorandum of appeal before the NLRC11 and moved for the reduction of the appeal bond to P100,000.00, on the ground that its financial losses in the preceding years had rendered it unable to put up one in cash and/or surety equivalent to the monetary award.12 In opposition, respondents moved for the dismissal of the appeal in view of the fact that, despite receipt of the appealed decision on 24 November 2004, petitioner mailed their copy of the memorandum of appeal only on 7 February 2005. Respondents also argued that the appeal bond tendered by petitioner was so grossly disproportionate to monetary award for the same to be considered substantial compliance with the requirements for the perfection of an appeal from a Labor Arbiter’s decision.

ISSUE: Whether motion for the reduction of the appeal bond on the ground that the cash equivalent of the monetary award and/or cost of the surety bond have proven to be prohibitive in view of the tremendous business losses

it allegedly sustained.

RULING: By allowing appeals on the merits,37it has been ruled that the employer should comply with the following conditions: (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal. Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure. The first condition may be left for the nonce. As to the second condition, we may consider that the amount ofP100,000.00


http://www.lawphil.net/judjuris/juri2015/apr2015/gr_182800_2015.html#fnt37






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supposedly posted was provisional bond sufficient to suspend the running of the 10-day reglementary period to perfect an appeal from the Labor Arbiter's decision. That would however not improve petitioner's position one bit.

26. PHILIPPINE BANK OF COMMUNICATIONS VS.THE NATIONAL LABOR RELATIONS COMMISSION ET AL. G.R. NO. L-66598 DECEMBER 19, 1986

FACTS:Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to provide "Tempo[rary] Services" to petitioner Consisting of the "temporary services" of eleven (11) messengers. The contract period is described as being "from January 1976—." The petitioner in truth undertook to pay a "daily service rate of P18, " on a per person basis.Attached to the letter agreement was a "List of Messengers assigned at Philippine Bank of Communications" which list included, as item No. 5 thereof, the name of private respondent Ricardo Orpiada.Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered services to the bank, within the premises of the bank and alongside other people also rendering services to the bank. There was some question as to when Ricardo Orpiada commenced rendering services to the bank. As noted above, the letter agreement was dated January 1976. However, the position paper submitted by (CESI) to the National Labor Relations Commission stated that (CESI) hired Ricardo Orpiada on 25 June 1975 as a Tempo Service employee, and assigned him to work with the petitioner bank "as evidenced by the appointment memo issued to him on 25 June 1975. " Be that as it may, on or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's services "were no longer needed."On 29 October 1976, Orpiada instituted a complaint in the Department of Labor (now Ministry of Labor and Employment) against the petitioner for illegal dismissal and failure to pay the 13th month pay provided for in Presidential Decree No. 851. This complaint was docketed as Case No. R04-1010184-76-E.After investigation, the Office of the Regional Director, Regional Office No. IV of

the Department of Labor, issued an order dismissing Orpiada's complaint for failure of Mr.Orpiada to show the existence of an employer-employee relationship between the bank and himself.Despite the foregoing order, Orpiada succeeded in having his complaint certified for compulsory arbitration in Case No. RB-IV-11187-77 entitled "Ricardo Orpiada, complaint vs. Philippine Bank of Communications, respondent." During the compulsory arbitration proceedings, CESI was brought into the picture as an additional respondent by the bank. Both the bank and (CESI) stoutly maintained that (CESI) (and not the bank) was the employer of Orpiada.ISSUE:Whether or not an employer-employee relationship existed between the petitioner bank and private respondent Ricardo Orpiada. The petitioner bank maintains that no employer-employee relationship was established between itself and Ricardo Orpiada and that Ricardo Orpiada was an employee of (CESI) and not of the bank. The second ("payment of wages") and third ("power of dismissal") factors suggest that the relevant relationship was that subsisting between (CESI) and Orpiada, a relationship conceded by (CESI) to be one between employer and employee. Upon the other hand, the first ("selection and engagement") and fourth ("control of employee's conduct") factors indicate that some direct relationship did exist between Orpiada and the bank and that such relationship may be assimilated to employment. Perhaps the most important circumstance which emerges from an examination of the facts of the tri-lateral relationship between the bank, (CESI) and Orpiada is that the employer-employee relationship between (CESI) and Orpiada was established precisely in anticipation of, and for the very purpose of making possible, the secondment of Orpiada to the bank. It is therefore necessary to confront the task of determining the appropriate characterization of the relationship between the bank and (CESI) was that relationship one of employer and job (independent) contractor or one of employer and "labor-only" contractor?Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the performance of work for the employer, does not thereby create an employer-employes relationship between himself and the employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's employees. The law itself, in other words, establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them.A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e "the person or intermediary" is considered "merely as an agent of the employer. " The employer is made by the statute


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responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. Thus, where "labor only" contracting exists in a given case, the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. " The law in effect holds both the employer and the "labor-only" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code.Both the petitioner bank and (CESI) have insisted that (CESI) was not a "labor only" contractor. Section 9 of Rule VIII of Book III entitled "Conditions of Employment," of the Omnibus Rules Implementing the Labor Code provides as follows:In contrast, job contracting-contracting out a particular job to an independent contractor is defined by the Implementing Rules as follows:The definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be read in conjunction with the definition of job contracting given in Section 8 of the same Rules. The undertaking given by CESI in favor of the bank was not the performance of a specific — job for instance, the carriage and delivery of documents and parcels to the addresses thereof. There appear to be many companies today which perform this discrete service, companies with their own personnel who pick up documents and packages from the offices of a client or customer, and who deliver such materials utilizing their own delivery vans or motorcycles to the addresses. In the present case, the undertaking of (CESI) was toprovideits client-thebank-with a certain number of persons able to carry out the work of messengers. Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. Orpiada utilized the premises and office equipment of the bank and not those of (CESI) Messengerial work-the delivery of documents to designated persons whether within or without the bank premises — is of course directly related to the day-to-day operations of the bank. Section 9(2) quoted above does notrequire for its applicability that the petitioner must be engaged in the delivery of items as a distinct and separate line of business.Succinctly put, CESI is not a parcel delivery company: as its name indicates, it is a recruitment and placement corporation placing bodies, as it were, in d ifferent client companies for longer or shorter periods of time. It is this factor that, to our mind, distinguishes this case from American President v. Clave et al, 114 SCRA 826 (1982) if indeed distinguishing way is needed.The bank urged that the letter agreement entered into with CESI was designed to enable the bank to obtain the temporary services of people necessary to enable the bank to cope with peak loads, to replace temporary workers who were out on vacation or sick leave, and to handle specialized work. There is, of course, nothing illegal about hiring persons to carry out "a specific project or undertaking the completion or termination of which [was] determined at the time of the engagement of [the]

employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season" (Article 281, Labor Code).<äre||anº•1àw> The letter agreement itself, however, merely required (CESI) to furnish the bank with eleven 11) messengers for " a contract period from January 19, 1976 —." The eleven (11) messengers were thus supposed to render "temporary" services for an indefinite or unstated period of time. Ricardo Orpiada himself was assigned to the bank's offices from 25 June 1975 and rendered services to the bank until sometime in October 1976, or a period of about sixteen months. Under the Labor Code, however, any employee who has rendered at least one year of service, whether such service is continuous or not, shall be considered a regular employee (Article 281, Second paragraph). Assuming, therefore, that Orpiada could properly be regarded as a casual (as distinguished from a regular) employee of the bank, he became entitled to be regarded as a regular employee of the bank as soon as he had completed one year of service to the bank. Employers may not terminate the service of a regular employee except for a just cause or when authorized under the Labor Code (Article 280, Labor Code). It is not difficult to see that to uphold the contractual arrangement between the bank and (CESI) would in effect be to permit employers to avoid the necessity of hiring regular or permanent employees and to enable them to keep their employees indefinitely on a temporary or casual status, thus to deny them security of tenure in their jobs. Article 106 of the Labor Code is precisely designed to prevent such a result.We hold that, in the circumstances 'instances of this case, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in respect c Ricardo Orpiada, and that consequently, the petitioner bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain reimbursement of, or some contribution to, the amounts which the bank will have to pay to Orpiada; but this it is not necessary to determine here.WHEREFORE, the petition for certiorari is DENIED and the decision promulgated on 29 December 1983 of the National Labor Relations Commission is AFFIRMED. The Temporary Restraining Order issued by this Court on 11 April 1984 is hereby lifted. Costs against petitioner.SO ORDERED.

27. NERI and JOSE CABELIN vs. NATIONAL LABOR RELATIONS COMMISSION, G.R. No. Nos. 97008-09 July 23, 1993


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FACTS:

Neri and Cabelinapllied for and were hired by respondent BCC, a corporation engaged in providing technical, maintenance, engineering, housekeeping, security and other specific services to its clientele.They were assigned to work in the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980, respectively, Neri a radio/telex operator and Cabelin as janitor, before being promoted to messenger on 1 April 1989.chanroblesvirtualawlibrarychanrobles virtual law library

On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the Department of Labor and Employment to recognize them as its regular employees and be paid the same wages which its employees receive.

On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit.Respondent BCC was considered an independent contractor because it proved it had substantial capital. Thus, petitioners were held to be regular employees of BCC, not FEBTC. The dismissal was appealed to NLRC which on 28 September 1990 affirmed the decision on appeal. On 22 October 1990, NLRC denied reconsideration of its affirmance,prompting petitioners to seek redress from this Court.

Nevertheless, petitioners insist before that BCC is engaged in "labor-only" contracting hence, they conclude, they are employees of respondent FEBTC.

ISSUE:Whether or not BCC is only a job contracting company, hence petitioners are not regular employees of FEBTC.

RULING:We cannot sustain the petition.

Respondent BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. The Labor Arbiter and the NLRC both determined that BCC had a capital stock of P1 million fully subscribed and paid for.BCC is therefore a highly capitalized venture and cannot be deemed engaged in "labor-only" contracting.

It is well-settled that there is "labor-only" contracting where:

(a) the person supplying workers to an employer does not have substantial capital

or investment in the form of tools, equipment, machineries, work premises, among others; and, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer.

Article 106 of the Labor Code defines "labor-only" contracting thus

Art. 106. Contractor or subcontractor. . . . . There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited by such persons are performing activities which are directly related to the principal business of such employer . . . . (emphasis supplied).

Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial capital. While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or". If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction "and" should have been used. But, having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank.

Even assuming ex argumentithat petitioners were performing activities directly related to the principal business of the bank, under the "right of control" test they must still be considered employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end-result of the task,e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the desired end-result was achieved. It did not, however, tell Neri how the radio/telex machine


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should be operated.More importantly, under the terms and

conditions of the contract, it was BCC alone which had the power to reassign petitioners. Their deployment to FEBTC was not subject to the bank's acceptance. Cabelin was promoted to messenger because the FEBTC branch manager promised BCC that two (2) additional janitors would be hired from the company if the promotion was to be effected. Furthermore, BCC was to be paid in lump sum unlike in the situation in Philippine Bank of Communications where the contractor, CESI, was to be paid at a daily rate on a per person basis. And, the contract therein stipulated that the CESI was merely to provide manpower that would render temporary services. In the case at bar, Neri and Cabelin were to perform specific special services. Consequently, petitioners cannot be held to be employees of FEBTC as BCC "carries an independent business" and undertaken the performance of its contract with various clients according to its "own manner and method, free from the control and supervision" of its principals in all matters "except as to the results thereof."

The Petition for Certiorari is dismissed.

28. FILIPINAS SYNTHETIC FIBER CORPORATION VS. NLRC, ET AL.

[257 SCRA 336 June 14, 1996]

Facts:On 4 April 1991 FILSYN, a domestic corporation engaged in the manufacture of polyester fiber, contracted with De Lima Trading andGeneral Services (DE LIMA) for the performance of specific janitorial services Pursuant to the agreement Felipe Loterte, among others, wasdeployed at FILSYN to take care of the plants and maintain general cleanliness around the premises.On 24 February 1992 Loterte sued FILSYN and DE LIMA as alternative defendants for illegal dismissal, underpayment of wages,non-payment of legal holiday pay, service incentive leave pay and 13th month pay alleging that he was first assigned to perform janitorial work atFILSYN in 1981 by the La Saga General Services; that the La Saga was changed to DE LIMA on August 1991; that when a movement todemand increased wages and 13th month pay arose among the workers on December 1991 he was accused by a certain Dodie La Flores of havingposted in the bulletin board at FILSYN an article attributing to management a secret understanding to block the demand; and, for denyingresponsibility, his gate pass was unceremoniously cancelled on 6 February 1992 and he was subsequently dismissed Loterte was classified by the Labor Arbiter as a regular employee on the ground that he performed tasks usually necessary or desirablein the main business of FILSYN for more than ten (10) years or since 1981. FILSYN was declared to be the real employer of Loterte and DELIMA as a mere labor contractor. Hence, FILSYN was adjudged liable for Loterte's reinstatement, payment of salary differentials and back wages and other benefits. Hence, this petition for certiorari by FILSYN.

Issue:Whether or not there exists an employer-employee relationship between FILSYN and private respondent Felipe Loterte.

SC Ruling:

DE LIMA is an independent job contractor, therefore no direct employer-employee relationship exists between petitioner FILSYN andprivate respondent Felipe Loterte.


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The relationship between petitioner Filipinas Synthetic Fiber Corporation (FILSYN) and private respondent DeLima Trading and General Services (DE LIMA) is one of job-contractorship.

Under the Labor Code, two (2) elements must exist for a finding of labor-only contracting: (a) the person supplying workers to anemployer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and (b) theworkers recruited and placed by such persons are performing activities directly related to the principal business of such employer.

These two (2) elements do not exist in the instant case. As pointed out by petitioner, private respondent DE LIMA is a going concernduly registered with the Securities and Exchange Commission with substantial capitalization of P1,600,000.00, P400,000.00 of which is actuallysubscribed. Hence, it cannot be considered as engaged in labor-only contracting being a highly capitalized venture. Moreover, while the janitorialservices performed by Felipe Loterte pursuant to the agreement between FILSYN and DE LIMA may be considered directly related to theprincipal business of FILSYN which is the manufacture of polyester fiber, nevertheless, they are not necessary in its operation. On the contrary,they are merely incidental thereto, as opposed to being integral, without which production and company sales will not suffer. Judicial notice hasalready been taken of the general practice in private as well as in government institutions and industries of hiring janitorial services on anindependent contractor basis.

Respondent De Lima Trading and General Services (DE LIMA) are ordered to reinstate private respondent FELIPE LOTERTE to hisformer position or its equivalent without loss of seniority rights. And private respondent De Lima Trading and General Services (DE LIMA) isordered jointly and severally with petitioner Filipinas Synthetic Fiber Corporation (FILSYN) to pay private respondent FELIPE LOTERTE his salary differentials, 13th month pay, service incentive leave pay, and backwages without prejudice to FILSYN seeking reimbursement from DELIMA for whatever amount the former may pay or have paid the latter

29. ALEJANDRO MARAGUINOT AND PAULINO ENERO V. NLRC, GR NO. 120969, 22 JANUARY 1998, DAVIDE, FIRST DIVISION

Facts

Maraguinot and Enero were both hired by Vic del Rosario to work for his projects under Viva films;

Sometime in 1992, they asked for their salary to be adjusted according to the minimum wage;

It is to be noted that at the time, Maraguinot was having a salary of only 475 per week (this was in 1991);

Both Maraguinot and Enero asked their supervisors for their wage to be adjusted according to the minimum wage however, they were told that their concern is to be aired to the owner of Viva;

They were told that their wage will be adjusted but they have to sign a blank employment contract; Enero did not accept and so he was fired;

Maraguinot was fired but was asked to return few days after;

He was once again asked to sign a blank employment contract in exchange of the adjustment of his salary according to the minimum wage; this, he did not accede to, hence, he was fired;

A case was filed by the two against Viva but NLRC ruled in favour of Viva saying that there was really no employer-employee relationship between them;

Issue

1. Whether there was employer-employee relationship between Viva and the complainants that would merit a filing of an illegal dismissal case?

Held

1. Yes, the complainants are employees of Viva. In fact in most cases, it was Viva that paid the complainants. Further, the argument of Viva that


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they are contractual employees is untenable for the reason that the complainants are employed on long-term basis.

30. URBANES JR. VS. SEC. OF LABOR, G.R. NO. 122791, FEB. 19, 2003

Facts:Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina Security Agency, entered into an agreement to provide security services to respondent Social Security System (SSS).

During the effectivity of the agreement, petitioner, by letter of May 16, 1994, requested the SSS for the upward adjustment of their contract rate in view of Wage Order No. NCR-03 which was issued by the Regional Tripartite Wages and Productivity Board-NCR.

Petitioner sent several letters dated June 7 and June 8, 1994, reiterating the request. On June 24, 1994, petitioner pulled out his agency’s services from the premises of the SSS. Petitioner, on June 29, 1994, filed a complaint with the DOLE-NCR against the SSS seeking the implementation of Wage Order No. NCR-03.

SSS prayed for the dismissal of the complaint on the ground that petitioner is not the real party in interest and has no legal capacity to file the same. In any event, it argued that if it had any obligation, it was to the security guards. Morever, it contended that the security guards assigned to the SSS do not have any legal basis to file a complaint against it for lack of contractual privity.

The Regional Director held in favor of petitioner ordering SSS to pay complainant the sum of P 1,600,858.46 representing the wage differentials under Wage Order No. NCR-03 of the 168 Security Guards of Catalina Security Agency covering the period from December 16, 1993 to June 24, 1994.The SSS moved to reconsider the September 16, 1994 Order of the Regional Director, praying that the computation be revised. The amount was reduced to P 1,237,740.00.

The SSS appealed to the Secretary of Labor upon several assigned errors. Thereafter, the Secretary of Labor, by Order of June 22, 1995, set aside the order of the Regional Director and remanded the records of the case "for recomputation of the wage differentials using P 5,281.00 as the basis of the wage adjustment." And the Secretary held petitioner’s security agency "Jointly and severally liable for wage differentials, the amount of which should be paid directly to the security guards concerned."

Issues:

1. Whether or not the Secretary of Labor has jurisdiction to review appeals from decisions of the Regional Directors.

2. Whether or not SSS is liable to pay petitioner for wage differentials.

Contentions:Petitioner asserts that the Secretary of Labor does not have jurisdiction to review appeals from decisions of the Regional Directors in complaints filed under Article 129 of the Labor Code. Petitioner thus contends that as the appeal of SSS was filed with the wrong forum, it should have been dismissed. The SSS, on the other hand, contends that Article 128, not Article 129, is applicable to the case. Article 128.

Held:Neither the petitioner’s contention nor the SSS’s is impressed with merit.Lapanday Agricultural Development Corporation v. Court of Appealsinstructs so. In that case, the security agency filed a complaint before the RTC against the principal or client Lapanday for the upward adjustment of the contract rate in accordance with Wage Order Nos. 5 and 6. Lapanday argued that it is the National Labor Relations Commission, not the civil courts, which has jurisdiction to resolve the issue in the case, it involving the enforcement of wage adjustment and other benefits due the agency’s security guards as mandated by several wage orders. Holding that the RTC has jurisdiction over the controversy, this Court ruled:

We agree with the respondent that the RTC has jurisdiction over the subject matter of the present case. It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists.

In the case at bar, even if petitioner filed the complaint on his and also on behalf of the security guards, the relief sought has to do with the enforcement of the contract between him and the SSS which was deemed amended by virtue of Wage Order No. NCR-03. The


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controversy subject of the case at bar is thus a civil dispute, the proper forum for the resolution of which is the civil courts.

But even assuming arguendo that petitioner’s complaint were filed with the proper forum, for lack of cause of action it must be dismissed. Articles 106, 107 and 109 of the Labor Code provide:

ART. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an employer enters into 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 wage of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

ART. 107 INDIRECT EMPLOYER. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.

ART. 109. SOLIDARY LIABILTY. 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.

As to the second issue, the liability of the SSS to reimburse petitioner arises only if and when petitioner pays his employee-security guards "the increases" mandated by Wage Order No. NCR-03.

The records do not show that petitioner has paid the mandated increases to the security guards. The security guards in fact have filed a complaint with the NLRC against petitioner relative to, among other things, underpayment of wages.

31. SAN MIGUEL VS. MAERC INTEGRATED SERVICES G.R. NO. 144672, JULY 10, 2003

FACTS:291 workers filed their complaints

against San Miguel Corporation and Maerc Integrated Services, Inc, for illegal dismissal, underpayment of wages, non-payment of service incentive leave pays and other labor standards benefits, and for separation pays.

The complainants alleged that they were hired by San Miguel Corporation (SMC) through its agent or intermediary Maerc Integrated Services, Inc. (MAERC) to work in 2 designated workplaces in Mandaue City. They washed and segregated various kinds of empty bottles used by SMC to sell and distribute its beer beverages to the consuming public. They were paid on a per piece or pakiao basis except for a few who worked as checkers and were paid on daily wage basis.

Complainants alleged that long before SMC contracted the services of MAERC a majority of them had already been working for SMC under the guise of being employees of another contractor, Jopard Services, until the services of the latter were terminated on 31 January 1988.

SMC denied liability for the claims and averred that the complainants were not its employees but of MAERC, an independent contractor whose primary corporate purpose was to engage in the business of cleaning, receiving, sorting, classifying, etc., glass and metal containers.

In a letter dated 15 May 1991, SMC informed MAERC of the termination of their service contract by the end of June 1991. SMC cited its plans to phase out its segregation activities starting 1 June 1991 due to the installation of labor and cost-saving devices.

When the service contract was terminated, complainants claimed that SMC stopped them from performing their jobs; that this was tantamount to their being illegally dismissed by SMC who was their real employer as their activities were directly


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related, necessary and desirable to the main business of SMC; and, that MAERC was merely made a tool or a shield by SMC to avoid its liability under the Labor Code. MAERC admitted that it recruited the complainants and placed them in the bottle segregation project of SMC but maintained that it was only conveniently used by SMC as an intermediary in operating the project.

The Labor Arbiter rendered a decision holding that MAERC was an independent contractor. The National Labor Relations Commission (NLRC) ruled that MAERC was a labor-only contractor and that complainants were employees of SMC.

ISSUE:

Whether the complainants are employees of petitioner SMC or of respondent MAERC.

HELD:Employees are those of SMC. In ascertaining an employer-employee

relationship, the following factors are considered: (a) the selection and engagement of

employee; (b) the payment of wages; (c) the power of dismissal; and, (d) the power to control an employee's

conduct.Evidence discloses that petitioner

played a large and indispensable part in the hiring of MAERC's workers. It also appears that majority of the complainants had already been working for SMC long before the signing of the service contract between SMC and MAERC in 1988.

In the case, the incorporators of MAERC admitted having supplied and recruited workers for SMC even before MAERC was created. The NLRC also found that when MAERC was organized into a corporation in February 1988, the complainants who were then already working for SMC were made to go through the motion of applying for work with Ms. Olga Ouano, President and General Manager of MAERC.

As for the payment of workers' wages, SMC assumed the responsibility of paying for the mandated overtime, holiday and rest day pays of the MAERC workers. SMC also paid the employer's share of the SSS and Medicare contributions, the 13th month pay, incentive leave pay and maternity benefits. These lend credence to the complaining workers' assertion that while MAERC paid the wages of the complainants, it merely acted as an agent of SMC.

SMC maintained a constant presence in the workplace through its own checkers. The responsibility of watching over the MAERC workers by MAERC personnel became

superfluous with the presence of additional checkers from SMC. Control of the premises in which the contractor's work was performed was also viewed as another phase of control over the work, and this strongly tended to disprove the independence of the contractor.

But the most telling evidence is a letter by Mr. Antonio Ouano, Vice-President of MAERC addressed to Francisco Eizmendi, SMC President and Chief Executive Officer, asking the latter to reconsider the phasing out of SMC's segregation activities in Mandaue City. The letter attested to an arrangement entered into by the two (2) parties which was not reflected in the Contract of Services. A peculiar relationship mutually beneficial for a time but nonetheless ended in dispute when SMC decided to prematurely end the contract leaving MAERC to shoulder all the obligations to the workers.

While MAERC's investments in the form of buildings, tools and equipment amounted to more than P4 Million, one cannot disregard the fact that it was the SMC which required MAERC to undertake such investments under the understanding that the business relationship between petitioner and MAERC would be on a long term basis.

NOTES:Jurisprudence has it that in determining the existence of an independent contractor relationship, several factors may be considered such as:

o whether the contractor was carrying on an independent business

o the nature and extent of the worko the skill requiredo the term and duration of the relationshipo the right to assign the performance of

specified pieces of worko the control and supervision of the workerso the power of the employer with respect to the

hiring, firing and payment of the workers of the contractor

o the control of the premiseso i.the duty to supply premises, tools,

appliances, materials and labor the mode, manner and terms of payment.


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32. MARIVELES SHIPYARD CORP V. COURT OF APPEALS, G.R. NO. 144134, NOVEMEBER 11, 2003

FACTS: Petitioner submits that respondent Court of Appeals (CA) erred in its decisions in the previous cases where the petitioner was involved. The latter contend that, among other issues, CA gravely erred in its affirmation on the National Labor Relations Commission‘s (NLRC) decision that the petitioner together with ‘Longest Force’, a security agency, are jointly and severally liable for the payment of back wages and overtime pay to private respondents. The petitioner invokes that it has already paid all the necessary compensation to the private respondents.ISSUE: Whether or not the petitioner should be held jointly and severally liable, together with ‘Longest Force’ in the payment of back wages to the private respondents as affirmed by respondent CA?

HELD: Yes.

Under Article 106, par. 2 of the Labor Code, ‘in the event that the contractor or subcontractor fails to pay wages of his employees…the employer shall be jointly and severally liable with his contractor or subcontractor xxx’. Also, in Article 107 of the same Code, the law states that ‘…the preceding Article shall likewise apply to person, partnership, association or corporation which, not being an employer, contracts with an independent contractor…’. Pursuant to the mentioned provisions of the Labor Code, the Court said that, in this case, the petitioner as an indirect employer, shall truly be liable jointly and severally with ‘Longest Force’ in paying backwages and overtime pay to the private respondents. Moreover, the Court emphasized that ‘Labor standard are enacted by the legislature to alleviate the plight of workers whose wages barely meet the spiraling costs of their basic needs. Labor laws are considered written in every contract. Stipulations in violation thereof are considered null‘. Therefore, the petitioner should be held jointly and severally liable, together with ‘Longest Force’ to the private respondents as earlier decided by NLRC, as affirmed by the CA.

33. G.R. NO. 154715, DEC. 11, 2003, NEW GOLDEN CITY BUILDERS VS. CA

FACTS:

Petitioner entered into a construction contract with Prince David Development Corporation for the construction of a 17-storey office and residential condominium building. Petitioner engaged the services of NiloLayno Builders to do the specialized concrete works, forms works and steel rebars works. Pursuant to the contract, NiloLayno Builders hired private respondents to perform work at the project.

After the completion of the phase for which NiloLayno Builders was contracted, private respondents filed a complaint against petitioner and its president (NGC Builder and Manuel Sy) for unfair labor practice, non-payment of 13th month pay, service incentive leave, illegal dismissal and severance pay, in lieu of reinstatement.

The Labor Arbiter ruled in favor of respondents, but dismissed the charges for illegal dismissal including their prayers for back wages and unfair labor practice and other monetary claims except their 13th month pay and service incentive leave pay. It was also found that NiloLayno Builders was a labor-only-contractor, thus private respondents were deemed employees of the petitioner. Both parties appealed to the National Labor Relations Commission, which affirmed the Labor Arbiter's decision with modification that private respondents were illegally dismissed.

Since petitioner's motion for reconsideration was denied, it instituted a special civil action for certiorariwith the Court of Appeals, but the latter denied the same; hence, a petition for review in SC.

Issue: Whether NiloLayno Builders was an "independent contractor" or a "labor-only" contractor

Ruling:NiloLayno Builders is an independent contractor.

Under Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labor


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Code, an independent contractor is one who undertakes "job contracting," i.e., a person who: (a) carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (b) has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business. Jurisprudential holdingsare to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.

We are convinced

that Nilo Layno Builders is undertaking permissible labor or job contracting. NiloLayno Builders is a duly licensed labor contractor carrying on an independent business for a specialized work that involves the use of some particular, unusual and peculiar skills and expertise, like concrete works, form works and steel rebars works. As a licensed labor contractor, it complied with the conditions set forth in Section 5, Rule VII-A, Book III, Rules to Implement the Labor Code, among others, proof of financial capability and list of equipment, tools, machineries and implements to be used in the business. Further, it entered into a written contract with the petitioner, a requirement under Section 3, Rule VII-A, Book III, Rules to Implement the Labor Code to assure the employees of the minimum labor standards and benefits provided by existing laws.

The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only to the results of the work. This is exactly the situation obtaining in the case at bar. NiloLayno Builders hired its own employees, the private respondents, to do specialized work in the Prince David Project of the petitioner. The means and methods adopted by the private respondents were directed by

NiloLayno Builders except that, from time to time, the engineers of the petitioner visited the site to check whether the work was in accord with the plans and specifications of the principal. As admitted by Nilo G. Layno, he undertook the contract work on his own account and responsibility, free from interference from any other persons, except as to the results; that he was the one paying the salaries of private respondents; and that as employer of the private respondents, he had the power to terminate or dismiss them for just and valid cause. Indubitably, the Court finds that NiloLayno Builders maintained effective supervision and control over the private complainants.

Thus, it was plain conjecture on the part of the Labor Arbiter, the NLRC and the Court of Appeals to conclude that Nilo Layno Builders was a labor-only contractor merely because it does not have investment in the form of tools or machineries. They failed to appreciate the fact that Nilo Layno Builders had substantial capitalization for it did not only provide labor to do the specified project and pay their wages, but it furnished the materials to be used in the construction.

In Neri v. NLRC, we held that the labor contractor which sufficiently proved that it had substantial capital was not engaged in labor-only contracting. Thus:

While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction “or”. If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction “and” should have been used.


LABOR STANDARDS LAW

34. NFA vs. MASADA SECURITY AGENCY, INC.G.R. No. 163448.March 08, 2005

Facts:

On September 17, 1996, respondent MASADA Security Agency, Inc., entered into a one year contract with NFA to provide security services to the various offices, warehouses and installations of the scope of the NFA Region I.

Upon the expiration of said contract, the parties extended the effectivity of the contract on a monthly basis under same terms and condition.

Meanwhile on several occasions, the Regional Tripartite Wages and Productivity Board issued several wage orders mandating increases in the daily wage rate.

Therefore because of the wage orders mandating increase in the wage rates, respondent requested NFA for a corresponding upward adjustment in the monthly contract rate consisting of the increases in the daily minimum wage of the security guards as well as the

corresponding raise in their overtime pay, holiday pay, 13th month pay, holiday and rest day pay.

NFA, however, granted the request but only with respect to the increase in the daily wage and denied the same with respect to the adjustments in the other benefits and remunerations computed on the basis of the daily wage.

Respondent sought the intervention of the Office of the Regional Director, Regional Office No. I.

Despite the advisory of DOLE Regional Director sustaining the claim of respondent that the increase mandated by Republic Act No. 6727 (RA 6727) and the wage orders issued by the RTWPB is not limited to the daily pay, NFA maintained its stance that it is not liable to pay the corresponding adjustments in the wage related benefits of respondent’s security guards.

Respondent filed with the Regional Trial Court of Quezon, City, Branch 83, a case for recovery of sum of money against NFA.

On September 19, 2002, the trial court rendered a decision in favor of respondent holding that NFA is liable to pay the security guards’ wage related benefits pursuant to RA 6727.

NFA appealed to the Court of Appeals but the same was dismissed on February 12, 2004.

Hence, this petition.

Issue:

Whether or not the liability of principals in service contracts under Section 6 of RA 6727 and the wage orders issued by the Regional Tripartite Wages and Productivity Board is limited only to the increment in the minimum wage.

Ruling:

General rule, payment of the increases in the wage rate of workers is ordinarily shouldered by the employer.

However, Section 6 of RA 6727, expressly lodged said obligation to the principals or indirect employers in construction projects and establishments providing security, janitorial and similar services.

Section 6 of RA 6727, provides:

SEC. 6. In the case of contracts for construction projects and for security, janitorial and similar services, the prescribed increases in the wage rates of the workers shall be borne by the principals or clients of the construction/service contractors and the contract shall be deemed amended accordingly. In the event, however, that the principal or client fails to pay the prescribed wage rates, the construction/service contractor shall be jointly and severally liable with his principal or client.


LABOR STANDARDS LAW

There is merit on the contention of NFA that its additional liability under the aforecited provision is limited only to the payment of the increment in the statutory minimum wage rate, i.e., the rate for a regular eight (8) hour work day.

The term “wage” as used in Section 6 of RA 6727 pertains to no other than the “statutory minimum wage” which is the lowest wage rate fixed by law that an employer can pay his worker. Hence, the prescribed increases or the additional liability to be borne by the principal under Section 6 of RA 6727 is the increment or amount added to the remuneration of an employee for an 8-hour work.

Therefore, since the increase in wage referred to in Section 6 pertains to the “statutory minimum wage” as defined herein, principals in service contracts cannot be made to pay the corresponding wage increase in the overtime pay, night shift differential, holiday and rest day pay, premium pay and other benefits granted to workers.

Applying the elementary rule on statutory construction that if the statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without interpretation. Therefore, the presumption is that lawmakers are well aware that the word “wage” as used in Section 6 means the statutory minimum wage. If their intention was to extend the obligation of principals in service contracts to the payment of the increment in the other benefits and remuneration of workers, it would have so expressly specified. In not so doing, the only logical conclusion is that the legislature intended to limit the additional obligation imposed on principals in service contracts to the payment of the increment in the statutory minimum wage.

Although the general rule is that construction of a statute by an administrative agency charged with the task of interpreting or applying the same is entitled to great weight and respect. The Court, however, is not bound to apply said rule where such executive interpretation, is clearly erroneous, or when there is no ambiguity in the law interpreted, or when the language of the words used is clear and plain, as in the case at bar. Besides, administrative interpretations are at best advisory for it is the Court that finally determines what the law means.

Hence, the interpretation given by the labor agencies in the instant case which went as far as supplementing what is otherwise not stated in the law cannot bind this Court.

So long as the minimum obligation of the principal, i.e., payment of the increased statutory minimum wage is complied with, the Wage Rationalization Act is not violated.

WHEREFORE, the petition is GRANTED

35. ABELLA VS. PLDT, G.R. NO. 159469, JUNE 8, 2005

Facts: Respondent People’s Security Incorporated

entered into an agreement with the PLDT to provide the latter with such number of qualified uniformed and properly armed security guards for the purpose of guarding and protecting PLDT’s installations and properties from theft, pilferage, intentional damage, trespass or other unlawful acts. Under the agreement, it was expressly provided that there shall be no employer-employee relationship between the PLDT and the security guards, which may be supplied to it by PSI, and that the latter shall have the entire charge, control and supervision over the work and services of the supplied security guards. It was likewise stipulated therein that PSI shall also have the exclusive authority to select, engage, and discharge its security guards, with full control over their wages, salaries or compensation.


LABOR STANDARDS LAW

Consequently, respondent PSI deployed security guards to the PLDT. The sixty-five (65) security guards supplied by respondent PSI filed a Complaint for regularization against the PLDT alleging that petitioner security guards have been employed by the company through the years and that PSI acted as the middleman in the payment of the minimum pay to the security guards, but no premium for work rendered beyond eight hours was paid to them nor were they paid their 13th month pay. In sum, the Complaint states that inasmuch as the complainants are under the direct control and supervision of PLDT. Hence they should be considered as regular employees by the latter.Issue: Whether or not an employer- employee relationship exists between petitioners and respondent PLDT;Ruling: We considered the following factors in considering the existence of an employer-employee relationship: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee’s conduct.

Testimonies during the trial reveal that interviews and evaluation were conducted by PLDT to ensure that the standards it set are met by the security guards. In fact, PLDT rarely failed to accept security guards referred to by PSI but on account of height deficiency. The referral is nothing but for possible assignment in a designated client which has the inherent prerogative to accept and reject the assignee for justifiable grounds or even arbitrarily. We are thus convinced that the employer-employee relationship is deemed perfected even before the posting of the complainants with the PLDT, as assignment only comes after employment.

PSI is a legitimate job contractor pursuant to Section 8, Rule VII, Book II of the Omnibus Rules Implementing the Labor Code. It is a registered corporation duly licensed by the Philippine National Police to engage in security business. It has substantial capital and investment in the form of guns, ammunitions, communication equipments, vehicles, office equipments like computer, typewriters, photocopying machines, etc., and above all, it is servicing clients other than PLDT like PCIBank, Crown Triumph, and Philippine Cable, among others. Here, the security guards which PSI had assigned to PLDT are already the former’s employees prior to assignment and if the assigned guards to PLDT are rejected by PLDT for reasons germane to the security agreement, then the rejected or terminated guard may still be assigned to other clients of PSI as in the case of Jonathan Daguno who was posted at PLDT on 21 February 1996 but was subsequently relieved therefrom and assigned at PCIBank Makati Square effective 10 May 1996. Therefore, the evidence as it stands is at odds with petitioners’ assertion that PSI is an “in-house” agency of PLDT so as to call for a piercing of veil of corporate identity

It is PSI that determined and paid the petitioners’ wages, salaries, and compensation. As elucidated by the Labor Arbiter, petitioners’ witness testified that his wages were collected and withdrawn at the office of PSI and PLDT pays PSI for the security services on a lump-sum basis and that the wages of complainants are only a portion

of the total sum. The signature of the PLDT supervisor in the Daily Time Records does not ipso facto make PLDT the employer of complainants inasmuch as the Labor Arbiter had found that the record is replete with evidence showing that some of the Daily Time Records do not bear the signature of a PLDT supervisor yet no complaint was lodged for nonpayment of the guard’s wages evidencing that the signature of the PLDT’s supervisor is not a condition precedent for the payment of wages of the guards. Notably, it was not disputed that complainants enjoy the benefits and incentives of employees of PSI and that they are reported as employees of PSI with the SSS. Lastly, petitioners capitalize on the delinquency reports prepared by PLDT personnel against some of the security guards as well as certificates of participation in civil disturbance course, certificates of attendance in first aid training, certificate of completion in fire brigade training seminar and certificate of completion on restricted land mobile radio telephone operation to show that the petitioners are under the direct control and supervision of PLDT and that the latter has, in fact, the power to dismiss them. The Labor Arbiter found from the evidence that the delinquency reports were nothing but reminders of the infractions committed by the petitioners while on duty which serve as basis for PLDT to recommend the termination of the concerned security guard from PLDT. As already adverted to earlier, termination of services from PLDT did not ipso facto mean dismissal from PSI inasmuch as some of those pulled out from PLDT were merely detailed at the other clients of PSI as in the case of Jonathan Daguno, who was merely transferred to PCIBank Makati.

36. SAN MIGUEL VS. ABALLA, G.R. NO. 149011, JUNE 28, 2005

Facts:

Petitioner San Miguel Corporation entered into a one-year contract with the Sunflower Multi-Purpose Cooperative.

Sunflower undertook and agreed to perform and provide the company on a non exclusive basis for a period of one year the following: Messengerial, Janitorial, Shrimp harvesting and Sanitation.

Pursuant to the contract, Sunflower engaged private respondents to render services at SMC’s Bacolod Shrimp Processing Plant. The contract was renewed and private respondent continued to perform their tasks.

Later, private respondents filed a complaint praying to be declared as regular employees of SMC, with claims of recovery of all benefits and privileges.

Issue:

Whether or not Sunflower is engaged in labor only contracting


LABOR STANDARDS LAW

Ruling:

The test to determine the existence of independent contractorship is whether one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work.

In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees’ wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees.

In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.

The following would show that sunflower is engaged in labor only contracting: What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor.

It is gathered that the lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC.

Sunflower, during the existence of its service contract with respondent SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC.

And from the job description provided by SMC itself, the work assigned to private respondents was directly related to the aquaculture operations of SMC. Undoubtedly, the nature of the work performed by private respondents in shrimp harvesting, receiving and packing formed an integral part of the shrimp processing operations of SMC. As for janitorial and messengerial services, that they are considered directly related to the principal business of the employer has been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC.

Therefore since Sunflower is labor only contracting, there is the existence of an employer- employee relationship between SMC and private respondents.


LABOR STANDARDS LAW

37. MANILA ELECTRIC CO. VS. BENAMIRA, G.R. NO. 145271, JULY 14, 2005

Facts: The individual respondents are licensed security

guards formerly employed by People’s Security, Inc. and deployed as such at MERALCO’s head office. The security service agreement between PSI and MERALCO was terminated. Thereafter, 56 of PSI’s security guards, including herein eight individual respondents, filed a complaint for unpaid monetary benefits against PSI and MERALCO. Meanwhile, the security service agreement between respondent Armed Security & Detective Agency, Inc., (ASDAI) and MERALCO took effect. Subsequently, the individual respondents were absorbed by ASDAI and retained at MERALCO’s head office. Later, the security service agreement between respondent Advance Forces Security & Investigation Services, Inc. (AFSISI) and MERALCO took effect, terminating the previous security service agreement with ASDAI. The individual respondents amended their complaint to implead AFSISI as party respondent.

Issue: Whether or not the individual respondents are employees of MERALCO; Ruling:

No. In this case, the terms and conditions embodied in the security service agreement between MERALCO and ASDAI expressly recognized ASDAI as the employer of individual respondents. Under the security service agreement, it was ASDAI which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to MERALCO according to the number agreed upon; (c) provided the uniform, firearms and ammunition, nightsticks, flashlights, raincoats and other paraphernalia of the security guards; (d) paid them salaries or wages; and, (e) disciplined and supervised them or principally controlled their conduct. The agreement even explicitly provided that “[n]othing herein contained shall be understood to make the security guards under this Agreement, employees of the COMPANY, it being clearly understood that such security guards shall be considered as they are, employees of the AGENCY alone.” Clearly, the individual respondents are the employees of ASDAI.

Neither is the stipulation that the agency cannot pull out any security guard from MERALCO without its consent an indication of control. It is simply a security clause designed to prevent the agency from unilaterally removing its security guards from their assigned posts at MERALCO’s premises to the latter’s detriment.

The clause that MERALCO has the right at all times to inspect the guards of the agency detailed in its premises is likewise not indicative of control as it is not a unilateral right. The agreement provides that the agency is principally mandated to conduct inspections, without prejudice to MERALCO’s right to conduct its own inspections. Moreover, ASDAI and AFSISI are not “labor-only” contractors. There is “labor only” contract when the person acting as contractor is considered merely as an agent

or intermediary of the principal who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. On the other hand, “job (independent) contracting” is present if the following conditions are met: (a) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. Given the above distinction and the provisions of the security service agreements entered into by petitioner with ASDAI and AFSISI, we are convinced that ASDAI and AFSISI were engaged in job contracting.

The individual respondents can not be considered as regular employees of the MERALCO for, although security services are necessary and desirable to the business of MERALCO, it is not directly related to its principal business and may even be considered unnecessary in the conduct of MERALCO’s principal business, which is the distribution of electricity.

Furthermore, the fact that the individual respondents filed their claim for unpaid monetary benefits against ASDAI is a clear indication that the individual respondents acknowledge that ASDAI is their employer.


LABOR STANDARDS LAW

38. GRANSPAN DEVELOPMENT CORP., VS. BERNARDO, G.R. NO. 141464, SEPT. 21, 2005

Facts:

The instant controversy stemmed from a complaint for illegal dismissal and non-payment of benefits filed with the Labor Arbiter by Ricardo Bernardo, Antonino Ceñidoza and Edgar Del Prado, respondents, against Grandspan Development Corporation, petitioner, and/or its warehouse manager, Manuel G. Lee, docketed as NLRC Case No. RAB-IV-11-4605-92-RI.

Those three respondents alleged in their complaint that they were terminated illegally, the petitioners (granspan development corp) sent them a notice that they were terminated on the grounds that they vandalized the logbooks and for the use of profane language. Also they alleged that they were employed by the petitioner, they were given ID and a daily salary of 104 php.

Petitioner denied these allegations, claiming that they are contractors. Thus there is no employee-employer relationship, And that the warehouse manager received reports from their supervisor that those respondents vandalized the company’s log book, which violates their company’s rules and regulations.

After the submission of the parties’ pleadings and position papers, the Labor Arbiter rendered a Decision dated June 30, 1994 dismissing respondents’ complaint. In concluding that respondents were validly dismissed from employment, the Labor Arbiter held that they were project employees whose services were terminated upon completion of the project for which they were hired.

When the case was appealed at the NLRC, the NLRC ordered that the case is remanded to the labor arbiter for proper proceeding. This prompted both parties to file motion for reconsideration, which were denied by the NLRC.

Then respondents filed a petition for certiorari in Supreme Court(SC), which was referred to the Court of Appeals (CA). While the case was pending, Del Prado died and was substituted by his surviving parent, Edgardo Del Prado.

The CA, ruled in favor of the respondents. The court ordered that these respondents should be reinstated and that del prado shall be paid of his separation pay.

Petitioner filed a motion for reconsideration. Respondents also filed a motion for reconsideration and/or clarification praying that the Appellate Court’s Decision be modified by awarding respondent Del Prado his backwages. Court of Appeals promulgated its Resolution denying petitioner’s motion for reconsideration but modifying its Decision in the sense that petitioner and J. Narag Construction are ordered to pay respondent Del Prado his separation pay and backwages.

Hence, this petition for review on certiorari in SC.

Issues:

Whether or Not there is employer-employee relationship in the case at bar.

Ruling:

Yes, there is employer-employee relationship.

The SC upheld the CA’s ruling. CA found that the J. Narag Construction assigned the respondents to perform activities directly related to the main business of the petitioner, all the documents that proved the employment of the respondents were all approved by the petitioner, such as the payrolls, the using of equipment, materials and supplies of the J. narag construction. The termination of the respondents also proves that there is employer-employee relationship, since it was the petitioner who terminated them and the J. Narag construction.

Being a legitimate independent contractor cannot be pinned on J. Narag Construction, rather the CA held that they are labor-only contractor which was upheld by the SC too.

On the basis of the records, we have no reason to deviate from the Appellate Court’s finding that J. Narag Construction is indeed a labor-only contractor. These are the reasons: (1) it is not registered as a building contractor with the SEC; (2) it has no contract with petitioner; and (3) there is no proof of its financial capability and has no list of equipment, tools, machineries and implements used in the business.

The allegations of the petitioners that the respondents are project employees, thus making them contractors and that their services ended up when the project was finished is untenable. petitioner could not present employment contracts signed by respondents showing that their employment was for the duration of the HCMG or Sogo project. Likewise, as correctly observed by the Court of Appeals, petitioner failed to present any report terminating the services of respondents when its projects were actually finished.

Time and again, we held that failure of the employer to file termination reports after every project completion with the nearest public employment office is an indication that respondents were employees.

Records show that respondents were not served by petitioner with notices, verbal or written, informing them of the particular acts for which their dismissal is sought. Neither were they required to give their side regarding the alleged serious misconduct imputed against them.

We thus sustain the Court of Appeals ruling that respondents were deprived of both their substantive and procedural rights to due process and, therefore, the termination of their employment is illegal.


LABOR STANDARDS LAW

39. ACEVEDO v ADVANSTAR, GR 157656

FACTS: The Advanstar Company Inc. (ACI)

was engaged in the distribution and sale of various brands of liquor and alcoholic spirits, including the Tanduay brand. To effectively launch its vigorous marketing operations, ACI hired several salesmen, one of whom was Tony Jalapadan. On September 1, 1994, ACI executed an Agreement for the Sale of Merchandise with Jalapadan for a period of one year, renewable for another year under the same terms and conditions. Under the agreement, the parties agreed, inter alia, that Jalapadan would promote and sell products of ACI, solicit from customers and outlets within his designated territory, collect payments from such customers and account the same to ACI. Jalapadan was provided with a 6-wheeler truck to facilitate the sale and delivery of products to customers and outlets from his base of operations. Jalapadan was also authorized to employ and discharge a driver and other assistants as he deemed necessary. It was stipulated, however, that the hired hands would be considered his employees, and that he alone would be liable for their compensation and actual expenses, including meals while on duty.

Jalapadan hired Arnulfo Acevedo as the driver of the truck assigned to him by ACI. Acevedo was tasked to sell and deliver stocks to outlets and customers, collect payments, and to maintain the truck in good and clean condition. He reported for work from 6:00 a.m. to 8:00 or 9:00 p.m. Acevedo received a daily wage of P152.00 and was paid on a weekly basis. He also enjoyed sick leave privilege, which benefit was convertible into cash. Sometime in June 1998, he received from Jalapadan a salary differential for the period of December 1997 to June 1998, following a P15.00 increase in his daily wage. He received his wages from Jalapadan through vouchers approved by the latter.

Sometime in July 1998, Acevedo failed to comply with Jalapadan’s instructions. At that time, they were on their way to Plaridel, Misamis Oriental on board the truck. Jalapadan ordered Acevedo to alight from the truck, and threatened to leave him behind to fend for himself. However, Jalapadan later asked him to return to work and the latter agreed.

On October 7, 1998, Acevedo failed to report for work. The next day, Jalapadan inquired why he failed to check and wash the truck. Jalapadan berated Acevedo and ordered him to get his personal belongings and leave. Acevedo did as he was told. Later, Jalapadan

urged Acevedo to go back to work, stating that they were “one big family,” but Acevedo refused. He then signed a Letterdated October 10, 1998, informing Jalapadan that he was resigning effective that date.

However, on October 26, 1998,

Acevedo filed a complaint against Jalapadan, ACI and its general manager, Felipe Loi, for illegal dismissal and for the recovery of backwages and other monetary benefits.

ISSUES:

1. WON ACI was the employer of Jalapadan---YES. LABOR-ONLY CONTRACTOR

2. WON Acevedo is an employee of ACI---YES

3. WON Acevedo resigned from his employment---NO

HELD:ISSUES 1&2:

The pertinent provision of the Labor Code on labor-only contracting is paragraph 4 of Article 106, which provides:

There is “labor-only” contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

Rule VIII-A, Book III, Section 4(f) of the Omnibus Rules Implementing the Labor Code further defines “labor-only” contracting as an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; (b) The employees recruited, supplied or placed by such contractor or subcontractor, are


LABOR STANDARDS LAW

performing activities which are directly related to the main business of the principal.

In such case, the law creates an employee-employer relationship so that labor laws may not be circumvented. The principal employer becomes solidarily liable with the labor-only contractor for all the rightful claims of the employees. The labor-only contractor is considered merely as an agent of the employer, the employer having been made, by law, responsible to the employees of the labor-only contractor as if such employees had been directly employed by it.

On the other hand, permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.

A person is considered engaging in

legitimate job contracting or subcontracting if the following conditions concur:

(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b) The contractor or subcontractor has substantial capital or investment; and (c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.

The test to determine the existence of an independent contractorship is whether one who claims to be an independent contractor has 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. Each case must be determined by its own facts and all the features of the relationship are to be considered.

In the case of Vinoya v. NLRC, the Court declared that it is not enough to show substantial capitalization or investment in the form of tools, equipment, etc. to determine whether one is an independent contractor. Other factors that may be considered include the following: whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employer’s power with respect to the hiring, firing and payment of the contractor’s workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode and manner or terms of payment.

In the present case, the respondents failed to prove that respondent Jalapadan was an independent contractor. Indeed, the substantial evidence on record shows that he was merely a labor-only contractor. First. The respondents failed to adduce a scintilla of evidence that respondent Jalapadan had any substantial capital or investment, such as tools and equipment, to perform the work contracted for. There is even no evidence that respondent Jalapadan had any assets, or that he maintained an office, staff or a terminal for the truck entrusted to him by respondent ACI. Second. Respondent Jalapadan bound and obliged himself to work exclusively for respondent ACI during the terms of the agreement. Third. Under the agreement, respondent ACI had the right to control not only the end to be attained but also the manner and means to be used in accomplishing that end or purpose. Aside from Jalapadan’s duties/obligations as salesman, respondent ACI could require him to perform other duties and obligations. Respondent Jalapadan was, likewise, mandated to obey all rules, regulations, orders, and instructions, whether oral or written, of respondent ACI. He was obliged to work only in the territory assigned to him, which may be altered at any time upon the discretion of ACI. He was also prohibited from overpricing or underpricing the products of respondent ACI, and was required to sell the same according to the prices dictated solely by it. While Jalapadan was entitled to a monthly compensation of P3,590.00 payable on a bi-monthly basis and an unspecified commission based on booking sales fully remitted to respondent ACI, the latter had the absolute right to change, at any time, the amount and/or all the payments of such compensation and commission. Moreover, notice of such changes was only for information purposes. Furthermore, Jalapadan was obliged to inform respondent ACI of his activities, situation or whereabouts.


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Since he did not have any truck for the delivery of products to customers or outlets, he had to rely on the truck entrusted to him by respondent ACI or, in lieu thereof, a traveling allowance of P600.00 a month which could even be changed. Respondent Jalapadan was prohibited from incurring any other expenses unless permission was first secured from respondent ACI. He was prohibited from using the truck for purposes other than the performance of his duties and responsibilities under the agreement. Respondent Jalapadan was mandated to maintain the truck and its accessories in clean and good order and condition. The agreement was for a period of one year, renewable under the same terms and conditions but the parties could terminate the agreement upon notice to the other. Moreover, while respondent ACI did not fix or impose any quota on respondent Jalapadan, it reserved the right to do so. Fourth. Respondent Jalapadan was obliged to pay the petitioner’s monthly wage of P3,648.00, as well as that of his helper, another P4,000.00 a month, totaling P7,648.00, exclusive of other expenses such as meals, gasoline, and the upkeep of the vehicle. On the other hand, respondent Jalapadan received from respondent ACI only P3,590.00 a month as compensation. He had no other means of income because he was obliged, under the agreement, to devote all his time for respondent ACI. Respondent Jalapadan’s claim that he sold the products of the respondent ACI for a marked-up price as his commission is belied by their agreement, which precisely prohibited him from selling such products at a different price. Respondent Jalapadan was only entitled to a commission based on their booked sales. Aside from the fact that such commission was not fixed, there is no evidence on record how much, if any, respondent Jalapadan received from the respondent ACI by way of commission.

Considering all these, then, the Court concludes that the petitioner’s wages must have been paid for by respondent ACI through respondent Jalapadan, its labor-only contractor.

ISSUE 3:

Ruling of NLRC and CA which the SC agrees with:

The only incident from which complainant drew the conclusion that he was dismissed from work is when he was allegedly told to disembark from the vehicle. Nothing on record shows that he was terminated from work. On the contrary, complainant himself reveals that previously (in July 1995) he was also told to disembark to be left on the road by an angry Jalapadan, the latter

went back to fetch him and told him that “we are just one family.” Evidently, [these] incidents were mere expressions of anger on the part of Jalapadan without intention of terminating his employment. Rather, it was complainant as admitted by him – who, this time, refused to return to work…

When he testified before the Labor Arbiter, the petitioner admitted that he was not dismissed from employment. In fact, respondent Jalapadan appealed to the petitioner to go back to work, and the latter spurned such plea. The Court finds, however, that contrary to the rulings of the NLRC and the CA, the petitioner did not resign from his employment.

Reliance on the handwritten letter of resignation dated October 10, 1998 signed and thumbmarked by the petitioner is misplaced. The handwritten letter of resignation signed by the petitioner is inconsistent with the respondents’ claim that respondent Jalapadan was the petitioner’s employer. This is so because the said letter is addressed to Tanduay Corporation, and not to respondent Jalapadan, thus:

TANDUAY CORPORATIONOZAMIS BRANCH THRU: MR. TONY JALAPADAN, SALESMAN SIR: I HAVE THE HONOR TO TENDER MY RESIGNATION, EFFECTIVE OCT. 10, 1998, BY REASON THAT I AM SEARCHING FOR BETTER INCOME. BY VIRTUE THAT MY SALARY CURRENTLY IS NOT SUFFICIENT FOR MY FAMILY. HOPE AND PRAY FOR YOUR CONSIDERATION AND I REMAIN PRAYING FOR THE CONTINUOUS SUCCESS OF YOUR MOST PROGRESSIVE COMPANY AND I HAVE NO CLAIM WHATSOEVER. HANDTHUMBMARK VERY TRULY YOURS, (SGD.)________HANDTHUMBMARK ARNULFO ACEBEDO


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Neither the petitioner nor the respondents explained why the letter was addressed to Tanduay Corporation. Significantly, respondent Jalapadan did not deny the petitioner’s claim that the letter was handwritten by him (Jalapadan). If such claim were true, there is neither rhyme nor reason why Tanduay Corporation was its addressee. Moreover, it appears that the letter was coursed through respondent Jalapadan as salesman of the said corporation, which is antithetical to the respondents’ claim that he was the petitioner’s employer and an independent contractor of respondent ACI.

40. BIG AA MANUFACTURER VS. ANTONIO, G.R. NO. 1608504, MARCH 3, 2006

Facts:Petitioner is a sole proprietorship registered in the name of its proprietor, Enrico E. Alejo, with office address at 311 Barrio Santol, Balagtas, Bulacan.On January 13, 2000, herein respondents Eutiquio Antonio,Jay Antonio, Felicisimo Antonio, Leonardo

Antonio, Sr. and Roberto Fabian filed a complaint for illegal lay-off and illegal deductions before the NLRC’s Regional Arbitration Branch No. III. They claimed that they were dismissed on January 11, 2000 and sought separation pay from petitioner.In respondents’ position paper,they alleged that as regular employees, they worked from 8:00 a.m. to 5:00 p.m. at petitioner’s premises using petitioner’s tools and equipment and they received P250 per day. Eutiquio was employed as carpenter-foreman from 1991-1999; Jay as carpenter from 1993-1999; Felicisimo as carpenter from 1994-1999; and Leonardo, Sr. also as carpenter from 1997-1999. According to respondents, they were dismissed without just cause and due process; hence, their prayer for reinstatement and full backwages. On the other hand, petitioner denied that respondents were its regular employees. Instead, petitioner claimed that Eutiquio Antonio was one of its independent contractors who used the services of the other respondents. According to petitioner, its independent contractors were paid by results and were responsible for the salaries of their own workers. Allegedly, there was no employer-employee relationship between petitioner and respondents. However, petitioner stated it allowed respondents to use its facilities to meet job orders.Petitioner also denied that respondents were laid-off, since they were project employees only. It added that since Eutiquio Antonio had refused a job order of office tables, their contractual relationship ended. On June 1, 2000, the Labor Arbiter rendered a decisionordering petitioner to pay separation pay and backwages. It ruled that respondents were regular employees because their work as carpenters was necessary and desirable in petitioner’s business. Since Eutiquio worked in petitioner’s premises and was without substantial capital or investment in the form of tools, equipment, machinery or work premises, the Labor Arbiter held that Eutiquio was not an independent contractor. Noting the absence of contracts providing the duration of respondents’ employment and of reports of project completion to the Department of Labor and Employment (DOLE), the Labor Arbiter also rejected petitioner’s allegation that respondents were project employees. The Labor Arbiter further held that respondents were constructively dismissed when the Implementing Guidelines changed their status from regular employees to project employees.On appeal, the NLRC modified the Labor Arbiter’s decision by ordering petitioner to reinstate respondents to their former positions or to pay them separation pay in case reinstatement was no longer feasible, with full backwages in either case. It ruled that respondents were regular employees, not independent contractors. It further held that petitioner failed to justify its reason for terminating respondents and its failure to comply with the due process requirements.Issue:Whether or not respondents were regular employees and were illegally dismissed.Ruling:Respondents are petitioner’s regular employees. Respondents were employed for more than one year and their work as carpenters was necessary or desirable in


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petitioner’s usual trade or business of manufacturing office furniture. Under Article 280 of the Labor Code, the applicable test to determine whether an employment should be considered regular or non-regular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer.True, certain forms of employment require the performance of usual or desirable functions and exceed one year but do not necessarily result to regular employment under Article 280 of the Labor Code.Some specific exceptions include project or seasonal employment. Yet, in this case, respondents cannot be considered project employees. Petitioner had neither shown that respondents were hired for a specific project the duration of which was determined at the time of their hiring nor identified the specific project or phase thereof for which respondents were hired.We also agree that Eutiquio was not an independent contractor for he does not carry a distinct and independent business, and he does not possess substantial capital or investment in tools, equipment, machinery or work premises.He works within petitioner’s premises using the latter’s tools and materials, as admitted by petitioner. Eutiquio is also under petitioner’s control and supervision. Attesting to this is petitioner’s admission that it allowed respondents to use its facilities for the "proper implementation" of job orders. Moreover, the Implementing Guidelines regulating attendance, overtime, deadlines, penalties; providing petitioner’s right to fire employees or "contractors"; requiring the carpentry division to join petitioner’s exercise program; and providing rules on machine maintenance, all reflect control and supervision over respondents.Petitioner likewise alleges that it did not dismiss respondents as they were not its regular employees; that respondents failed to sufficiently establish the fact of illegal dismissal; and that respondents abandoned the work after it issued the Implementing Guidelines.Having ruled that respondents are regular employees, we shall proceed to determine whether respondents have, as petitioner contends, abandoned their work, or they have been illegally dismissed.The consistent rule is that the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause, failing in which would make the termination illegal, as in this case.For accusing respondents of abandonment, petitioner must present evidence (1) not only of respondents’ failure to report for work or absence without valid reason, but (2) also of respondents’ clear intention to sever employer-employee relations as manifested by some overt acts. The second element is the more determinative factor.Here, petitioner’s argument in support of its abandonment charge was that respondents may have resented its issuance of the Implementing Guidelines. This, in our view, fails to establish respondents’ intention to abandon their jobs. On the contrary, by filing the complaint for illegal dismissal within two days of their dismissal on January 11, 2000 and by seeking reinstatement in their position paper, respondents manifested their intention against severing their employment relationship with petitioner and abandoning their jobs. It is settled that an employee who

forthwith protests his layoff cannot be said to have abandoned his work.Finally, Article 279 of the Labor Code,provides that a regular employee who is unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. If reinstatement is no longer feasible, separation pay equivalent to one month salary for every year of service should be awarded as an alternative. This has been our consistent ruling in the award of separation pay to illegally dismissed employees in lieu of reinstatement.


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41. DOLE PHILIPPINES, INC. VS. ESTEVA, G.R. NO. 161115, NOV. 30, 2006

Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil Procedure seeking the reversal of the Decision, dated 20 May 2002, and the Amended Decision, dated 27 November 2003, both rendered by the Court of Appeals in CA-G.R. SP No. 63405, which declared herein petitioner Dole Philippines, Inc. as the employer of herein respondents, Medel Esteva and 86 others; found petitioner guilty of illegal dismissal; and ordered petitioner to reinstate respondents to their former positions and to pay the latter backwages.

Facts

Petitioner is a corporation engaged principally in the production and processing of pineapple for the export market. Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines. Pursuant to the Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner. DOLE organized a Task Force that conducted an investigation into the alleged labor-only contracting activities of the cooperatives. The Task Force identified six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. In this case, respondents alleged that they started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were still working for petitioner, others were put on “stay home status” on varying dates in the years 1994, 1995, and 1996 and were no longer furnished with work thereafter. Together, respondents filed a Complaint with the NLRC for illegal dismissal, regularization, wage differentials, damages and attorney’s fees. Petitioner denied that respondents were its employees. It explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in

operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, in which petitioner was accused of preventing the regularization of such workers.

Issues Whether or not the court of appeals was

correct when it made its own factual findings and disregarded the factual findings of the labor arbiter and the NLRC.

Whether or not CAMPCO was a mere labor-only contractor.

Ruling

The Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC.

On the second issue, CAMPCO was a mere labor-only contractor. First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to remember that such were amassed in the years following its establishment. In 1993, when CAMPCO was established and the Service Contract between petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered substantial. It only managed to increase its capitalization and assets in the succeeding years by continually and defiantly engaging in what had been declared by authorized DOLE officials as labor-only contracting. Second, CAMPCO did not carry out an independent business from petitioner. It was precisely established to render services to petitioner to augment its workforce during peak seasons. Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these were mainly used for administrative purposes; the tools, machineries, and equipment actually used by CAMPCO members when rendering services to the petitioner belonged to the latter. Third, petitioner exercised control over the CAMPCO members, including respondents. Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere presence within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code, as amended, required for permissible job contracting that the contractor undertakes the contract work on his


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account, under his own responsibility, according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof.

As alleged by the respondents, and unrebutted by petitioner, CAMPCO members, before working for the petitioner, had to undergo instructions and pass the training provided by petitioner’s personnel. It was petitioner who determined and prepared the work assignments of the CAMPCO members. CAMPCO members worked within petitioner’s plantation and processing plants alongside regular employees performing identical jobs, a circumstance recognized as an indicium of a labor-only contractorship. Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning members to petitioner. Apart from that, no other particular job, work or service was required from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a recruitment agency for petitioner.

Since the undertaking of CAMPCO did not involve the performance of a specific job, but rather the supply of manpower only, CAMPCO clearly conducted itself as a labor-only contractor. Lastly, CAMPCO members, including respondents, performed activities directly related to the principal business of petitioner. They worked as can processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions which were, not only directly related, but were very vital to petitioner’s business of production and processing of pineapple products for export.

The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only contracting, then consequently, an employer-employee relationship is deemed to exist between petitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner.

Since respondents are now recognized as employees of petitioner, this Court is tasked to determine the nature of their employment. In consideration of all the attendant circumstances in this case, this Court concludes that respondents are regular employees of petitioner. As such, they are entitled to security of tenure. They could only be removed based on just and authorized causes as provided for in the Labor Code, as amended, and after they are accorded procedural due process. Therefore, petitioner’s acts of placing some of the respondents on “stay home status” and not giving them work assignments for more than six months were already tantamount to constructive and illegal dismissal.

42. G.R. No. 147566 December 6, 2006, SAN MIGUEL CORPORATION, petitioner vs. NATIONAL LABOR RELATIONS COMMISSION, citing Maerc Integrated Services Case

FACTS:

On 16 October 1990, Rafael M. Maliksi filed a complaint against the San Miguel Corporation-Magnolia Division, herein referred to as SMC and Philippine Software Services and Education Center herein referred to as PHILSSEC to compel the said respondents to recognize him as a regular employee. He amended the complaint on 12 November 1990 to include the charge of illegal dismissal because his services were terminated on 31 October 1990.

The complainant’s employment record indicates that he rendered service with Lipercon Services from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division, then from July 1983 to April 1985 with Skillpower, Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower, Inc. as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. The complainant considered himself as an employee of SMC-Magnolia. Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-only contractors and any one of which had never been his employer. His dismissal, according to him, was in retaliation for his filing of the complaint for regularization in service. His dismissal was illegal there being no just cause for the action. He was not accorded due process neither was his dismissal reported to the Department of Labor and Employment.

SMC likewise contends that PHILSSEC exercised exclusive managerial prerogative over the complainant as to hiring, payment of salary, dismissal and most importantly, the control over his work. SMC was interested


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only in the result of the work specified in the contract but not as to the means and methods of accomplishing the same. Moreover, PHILSSEC has substantial capital of its own. It has an IBM system, 3 computers, 17 IBM or IBM-compatible computers; it has a building where the computer training center and main office are located. What it markets to clients are computer programs and training systems on computer technology and not the usual labor or manpower supply to establishment concerns. Moreover, what PHILSSEC set up employing the complainant, among others, has no relation to the principal business of SMC, which is food and beverage..

The Labor Arbiter declared Maliksi a regular employee of PHILSSEC and absolved SMC from liability. Maliksi appealed to the NLRC. In turn, in a decision dated January 26, 1998, the NLRC reversed that of the Labor Arbiter by declaring Maliksi a regular employee of the petitioner and ordering the latter to reinstate him without loss of seniority rights and with full benefits.

Issue:

WHETHER OR NOT PRIVATE RESPONDENT IS A REGULAR EMPLOYEE OF PETITIONER SMC DESPITE ITS FINDINGS THAT PHILSSEC IS AN INDEPENDENT JOB CONTRACTOR? (affirmative)

Ruling:

SMC concedes that Maliksi, before his employment with PHILSSEC, worked in SMC from November 1988 to April 1990, but as employee of Skillpower and that he was previously assigned to SMC between 1981 up to February 1985, “for periods spread apart.” The Labor Arbiter found, as earlier stated, that Maliksi rendered service with Lipercon from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division; from July 1983 to April 1985 with Skillpower as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. In all, it appears that, while under the employ of either Lipercon or Skillpower, Maliksi has undisputedly rendered service with SMC for at least three years and seven months.

The Court takes judicial notice of the fact that Lipercon and Skillpower were

declared to be labor-only contractors, providing as they do manpower services to the public for a fee. The existence of an employer-employee relationship is factual and we give due deference to the factual findings of both the NLRC and the CA that an employer-employee relationship existed between SMC and Maliksi. Indeed, having served SMC for an aggregate period of more than three (3) years through employment contracts with these two labor contractors, Maliksi should be considered as SMC’s regular employee. The hard fact is that he was hired and re-hired by SMC to perform administrative and clerical work that was necessary to SMC’s business on a daily basis.

The act of hiring and re-hiring the petitioners over a period of time without considering them as regular employees evidences bad faith on the part of private respondent. The public respondent made a finding to this effect when it stated that the subsequent re-hiring of petitioners on a probationary status “clearly appears to be a convenient subterfuge on the part of management to prevent complainants (petitioners) from becoming regular employees.”

Issue:

Whether or not individual private respondents should first comply with certain requirements, like submission of NBI and police clearances and submission to physicak and medical examinations and etc?

Ruling:

Considering that the clearances and examinations sought by petitioners from private respondents are not 'periodic' in nature but are made preconditions for reinstatement, as in fact the petition filed alleged that reinstatement shall be effective upon compliance with such requirements, which should not be the case because this is not a case of initial hiring, the workers concerned having rendered years of service to petitioners who are considered direct employers, and that regularization is a labor benefit that should apply to all qualified employees similarly situated and may not be denied merely because some employees were allegedly not parties to or were not impleaded in the voluntary arbitration case, even as the finding of Labor Arbiter Genilo is to the contrary, this Court finds no grave abuse of discretion committed by Labor Arbiter


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Genilo in issuing the questioned order of October 20, 1988.


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43. EPARWA SECURITY AND JANITORIAL SERVICES VS. LICEO DE CAGAYAN UNIVERSITY

Facts:

Eparwa and LDCU, through their representatives, entered into a Contract for Security Services. Subsequently, 11 security guardswhom Eparwa assigned to LDCU filed a complaint before the NLRC-RAB against both Eparwa and LDCU for underpayment of salary, legalholiday pay, 13th month pay, rest day, service incentive leave, night shift differential, overtime pay, and payment for attorney's fees. LDCU madea cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards.The LA found that the security guards are entitled to wage differentials and premium for holiday and rest day work. The LA held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code and likewise orderd Eparwa to reimburse LDCU for whateveramount the latter may be required to pay the security guards. On appeal to the NLRC, Eparwa and LDCU was held solidarily liable for the wagedifferentials and premium for holiday and rest day work, but the NLRC did not require Eparwa to reimburse LDCU for its payments to thesecurity guards. Upon motion for reconsideration, NLRC declared that although Eparwa and LDCU are solidarily liable to the security guards forthe monetary award, LDCU alone is ultimately liable ordering it to reimburse Eparwa for payments made to the contractual employees. Uponappeal to the CA, the appellate court allowed LDCU to claim reimbursement from Eparwa. Eparwa then filed an action for certiorari before the SC.

Issue:

Whether or not LDCU alone is ultimately liable to the security guards for the wage differentials and premium for holiday and rest daypay without any right of reimbursement from Eparwa.

Ruling:

This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of theprovisions therein including the statutory minimum wage. The contractor is made liable by virtue of his status as direct employer. The principal,on the other hand, is made the indirect employer of the contractor's employees for purposes of paying the employees their wages should thecontractor 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. For the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. This is the import of Eparwa and LDCU's solidary liability. Creditors, such as the security guards, may collect from anyone of the solidary debtors. Solidary liabilitydoes not mean that, as between themselves, two solidary debtors are liable for only half of the payment. LDCU's ultimate liability comes intoplay because of the expiration of the Contract for Security Services. There is no privity of contract between the security guards and LDCU, butLDCU's liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code. Eparwa is already precluded from askingLDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwa's liability to the security guards remainsbecause of their employer-employee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement from LDCUfor any payment it may make to the security guards. However, LDCU cannot claim any reimbursement from Eparwa for any payment it maymake to the security guards.


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44. LAPANDAY AGRI DEVELOPMENT CORP., VS. COURT OF APPEALS, 324 SCRA 39

FACTS:On June 1986 private respondent and plaintiff entered into a Guard Service Contract. Respondent provided security guards in defendant's banana plantation. The contract called for the payment to a guard of P754.28 on a daily 8-hour basis and an additional P565.72 for a four hour overtime while the shift-in-charge was to be paid P811.40 on a daily 8-hour basis and P808.60 for the 4-hour overtime.Wage Orders increasing the minimum wage in 1983 were complied with by the defendant. On June 16, 1984, Wage Order No. 5 was promulgated directing an increase of P3.00 per day on the minimum wage of workers in the private sector and a P5.00 increase on the ECOLA. This was followed on November 1, 1984 by Wage Order No. 6 which further increased said minimum wage by P3.00 on the ECOLA. Both Wage Orders contain the following provision:

"In the case of contract for construction projects and for security, janitorial and similar services, the increase in the minimum wage and allowances rates of the workers shall be borne by the principal or client of the construction/service contractor and the contracts shall be deemed amended accordingly, subject to the provisions of Sec. 3 (b) of this order" (Sec. 6 and Sec. 9, Wage Orders No. 5 and 6, respectively).

- Respondent demanded that its Guard Service Contract with defendant be upgraded in compliance with Wage Order Nos. 5 and 6. Plaintiff refused. Their Contract expired on June 6, 1986 without the rate adjustment called for Wage Order Nos. 5 and 6 being implemented. The security agency then filed a case for the collection of a sum of money with the regional Trial Court that had jurisdiction over the case. Lapanday opposed, stating the NLRC was the proper forum for the case.ISSUES:1. WON RTC has jurisdiction over the case2. WON petitioner is liable to the private respondent for the wage adjustments provided under Wage Order Nos. 5 and 6 and for attorney's feesRULING: 1. YESThe enforcement of the written contract does not fall under the jurisdiction of the NLRC because the money claims involved therein did not arise from employer-employee relations between the parties and is intrinsically a civil dispute. Thus, jurisdiction lies with the regular courts. The RTC has jurisdiction over the subject matter of the present case. It is well settled in law and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The action is within the realm of civil law hence

jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no employer-employee relation exists. The liability of the petitioner to reimburse the respondent only arises if and when respondent actually pays its employees the increases granted by Wage Order Nos. 5 and 6. Payment, which means not only the delivery of money but also the performance, in any other manner, of the obligation, is the operative fact which will entitle either of the solidary debtors to seek reimbursement for the share which corresponds to each of the debtors.It is not disputed that the private respondent has not actually paid the security guards the wage increases granted under the Wage Orders in question. Neither is it alleged that there is an extant claim for such wage adjustments from the security guards concerned, whose services have already been terminated by the contractor. Accordingly, private respondent has no cause of action against petitioner to recover the wage increases. Needless to stress, the increases in wages are intended for the benefit of the laborers and the contractor may not assert a claim against the principal for salary wage adjustments that it has not actually paid. Otherwise, as correctly put by the respondent, the contractor would be unduly enriching itself by recovering wage increases, for its own benefit.Finally, considering that the private respondent has no cause of action against the petitioner, private respondent is not entitled to attorney's fees.Petition GRANTED. The complaint of private respondent COMMANDO SECURITY SERVICE AGENCY, INC. is hereby DISMISSED.


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45. ESCARIO VS. NLRC, 333 SCRA 257 [2000]

FACTS:

Petitioners worked as merchandisers for CMC, a company engaged in manufacturing and distributing food products. They filed a case against CMC to regularize their employment status. Pending determination of the case, D.L. Admark, a promotional firm, dismissed the petitioners. Hence, they amended their complaint to include illegal dismissal as a cause of action and impleaded D.L. Admark as party-defendant.

The issue brought to the fore is whether petitioners are employees of CMC or D.L. Admark. IDESTH

The Labor Arbiter ruled that petitioners should be reinstated by CMC as they are employees engaged in activities necessary and desirable in the usual business of CMC. The NLRC, on the other hand, ruled that D.L. Admark is a legitimate independent contractor, which should be the one to reinstate the petitioners with backwages.

Hence, this petition.

ISSUE: whether petitioners are employees of CMC or D.L. Admark. In resolving this, it is necessary to determine whether D.L. Admark is a labor-only contractor or an independent contractor.

HELD:the Supreme Court affirmed the decision of the NLRC, ruling that based on the criteria for determining whether there is labor-only contracting or job contracting, the status of D.L. Admark as a job contractor or independent contractor, hence, the true employer of petitioners, was established in this case. The Court also affirmed the NLRC finding that D.L. Admark had no just cause in dismissing petitioners for allegedly disowning them as their employer.

There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

(a) The person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and

(b) The workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. 7

In contrast, there is permissible job contracting when a principal agrees to put out or farm out with a contractor or a subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job or work or service is to be performed or completed within or outside the premises of the principal. In this arrangement, the following conditions must concur:

(a) The contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; and cdphil

(b) The contractor has substantial capital or investment in the form of tools, equipment, machineries (sic), work premises, and other materials which are necessary in the conduct of his business.

In the recent case of Alexander Vinoya vs. NLRC, et al., 9 this Court ruled that in order to be considered an independent contractor it is not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises. In addition, the following factors need be considered: (a) whether the contractor is carrying on an independent business; (b) the nature and extent of the work; (c) the skill required; (d) the term and duration of the relationship; (e) the right to assign the performance of specified pieces of work; (f) the control and supervision of the workers; (g) the power of the employer with respect to the hiring, firing and payment of workers of the contractor; (h) the control of the premises; (i) the duty to supply premises, tools, appliances, materials, and labor; and (j) the mode, manner and terms of payment. 10

Based on the foregoing criterion, we find that D.L. Admark is a legitimate independent contractor.

Among the circumstances that tend to establish the status of D.L. Admark as a legitimate job contractor are:

1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional, advertising, marketing and merchandising activities.

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


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merchandising services rather than one of manpower placement. 11

3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions, marketing and merchandising. It had several merchandising contracts with companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as evidenced by its magazine the "Phenomenon." 12

4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to P6 million and is therefore a highly capitalized venture. 13 It had an authorized capital stock of P500,000.00. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied.

46. ABOITIZ HAULERS VS. DIMAPATOI, SEPT. 19, 2006, G.R. NO. 148619

Facts: Petitioner Aboitiz Haulers, Inc. is a domestic

corporation principally engaged in the nationwide and overseas forwarding and distribution of cargoes. Private respondents MonaoraiDimapatoi, Cecilia Agawin, Raul Mamate, Emmanuel Guerrero and GemenianoBigaw worked as checkers in the Mega Warehouse, which is owned by the petitioner, located at the Tabacalera Compound, United Nations Avenue, Manila.

Respondents maintain that during their employment with the petitioner, they were not paid their regular holiday pay, night shift differential, 5-day service incentive leave, and overtime premium. They also averred that illegal deductions were being made on their wages, particularly the contributions for a Mutual Assistance Fund, a Cash Bond, and claims for damaged and misrouted cargoes incurred by petitioner.

On 17 May 1996, respondent Raul Mamate filed a complaint before the Department of Labor and Employment (DOLE) for nonpayment of wages and other benefits, as well as illegal deductions. The other respondents filed their own complaints. Since the claims of the respondents exceeded Five Thousand Pesos (P5,000.00), the case was referred to the NLRC. Thereafter, respondents filed their complaint for illegal dismissal and other money claims before the Arbitration Branch of the NLRC.

Petitioner claims that respondents are not its employees, rather they are the employees of Grigio Security Agency and General Services (Grigio), a manpower agency that supplies security guards, checkers and stuffers. It allegedly entered into a Written Contract of Service with Grigio on 1 March 1994. By virtue of the aforementioned Written Contract of Service, Grigio supplied petitioner with security guards, checkers and stuffers for petitioner's Mega Warehouse. The respondents were among the checkers that were assigned to the petitioner's warehouse.

Petitioner emphasizes that Grigio retained control over the respondents by providing their own supervisors to oversee Grigio's personnel, as well as time cards to monitor the attendance of its personnel. Petitioner also alleges that on 9 May 1996, the respondents left the warehouse and did not report to work thereafter. As a result of the respondents' sudden abandonment of their work, there was no orderly and proper turnover of papers and other company property in connection with the termination of the Written Contract for Services.


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Respondents, on the other hand, claim that most of them worked as checkers in petitioner's warehouse even before 1 March 1994.

Issue: Whether or not Grigio is a "labor-only"

contractor.

Ruling: Grigio is a "labor-only" contractor. The first issue

that needs to be resolved is whether Grigio is a "labor-only" contractor, which is tantamount to a finding that the petitioner is the employer of the respondents. Article 106 of the Labor Code 24 explains the relations which may arise between an employer, a contractor and the contractor's employees thus:

ART. 106. Contractor or subcontractor. — Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract in the same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

The first two paragraphs of Art. 106 set the general rule that a principal is permitted by law to engage

the services of a contractor for the performance of a particular job, but the principal, nevertheless, becomes solidarily liable with the contractor for the wages of the contractor's employees. The third paragraph of Art. 106, however, empowers the Secretary of Labor to make distinctions between permissible job contracting and "labor-only" contracting, which is a prohibited act further defined under the last paragraph. A finding that a contractor is a "labor-only" contractor is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the "labor-only" contractor is considered as a mere agent of the principal, the real employer. Section 7 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, reiterates the rules in determining the existence of employer-employee relationship between employer, contractor or subcontractor, and the contractor's or subcontractor's employee.

Section 7. Existence of an employer-employee relationship. — The contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation. The principal, however, shall be solidarily liable with the contractor in the event of any violation of any provision of the Labor Code, including the failure to pay wages.

The principal shall be deemed the employer of the contractual employee in any of the following cases, as declared by a competent authority:

a. where there is a labor-only contracting; orb. where the contracting arrangement falls within

the prohibitions provided in Section 6 (Prohibitions) hereof.

In determining whether or not a "labor-only" contracting exists, Art. 106 of the Labor Code and Section 5 of the Rules Implementing Articles 106 to 109 of the Labor Code, as amended, provides the following criteria: (1) where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among other things; (2) the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer; and (3) the contractor does not exercise the right to control the performance of the work of the contractual employee. In order that one is considered by law as a "labor-only" contractor, all three aforementioned criteria need not be present. If the contractor enters into an arrangement characterized by any one of the criteria provided, this would be a clear case of


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"labor-only contracting." The clear phrasing of Section 5 of the Rules Implementing

Articles 106 to 109 of the Labor Code, as amended, support this interpretation.

Section 5. Prohibition against labor-only contracting. — Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are is present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or

ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248 (C) of the Labor Code, as amended.

"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.

The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

The allegation of the petitioner that Grigio is an independent job contractor, and, therefore, this case is one of permissible job contracting, is without basis. In this case, the respondents' work, as warehouse checkers, is directly related to the principal business of the petitioner. Petitioner also exercises the right to control and determines not only the end to be achieved, but also the manner and means to be used in reaching that end. Lastly, petitioner failed to

sufficiently prove that Grigio had "substantial capital or investment."

The respondents, as checkers, were employed to check and inspect these cargoes, a task which is clearly necessary for the petitioner's business of forwarding and distributing of cargoes. The petitioner did not dispute the fact that the respondents were hired as checkers as early as 1992. The fact that they were employed before the Written Contract of Services took effect on 24 February 1994, and continued with their jobs until 1996, after the said contract had already expired on 24 February 1995, 29 indicates that the respondents' work was indeed necessary for the petitioner's business. In a similar case, Guarin v. National Labor Relations Commission, the workers' contracts were repeatedly renewed to perform services necessary for the employer's business. Thus, the Court described the arrangement as "labor-only" contracting:

The jobs assigned to the petitioners as mechanics, janitors, gardeners, firemen and grasscutters were directly related to the business of Novelty as a garment manufacturer. In the case of Philippine Bank of Communications vs. NLRC, 146 SCRA 347, we ruled that the work of a messenger is directly related to a bank's operations. In its Comment, Novelty contends that the services which are directly related to manufacturing garments are sewing, textile cutting, designs, dying, quality control, personnel, administration, accounting, finance, customs, delivery and similar other activities; and that allegedly, "it is only by stretching the imagination that one may conclude that the services of janitors, janitresses, firemen, grasscutters, mechanics and helpers are directly related to the business of manufacturing garments" (p. 78, Rollo). Not so, for the work of gardeners in maintaining clean and well-kept grounds around the factory, mechanics to keep the machines functioning properly, and firemen to look out for fires, are directly related to the daily operations of a garment factory. That fact is confirmed by Novelty's rehiring the workers or renewing the contract with Lipercon every year from 1983 to 1986, a period of three (3) years.

As Lipercon was a "labor-only" contractor, the workers it supplied Novelty became regular employees of the latter.Where the employees are tasked to undertake activities usually desirable or necessary in the usual business of the employer, the contractor is considered as a "labor-only" contractor and such employees are considered as regular employees of the employer.

In addition, Grigio did not undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal. The work activities, work shifts, and schedules of the respondents, including the time allowed for "recess" were set under the Written Contract of Services. This clearly indicates that these matters, which consist of the means and methods by which the work is to be accomplished, were not within the absolute control of Grigio. By stipulating these matters in a contract, Grigio is constrained to follow these provisions and would no longer be able to exercise the freedom to alter these work shifts


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and schedules at its own convenience. Such being the case, Grigio cannot be considered as an independent job contractor.

Petitioner's allegation that Grigio retained control over the respondents by providing supervisors to monitor the performance of the respondents cannot be given much weight. Instead of exercising their own discretion or referring the matter to the officers of Grigio, Grigio's supervisors were obligated to refer to petitioner's supervisors any discrepancy in the performance of the respondents with their specified duties. The Written Contract of Services provided that:

5.c. That the GRIGIO personnel, particularly the supervisors, shall perform the following:

The Supervisor for the warehouse operation shall monitor the performance and productivity of all the checkers, jacklifters, stuffers/strippers, forklift operators, drivers, and helpers. He shall coordinate with AHI's supervisors regarding the operations at the Warehouse to ensure safety at the place of work.

He shall see to it that the cargoes are not overlanded, shortlanded, delivered at a wrong destination, or misdelivered to consignee's port of destination. Any discrepancy shall be reported immediately to AHI's Logistic Manager, Mr. Andy Valeroso.

The control exercised by petitioner's supervisors over the performance of respondents was to such extent that petitioner's Warehouse Supervisor, Roger Borromeo, confidently gave an evaluation of the performance of respondent MonaoraiDimapatoi, who likewise felt obliged to obtain such Certification from Borromeo.

Petitioner's control over the respondents is evident. And it is this right to control the employee, not only as to the result of the work to be done, but also as to the means and methods by which the same is to be accomplished, that constitutes the most important index of the existence of the employer-employee relationship.

Lastly, the law casts the burden on the contractor to prove that it has substantial capital, investment, tools, etc. Employees, on the other hand, need not prove that the contractor does not have substantial capital, investment, and tools to engage in job-contracting. In this case, neither Grigio nor the petitioner was able to present any proof that Grigio had substantial capital. There was no evidence pertaining to its capitalization nor its investment in tools, equipment or implements actually used in the performance or completion of the job, work, or service that it was contracted to render. Grigio was merely expected to supply petitioner with manpower to carry out work necessary for its business, to be carried out in the manner which petitioner provided in the contract.

Thus, Grigio is obviously a "labor-only" contractor since it did not have substantial capital or investment which relates to the service performed; the

respondents performed activities which were directly related to the main business of the petitioner; and Grigio did not exercise control over the performance of the work of the respondents. Consequently, the petitioner is considered as the employer of the respondents.

In prohibiting "labor-only" contracting and creating an employer-employee relationship between the principal and the supposed contractor's employees, the law intends to prevent employers from circumventing labor laws intended to protect employees. In the case of Aurora Land Projects Corp. v. National Labor Relations Commission, this Court pronounced:

The question as to whether an employer-employee relationship exists in a certain situation continues to bedevil the courts. Some businessmen try to avoid the bringing about of an employer-employee relationship in their enterprises because that judicial relation spawns obligations connected with workmen's compensation, social security, medicare, minimum wage, termination pay, and unionism. In light of this observation, it behooves this Court to be ever vigilant in checking the unscrupulous efforts of some of our entrepreneurs, primarily aimed at maximizing their return on investments at the expense of the lowly workingman.


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47. GSIS VS. NLRC, G.R. NO. 157647, OCTOBER 15, 2007, CITING ROSEWOOD PROCESSING VS. NLRC, 290 SCRA 408

Facts: Tomas Lanting, doing business under the name

and style of Lanting Security and Watchman Agency (LSWA) entered into a Security Service Contract to provide security guards to the properties of the Government Service Insurance System (GSIS) at the contract rate of P3,000.00 per guard per month.

During the effectivity of the contract, LSWA requested the GSIS for an upward adjustment of the contract rate in view of Section 7 of Wage Order No. 1 and Section 3 of Wage Order No. 2, which were issued by the Regional Tripartite Wages and Productivity Board-NCR pursuant to Republic Act No. 6727, otherwise known as the Wage Rationalization Act.

Acting on the request of LSWA, the GSIS, through its Board of Trustees and under Board Resolution No. 207, dated May 24, 1991, approved the upward adjustments of the contract price from P3,000.00 to P3,716.07 per guard, per month effective November 1, 1990 to January 7, 1991, and P4,200.00 effective January 8, 1991 to May 31, 1991. LSWA assigned security guards Daniel Fanila, Hector Moreno, IsauroFerrer, Rubin Wilfredo, Jesus Delima Jr., Maria Legaspi, Santiago Noto Jr., and Virgilio Soriano (hereafter complainants) to guard one of GSIS's properties.

On March 15, 1993, GSIS terminated the Security Service Contract with LSWA. All the complainants, except Virgilio Soriano, were absorbed by the incoming security agency. On March 7, 1994, complainants filed separate complaints against LSWA for underpayment of wages and non-payment of labor standard benefits from March 1991 to March 15, 1993. Virgilio Soriano also complained of illegal dismissal.

In its Position Paper, LSWA alleged that complainants were estopped from claiming that they were underpaid because they were informed that the pay and benefits given to them were based on the contract rate of P103.00 per eight hours of work or about P3,100.00 per month.

On August 9, 1994, LSWA filed a Third-Party Complaint against GSIS for underpayment of complainants' wages.

In its Position Paper, GSIS alleged that the Third-Party Complaint states no cause of action against it; that LSWA obligated itself in the Security Service Contract to be solely liable for the enforcement of and compliance with all existing labor laws, rules and regulations; that the GSIS Board of Trustees approved the upward adjustment on a month-to-month basis, at P4,200 per guard per month, effective January 8, 1991 to May 31, 1991, under Board Resolution No. 207 dated May 24, 1991, which was

incorporated in the Security Service Contract; that GSIS fully paid the services of the security guards as agreed upon in the Security Service Contract.

Issues: Whether GSIS is solidarily liable for payment of complainants-respondnents' salary differentials.

Ruling: Yes. Articles 106 and 107 of the Labor Code

provide:ART. 106. Contractor or subcontractor. — Whenever an employer enters into contract with another person for 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 wage of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.

ART. 107 Indirect employer. — The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.

In this case, the GSIS cannot evade liability by claiming that it had fully paid complainants' salaries by incorporating in the Security Service Contract the salary rate increases mandated by Wage Order Nos. 1 and 2 by increasing the contract price from P3,000.00 to P3,176.07 per guard per month effective November 1, 1990 to January 7, 1991, and P4,200.00 effective January 8, 1991 to May 31, 1991.

In Rosewood Processing, Inc. v. National Labor Relations Commission, 25 the Court explained the rationale for the joint and several liability of the employer, thus:

The joint and several liability of the employer or principal was enacted to ensure compliance with the provisions of the Code, principally those on statutory minimum wage. The contractor or subcontractor is made liable by virtue of his or her status as a direct employer, and the principal as the indirect employer of the contractor's employees. This liability facilitates, if not guarantees, payment of the workers' compensation, thus, giving the workers ample protection as mandated by the 1987 Constitution. This is not unduly burdensome to the employer. Should the indirect employer be constrained to


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pay the workers, it can recover whatever amount it had paid in accordance with the terms of the service contract between itself and the contractor.

Thus, the Court does not agree with the GSIS's claim that a double burden would be imposed upon the latter because it would be paying twice for complainants' services. Such fears are unfounded. Under Article 1217 of the Civil Code, if the GSIS should pay the money claims of complainants, it has the right to recover from LSWA whatever amount it has paid in accordance with the terms of the service contract between the LSWA and the GSIS.

Joint and solidary liability is simply meant to assure aggrieved workers of immediate and sufficient payment of what is due them. This is in line with the policy of the State to protect and alleviate the plight of the working class.

48. REPUBLIC OF THE PHILS/SSC/SSS VS. ASIAPRO COOPERATIVE, G.R. NO. 172101, NOVEMBER 23, 2007

Facts:

Respondent Asiapro, as a cooperative, is composed of owners-members. Under its by-laws, owners-members are of two categories, to wit: (1) regular member, who is entitled to all the rights and privileges of membership; and (2) associate member, who has no right to vote and be voted upon and shall be entitled only to such rights and privileges provided in its by-laws.

In the discharge of the aforesaid primary objectives, respondent cooperative entered into several Service Contracts with Stanfilco - a division of DOLE Philippines, Inc. and a company based in Bukidnon

The owners-members do not receive compensation or wages from the respondent cooperative. Instead, they receive a share in the service surplus[10] which the respondent cooperative earns from different areas of trade it engages in, such as the income derived from the said Service Contracts with Stanfilco. The owners-members get their income from the service surplus generated by the quality and amount of services they rendered, which is determined by the Board of Directors of the respondent cooperative.

In order to enjoy the benefits under the Social Security Law of 1997, the owners-members of the respondent cooperative, who were assigned to Stanfilco requested the services of the latter to register them with petitioner SSS as self-employed and to remit their contributions as such. Also, to comply with Section 19-A of Republic Act No. 1161, as amended by Republic Act No. 8282, the SSS contributions of the said owners-members were equal to the share of both the employer and the employee.

SSS said that it is respondent who should register their owner-members to the SSS as they are the ones employing the said owner-members.

petitioner SSS, on 12 June 2003, filed a Petition before petitioner SSC against the respondent cooperative and Stanfilco praying that the respondent cooperative or, in the alternative, Stanfilco be directed to register as an employer and to report respondent cooperative’s owners-members as covered employees under the compulsory coverage of SSS and to remit the necessary contributions in accordance with the Social Security Law of 1997

Respondent cooperative filed its Answer with Motion to Dismiss alleging that no employer-employee relationship exists between it and its owners-members, thus, petitioner SSC has no jurisdiction over the respondent cooperative. Stanfilco, on the other hand, filed an Answer with Cross-claim against the respondent cooperative.


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On 17 February 2004, petitioner SSC issued an Order denying the Motion to Dismiss filed by the respondent cooperative. The respondent cooperative moved for the reconsideration of the said Order, but it was likewise denied in another Order issued by the SSC dated 16 September 2004.

respondent cooperative filed a Motion for Extension of Time to File a Petition for Review before the Court of Appeals. Subsequently, respondent cooperative filed a Manifestation stating that it was no longer filing a Petition for Review. In its place, respondent cooperative filed a Petition forCertiorari before the Court of Appeals.

Issues presented by each side:

Petitioner:

The [petitioner SSC] has jurisdiction over the petition-complaint filed before it by the [petitioner SSS] under R.A. No. 8282.

There is an employer-employee relationship between [respondent cooperative] and its [owners-members].

Respondent [Petitioner] SSC arbitrarily proceeded with the case as if it has jurisdiction over the petition a quo, considering that it failed to first resolve the issue of the existence of an employer-employee relationship between [respondent] cooperative and its owners-members.[Respondent] is not an employer within the contemplation of the Labor Law but is a multi-purpose cooperative created pursuant to Republic Act No. 6938 and composed of owners-members, not employees.B. The rights and obligations of the owners-members of [respondent] cooperative are derived from their Membership Agreements, the Cooperatives By-Laws, and Republic Act No. 6938, and not from any contract of employment or from the Labor Laws. Moreover, said owners-members enjoy rights that are not consistent with

being mere employees of a company, such as the right to participate and vote in decision-making for the cooperative.

C. As found by the Bureau of Internal Revenue [BIR], the owners-members of [respondent] cooperative are not paid any compensation income. (Emphasis supplied.)

Ruling:

The existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract, when the terms and surrounding circumstances show otherwise. The employment status of a person is defined and prescribed by law and not by what the parties say it should be.

First. It is expressly provided in the Service Contracts that it is the respondent cooperative which has the exclusive discretion in the selection and engagement of the owners-members as well as its team leaders who will be assigned at Stanfilco.

Second. Wages are defined as “remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered.” In this case, the weekly stipends or the so-called shares in the service surplus given by the respondent cooperative to its owners-members were in reality wages, as the same were equivalent to an amount not lower than that prescribed by existing labor laws, rules and regulations, including the wage order applicable to the area and industry; or the same shall not be lower than the prevailing rates of wages. It cannot be doubted then that those stipends or shares in the service surplus are indeed wages, because these are given to the owners-members as compensation in rendering services to respondent cooperative’s client, Stanfilco.

Third. It is also stated in the above-mentioned Service Contracts that it is the respondent cooperative which has the power to investigate, discipline and remove the owners-members and its team leaders who were rendering services at Stanfilco.

Fourth. As earlier opined, of the four elements of the employer-employee relationship, the “control test” is the most important. In the case at bar, it is the respondent cooperative which has the sole control over the manner and


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means of performing the services under the Service Contracts with Stanfilco as well as the means and methods of work. Also, the respondent cooperative is solely and entirely responsible for its owners-members, team leaders and other representatives at Stanfilco. All these clearly prove that, indeed, there is an employer-employee relationship between the respondent cooperative and its owners-members.

It is true that the Service Contracts executed between the respondent cooperative and Stanfilco expressly provide that there shall be no employer-employee relationship between the respondent cooperative and its owners-members. This Court, however, cannot give the said provision force and effect.

It bears stressing, too, that a cooperative acquires juridical personality upon its registration with the Cooperative Development Authority. It has its Board of Directors, which directs and supervises its business; meaning, its Board of Directors is the one in charge in the conduct and management of its affairs. With that, a cooperative can be likened to a corporation with a personality separate and distinct from its owners-members. Consequently, an owner-member of a cooperative can be an employee of the latter and an employer-employee relationship can exist between them.

In the present case, it is not disputed that the respondent cooperative had registered itself with the Cooperative Development Authority, as evidenced by its Certificate of Registration No. 0-623-2460. In its by-laws, its Board of Directors directs, controls, and supervises the business and manages the property of the respondent cooperative. Clearly then, the management of the affairs of the respondent cooperative is vested in its Board of Directors and not in its owners-members as a whole. Therefore, it is completely logical that the respondent cooperative, as a juridical person represented by its Board of Directors, can enter into an employment with its owners-members.

As there is employee-employer relationship, SSC jurisdiction.

49. ALMEDA ET AL., VS. ASAHI GLASS, G.R. NO. 177785, SEPT. 3, 2008

Facts:

This a complaint for illegal dismissal with claims for moral and exemplary damages and attorney’s fees filed by Almeda, et al against Asahi Glass and San Sebastian Allied Services, Inc. SSASI. Petitioners alleged that Asahi and SSASI entered into a service contract whereby SSASI undertook to provide Asahi with the necessary manpower for its operations. Pursuant to such a contract, SSASI employed petitioners Randy Almeda, Edwin Audencial, Nolie Ramirez and Ernesto Calicagan as glass cutters, and petitioner Reynaldo Calicagan as Quality Controller, all assigned to work for respondent. Asahi terminated its service contract with SSASI, which in turn, terminated the employment of petitioners on the same date. Believing that SSASI was a labor-only contractor, and having continuously worked as glass cutters and quality controllers for the respondent - functions which are directly related to its main line of business as glass manufacturer - for three to 11 years, petitioners asserted that they should be considered regular employees of the Asahi; and that their dismissal from employment without the benefit of due process of law was unlawful.

Asahi claimed that petitioners were employees of SSASI and were merely assigned by SSASI to work for respondent to perform intermittent services pursuant to an Accreditation Agreement. SSASI averred that it was the one who hired petitioners and assigned them to work for respondent on occasions that the 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.

Issue: Are Almeda, et al employees of Asahi Glass even considering that they were originally hired by San Sebastian Allied Services, Inc.?

Ruling:

Yes. Almeda, et al are employees of Asahi Glass.

Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. A person is


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considered engaged in legitimate job contracting or subcontracting if the following conditions concur:

(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof;

(b) The contractor or subcontractor has substantial capital or investment; and

(c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.

On the other hand, labor-only contracting, a prohibited act, is an arrangement in which the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In 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;

(b) The employees recruited, supplied or placed by such contractor or subcontractor is performing activities which are directly related to the main business of the principal.

In labor-only contracting, the statutes create an employer-employee relationship for a comprehensive purpose: to prevent circumvention of labor laws. The contractor is considered as merely the agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees are directly employed by the principal employer. Therefore, if SSASI was a labor-only contractor, then respondent shall be considered as the employer of petitioners who must bear the liability for the dismissal of the latter, if any.

An important element of legitimate job contracting is that the contractor has substantial capital or investment, which respondent failed to prove. There is a dearth of evidence to prove that SSASI possessed substantial capital or investment when respondent began contractual relations with it more than a decade before 2003. The Court did not find a single financial statement or record to attest to the economic status and financial capacity of SSASI to venture into and sustain its own business independent from petitioner.

Furthermore, the Court is unconvinced by 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. The indispensability of petitioners’ services was fortified by the length and continuity of their performance, lasting for periods ranging from three to 11 years.

More importantly, the Court finds that the crucial element of control over petitioners rested in respondent. The power of control refers to the authority of the employer to control the employee not only with regard to the result of work to be done, but also to the means and methods by which the work is to be accomplished. It should be borne in mind that the power of control refers merely to the existence of the power and not to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the former has a right to wield the power.

Petitioners followed the work schedule prepared by respondent. They were required to observe all rules and regulations of the respondent pertaining to, among other things, the quality of job performance, regularity of job output, and the manner and method of accomplishing the jobs. Other than being the one who hired petitioners, there was absolute lack of evidence that SSASI exercised control over them or their work.

The fact that it was SSASI which dismissed petitioners from employment is irrelevant. It is hardly proof of control, since it was demonstrated only at the end of petitioners’ employment. What is more, the dismissal of petitioners by SSASI was a mere result of the termination by respondent of its contractual relations with SSASI.

SSASI is a labor-only contractor; hence, it is considered as the agent of respondent. Respondent is deemed by law as the employer of petitioners.

Equally unavailing is 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. A party cannot dictate, by the mere expedient of a unilateral declaration in a contract, the character of its business, i.e., whether as labor-only contractor or as job contractor, it being crucial that its character be measured in terms of and determined by the criteria set by statute.


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50. ROLANDO SASAN, SR., vs NATIONAL LABOR RELATIONS COMMISSION

Assailed in this Petition for Review under Rule 45 of the Rules of Court are the Decision[1] dated 24 April 2006 of the Court of Appeals in CA-G.R. SP No. 79912, which affirmed the Decision dated 22 January 2003 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000241-2002 finding that Helpmate, Inc. (HI) is a legitimate independent job contractor and that the petitioners were not illegally dismissed from work

Respondent Equitable-PCI Bank (E-PCIBank), a banking entity duly organized and existing under and by virtue of Philippine laws, entered into a Contract for Services with HI, a domestic corporation primarily engaged in the business of providing janitorial and messengerial services. The contract was impliedly renewed every year after year.

July 23, 2001, petitioners filed with the Arbitration Branch of the NLRC in Cebu City against HI and E- PCIBANK for illegal dismissal with claims for separation pay, service incentive leave pay, allowances, damages, attorney’s fees and costs.

Position papers were submitted. Petitioners claimed that they had become regular employees of E-PCIbank with respect to activities for which they were employed and that the bank had direct control and supervision over the means and methods by which they were to perform their jobs and their dismissal by HI was null and void since they were regular employees of E-PCIBANK.

PCI Bank said that it entered into a Contract for Services with HI, an independent job contractor which hired and assigned petitioners to the bank to perform janitorial and messengerial services thereat. It was HI that paid petitioners’ wages, monitored petitioners’ daily time records (DTR) and uniforms, and exercised direct control and supervision over the petitioners and that therefore HI has every right to terminate their services legally. E-PCIBank could not be held liable for whatever misdeed HI had committed against its employees.

HI, on the other hand, asserted that it was an independent job contractor engaged in the business of providing janitorial and related services to business establishments, and E-PCIBank was one of its clients. Petitioners were its employees, part of its pool of janitors/messengers assigned to E-PCIBank. The Contract for Services between HI and E-PCIBank expired on 15 July 2000. E-PCIBank no longer renewed said contract with HI and, instead, bidded out its janitorial requirements to two other job contractors, Able Services and Puritan. HI designated petitioners to new work assignments, but the latter refused to comply with the same. Petitioners were not dismissed by HI, whether actually or constructively, thus, petitioners’ complaints before the NLRC were without basis.

On 7 January 2002, on the basis of the parties’ position papers and documentary evidence, Labor Arbiter Gutierrez rendered a Decision finding that HI was not a legitimate job contractor on the ground that it did not possess the required substantial capital or investment to actually perform the job, work, or service under its own account and responsibility as required under the Labor Code. HI is therefore a labor-only contractor and the real employer of petitioners is E-PCIBank which is held liable to petitioners.

Aggrieved by the decision of Labor Arbiter Gutierrez, respondents E-PCIBank and HI appealed the same to the NLRC, 4th Division, stationed in Cebu City. The NLRC promulgated its Decision on 22 January 2003 modifying the ruling of Labor Arbiter Gutierrez. The NLRC took into consideration the documentary evidence presented by HI for the first time on appeal and, on the basis thereof, declared HI as a highly capitalized venture with sufficient capitalization, which cannot be considered engaged in “labor-only contracting.”

Petitioners moved for a motion for recon was denied by NLRC.In the CA, it affirmed the findings of the NLRC that HI was a legitimate job contractor and that it did not illegally dismiss petitioners because they were offered new work assignments to various establishments but they refused to.

Issue:A) Whether HI is a labor-only contactor?

B) E-PCIBank should be deemed petitioners’ principal employer?

Held: A) NO.

The court finds that HI is a legitimate job contractor.

HI has a certification of registration issued by the DOLE. Moreover, the DOLE being the agency primarily responsible for regulating the business of independent job contractors, we can presume in the absence of evidence to the contrary that it thoroughly evaluated the requirements submitted by HI as a precondition to the issuance of the Cerificate of Registration.

HI has substantial capital in the amount of P20,939,935.72. It has its own building where it holds office and it has been engaged in business for more than a decade now.As observed by the Court of Appeals, surely, such a well-established business entity cannot be considered a labor-only contractor.

The evidence on record also shows that HI is carrying on a distinct and independent business from E-PCIBank. The employees of HI are assigned to clients to perform janitorial and messengerial services, clearly distinguishable from the banking services in which E-PCIBank is engaged.


http://sc.judiciary.gov.ph/jurisprudence/2008/october2008/176240.htm#_ftn2

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The court declared that while these services rendered by the petitioners as janitors, messengers and drivers are considered directly related to the principal business of a bank, in this case E-PCIBank, nevertheless, they are not necessary in the conduct of its (E-PCIBANK’s) principal business.

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.[35] A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b) The contractor or subcontractor has substantial capital or investment; and (c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits.[36]

In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal.[37] In labor-only contracting, the following elements are present: (a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and (b) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal.

In distinguishing between permissible job contracting and prohibited labor-only contracting, we elucidated in Vinoya v. National Labor Relations Commission, that it is not enough to show substantial capitalization or investment in the form of tools, equipment, etc. Other facts that may be considered include the following: whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another;

the employer’s power with respect to the hiring, firing and payment of the contractor’s workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode and manner or terms of payment.[41] Simply put, the totality of the facts and the surrounding circumstances of the case are to be considered.[42] Each case must be determined by its own facts and all the features of the relationship are to be considered.

B )NO.

The presence of the first requisite for the existence of an employer-employee relationship to wit, the selection and engagement of the employee is shown by the fact that it was HI which selected and engaged the services of petitioners as its employees.

On the second requisite regarding the payment of wages, it was HI who paid petitioners their wages and who provided their daily time records and uniforms and other materials necessary for the work they performed. Therefore, it is HI who is responsible for petitioner’s claims for wages and other employee’s benefits.

As to the third requisite on the power to control the employee’s conduct, and the fourth requisite regarding the power of dismissal, again E-PCIBank did not have the power to control petitioners with respect to the means and methods by which their work was to be accomplished.

Considering the foregoing, plus taking judicial notice of the general practice in private, as well as in government institutions and industries, of hiring an independent contractor to perform special services, ranging from janitorial, security and even technical services, we can only conclude that HI is a legitimate job contractor. As such legitimate job contractor, the law creates an employer-employee relationship between HI and petitioners which renders HI liable for the latter’s claims.




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51. PUREFOODS CORP. VS. NLRC ET AL., G.R. NO. 172241, NOVEMBER 20, 2008

FACTS:Lolita Neri (Neri) originally filed a

claim for nonpayment of additional wage increase, regularization, nonpayment of service incentive leave, underpayment of 13th month pay, and nonpayment of premium pay for holiday and holiday pay against Purefoods Corporation (Purefoods). By July 4, 1992, however, Neri was dismissed from her work as a Deli-Attendant. Subsequently, or on 13 July 1992, eleven (11) other complainantsjoined forces with Neri and together they filed an amended complaint, with Neri charging Purefoods with illegal dismissal.All the other complainants, save for Neri, were still working for Purefoods at the time of the filing of the amended complaint. On August 31, 1993, Labor declared Neri and the complainants as Purefoods' regular employees; and Neri as having been illegally dismissed and entitled to reinstatement with payment of backwages. Purefoods filed a partial appeal, praying that the claims of complainants be dismissed for lack of merit, or in the alternative, the case be remanded for formal hearing on the merits and to implead D.L. Admark as a party-respondent.The NLRC granted the appeal and remanded the case for further hearings on the factual issues.

The case was remanded to Labor Arbiter, who, after finding that Neri is not an employee of petitioner, but rather of D.L. Admark, an independent labor contractor, dismissed the complaint. A memorandum on appeal was nominally filed by all the complainants; the NLRC ruled in complainants' favor and reversed and set aside the labor arbiter's decision. According to the NLRC, the pieces of evidence on record established the employer-employee relationship between Purefoods and Neri and the other complainants. Purefoods moved for the reconsideration of the decision but its motion was denied for lack of merit. Hence, its recourse to the Court of Appeals via a petition for certiorari.

The Court of Appeals, relying on the case of Escario v. NLRC, held that D.L. Admark is a legitimate independent contractor. However, it ruled that complainants are regular employees of Purefoods. Citing Art. 280 of the Labor Code, the appellate court found that complainants were engaged to perform activities which are usually necessary or desirable in the usual business or trade of Purefoods, and that they were under the control and supervision of Purefoods' supervisors, and not of D.L. Admark's. It noted that in the Promotions Agreements between D.L. Admark and Purefoods, there was no mention of

the list of D.L. Admark employees who will handle particular promotions for petitioner, and that complainants' periods of employment are not fully covered by the Promotions Agreements.

Issue: Whether or not Neri and the other complainants are employees of PUREFOODS or A.D. ADMARK’S

Ruling:The Court agrees with Purefoods'

argument that Art. 280 of the Labor Codefinds no application in a trilateral relationship involving a principal, an independent job contractor, and the latter's employees. Indeed, the Court has ruled that said provision is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure; it does not apply where the existence of an employment relationship is in dispute. It is therefore erroneous on the part of the Court of Appeals to rely on Art. 280 in determining whether an employer-employee relationship exists between respondent Neri and Purefoods.

Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. In this arrangement, the following conditions must be met: (a)the contractor carries on a distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; (b)the contractor has substantial capital or investment; and(c)the agreement between the principal and contractor or subcontractor assures the contractual employees' entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.

To support its position that respondent is not its employee, Purefoods relies on the following: (i) the Promotions Agreements it entered into with D.L. Admark; (ii) Department Order No. 10 (Series of 1997) which defines legitimate contracting or subcontracting; and (iii) Escario v. NLRC wherein the Court declared D.L. Admark as a legitimate labor contractor.


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On the other hand, early on, Neri and the rest of the complainants admitted that they worked for petitioner through D.L. Admark. However, they also averred that they were under the control and supervision of petitioner's employees–salesmen, poultry sales managers, deli supervisors–who give them work orders and to whom they submit weekly inventory reports and monthly competitive sales report. In support of these statements, Neri appended several documents (various Identification Cards, Certification from Rustan's Supermarkets stating that respondent Neri is from Purefoods, Memoranda to respondent Neri written by a supervisor from

Purefoods, letters from Purefoods area sales managers introducing complainants as Purefoods Merchandisers). Purefoods, meanwhile, claims that these documents must be taken in the context of the performance of the service contracted out–promotion of its products.

In the first place, D.L. Admark's status as a legitimate independent contractor has already been established in Escario v. NLRC. In the said case, complainants, through D.L. Admark, worked as merchandisers for California Manufacturing Corporation (CMC). They filed a case before the labor arbiter for the regularization of their employment status with CMC, and while the case was pending, D.L. Admark sent termination letters to complainants. The complainants thereafter amended their complaint to include illegal dismissal. The Court considered the following circumstances as tending to establish D.L. Admark's status as a legitimate job contractor:

1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional, advertising, marketing and merchandising activities.

2) The service contract between CMC and D.L. Admark clearly provides that the agreement is for the supply of sales promoting merchandising services rather than one of manpower placement.

3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions, marketing and merchandising. It had several merchandising contracts with companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as evidenced by its magazine the "Phenomenon."

4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to P6 million and is therefore a highly capitalized venture. It had an authorized capital stock of P500,000.00. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied.

Moreover, applying the four-fold test used in determining employer-employee relationship, the Court found that: the employees therein were selected and hired by D.L. Admark; D.L. Admark paid their salaries, as evidenced by the payroll prepared by D.L. Admark and sample contribution forms; D.L. Admark had the power of dismissal as it admitted that it was the one who terminated the employment of the employees; and finally, it was D.L. Admark who exercised control and supervision over the employees.

Furthermore, it is evident from the Promotions Agreements entered into by Purefoods that D.L. Admark is a legitimate labor contractor. A sample agreement reads in part:

WHEREAS, The FIRST PARTY is engaged in the general promotion business;

WHEREAS, The SECOND PARTY will launch its "Handogsa Graduates" promotion project;

WHEREAS, The FIRST PARTY has offered its services to the SECOND PARTY, in connection with the said promotion project, and the latter has accepted the said offer;

NOW, THEREFORE, for and in consideration of the foregoing premises, and of the mutual convenience between them, the parties have agreed as follows:

1. The FIRST PARTY shall handle and implement the "Handogsa Graduates" promotion project of the SECOND PARTY, said project to last from February 1, 1992 to July 31, 1992.

2. The FIRST PARTY shall indemnify the SECOND PARTY for any loss or damage to the latter's properties, if such loss or damage is due to the fault or negligence of the FIRST PARTY or its agents or employees.

3. There shall be no employer-employee relationship between the FIRST PARTY or its agents or employees and the SECOND PARTY.

4. In consideration for the services to be rendered by the FIRST PARTY to the SECOND PARTY, the


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latter shall pay the former the amount of Two Million Six Hundred Fifty Two Thousand pesos only (P2,652,000.00) payable as follows:

The agreements confirm that D.L. Admark is an independent contractor which Purefoods had engaged to supply general promotion services, and not mere manpower services, to it. The provisions expressly permit D.L. Admark to handle and implement Purefoods' project, and categorically state that there shall be no employer-employee relationship between D.L. Admark's employees and Purefoods. While it may be true that complainants were required to submit regular reports and were introduced as Purefoods merchandisers, these are not enough to establish Purefoods' control over them. Even if the report requirements are somehow considered as control measures, they were imposed only to ensure the effectiveness of the promotion services rendered by D.L. Admark. It would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement.Indeed, it would be foolhardy for any company to completely give the reins and totally ignore the operations it has contracted out.

Significantly, the pieces of evidence submitted by Neri do not support her claim of having been a regular employee of Purefoods. We note that two "Statement of Earnings and Deductions"were issued for the same period, December 1989, and in one "Statement," someone deliberately erased the notation "January 1997," thereby casting doubt on the authenticity of the said documents. Even the identification cards presented by Neri are neither binding on Purefoods nor even indicative of her claimed employee status of Purefoods, issued as they were by the supermarkets concerned and not by Purefoods itself. Moreover, the check voucher issued by Purefoods marked "IN PAYMENT OF DL ADMARK DELI ATTENDANTS 12.00 PESOS ADJUSTMENT JAN 30, 1991 TO JUNE 22, 1992," signed and received by Neri, is proof that Purefoods never considered Neri as its own employee, but rather as one of D.L. Admark's deli attendants.

We also note that Neri herself admitted in her SinumpaangSalaysay and in the hearings that she applied with D.L. Admark and that she worked for Purefoods through D.L. Admark. Neri was aware from the start that D.L. Admark was her employer and not Purefoods. She had kept her contract with D.L. Admark, and inquired about her employment status with D.L. Admark. It was D.L. Admark, as her employer, which had

the final say in, and which actually effected, her termination.

In view of the foregoing, we hold that Neri is not an employee of Purefoods, but that of D.L. Admark. In the absence of employer-employee relations between Neri and Purefoods, the complaint for illegal dismissal and other monetary claims must fail.

52. MARANAW HOTELS and RESPORT CORP. vs. CA

FACTS:

Private respondent Sheryl Oabel filed a complaint for regularization, subsequently converted into one for illegal dismissal before LA Madjayran H. Ajan.

Oabel was initially hired by Maranaw Hotels as an extra beverage attendant on April 24, 1995. This lasted until February 7, 1997. Oabel worked in Century Park Hotel, an establishment owned by the petitioner. Petitioner then contracted with Manila Resource Dev’t Corp. (MANRED). Subsequently, Oabel was transferred to MANRED with the latter deporting itself as her employer. MANRED has intervened in all stages of the proceedings and has


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consistently claimed to be the employer of Oabel. Oabel performed the following functions: Secretary Public Relations, Gift Shop Attendant, Waitress, and Shop Attendant from 1997 – 1998.

In 1998, Oabel filed before LA a petition for regularization of employment against petitioner. However, in the same year, Oabel was dismissed from employment. Thus, Oabel converted her petition into a complaint for illegal dismissal.

LA dismissed the complaint claiming that Oabel never disputed the fact that her work with petitioner was on a per function basis or a “need basis” thus Oabel could not even be considered as a casual employee nor a provisional employee. Maranaw consider Oabel, at most, as a project employee which does not ripen into a regular employee.

Oabel appealed before the NLRC. NLRC reversed the ruling of LA and held that MANRED is a labor-only contractor and Oabel was illegaly dismissed for it was done without a valid or just cause. NLRC grounded these findings on the fat that:

1. Under the terms of the service contract, MANRED shall provide Maranaw not specific jobs or services but personnel; and

2. That MANDRED had insufficient capitalization and was not sufficiently equipped to provide specific jobs; and

3. That the activities performed by Oabel was directly related to and usually necessary or desirable in the business of Maranaw.

Maranaw then filed a petition before the CA. CA dismissed the petition on account of the failure of Maranaw to append the board resolution authorizing the counsel for petitioner to file the petition before the CA.

In the present petition, petitioner invokes, substantial justice as justification for a reversal of the resolution of the CA. Further, Maranaw contends that the filing of a MR with the certificate of non-forum shopping attached constitutes substantial compliance with the requirement.

ISSUE:

WON there was substantial compliance with respect on the certificate of non-forum shopping. Further, WON there exists an EE-ER relationship between Oabel and Maranaw.

RULING:

Specific authorization, the Court held, could only come in the form of a board resolution issued by the Board of Directors that specifically authorizes the counsel to institute the petition and execute the certification, to make his actions binding on his principal, i.e.,the corporation.

Art. 280. Regular and casual employment. — The provisions of written agreement to the contrary

notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

APPLICATION:

The procedural aspects placed aside, it may be seen sustained by this court that MANRED is a labor-only contractor and that the real employer of Oabel is Manaraw.

Further, it appears that Oabel has already rendered more than one year of service to the petitioner, for the period of 1995-1998, for which she must already be considered a regular employee, as stated in Art. 280 of LC.

Notably, the operations of the hotel itself do not cease with the end of each even or function and that there is an ever present need for individuals to perform certain tasks necessary in petitioner’s business. Thus, although the tasks themselves may vary, the need for sufficient manpower to carry them out does not. Thus, in any event, the petitioner determines the nature of the tasks to be performed by Oabel. Therefore, in the process, exercising control.

DENIED.

53. COCA-COLA BOTTLERS PHILS., INC. VS. ALAN M. AGITO, ET AL. [GR NO. 179546 FEBRUARY 13, 2009]

FACTS:

Coca-Cola Bottlers Phils. Inc. (COKE), the petitioner herein is a domestic corporation engaged in manufacturing, bottling and distributing soft drink beverages and other allied products. Respondents were salesmen assigned at Coke Lagro Sales Office for years but were not regularized. Coke averred that respondents were employees of Interserve who were tasked to perform contracted services in accordance with the provisions of the Contract of Services


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executed between Coke and Interserve on 23 March 2002. Said Contract constituted legitimate job contracting, given that the latter was a bona fide independent contractor with substantial capital or investment in the form of tools, equipment, and machinery necessary in the conduct of its business.

To prove the status of Interserve as an independent contractor, petitioner presented the following pieces of evidence: (1) the Articles of Incorporation of Interserve; (2) the Certificate of Registration of Interserve with the Bureau of Internal Revenue; (3) the Income Tax Return, with Audited Financial Statements, of Interserve for 2001; and (4) the Certificate of Registration of Interserve as an independent job contractor, issued by the Department of Labor and Employment (DOLE).

As a result, petitioner asserted that respondents were employees of Interserve, since it was the latter which hired them, paid their wages, and supervised their work, as proven by: (1) respondents’ Personal Data Files in the records of Interserve; (2) respondents’ Contract of Temporary Employment with Interserve; and (3) the payroll records of Interserve.

ISSUES:1. Whether or not Inteserve is a

legitimate job contractor;2. Whether or not an employer-employee

relationship exists between petitioner Coca-Cola Bottlers Phils. Inc. and respondents.

RULING:

No. Inteserve is not a legitimate job contractor

There is "labor-only" contracting where the person supplying workers to an employee does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

The afore-quoted provision recognizes two possible relations among the parties: (1) the permitted legitimate job contract, or (2) the prohibited labor-only contracting.

A legitimate job contract, wherein an employer enters into a contract with a job

contractor for the performance of the former's work, is permitted by law. Thus, the employer-employee relationship between the job contractor and his employees is maintained. In legitimate job contracting, the law creates an employer-employee relationship between the employer and the contractor's employees only for a limited purpose, i.e., to ensure that the employees are paid their wages. The employer becomes jointly and severally liable with the job contractor only for the payment of the employees' wages whenever the contractor fails to pay the same. Other than that, the employer is not responsible for any claim made by the contractor's employees.

On the other hand, labor-only contracting is an arrangement wherein the contractor merely acts as an agent in recruiting and supplying the principal employer with workers for the purpose of circumventing labor law provisions setting down the rights of employees. It is not condoned by law. A finding by the appropriate authorities that a contractor is a "labor-only" contractor establishes an employer-employee relationship between the principal employer and the contractor's employees and the former becomes solidarily liable for all the rightful claims of the employees.

Section 5 of the Rules Implementing Articles 106-109 of the Labor Code, as amended, provides the guidelines in determining whether labor-only contracting exists:

Section 5. Prohibition against labor-only contracting. — Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal, and any of the following elements are [is] present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; orii) The contractor does not exercise the right to control the performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended. "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work, or service contracted out.


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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 supplied.)

In sum, Interserve did not have substantial capital or investment in the form of tools, equipment, machineries, and work premises; and respondents, it’s supposed employees, performed work which was directly related to the principal business of petitioner. It is, thus, evident that Interserve falls under the definition of a “labor-only” contractor, under Article 106 of the Labor Code; as well as Section 5(i) of the Rules Implementing Articles 106-109 of the Labor Code, as amended. It is also apparent that Interserve is a labor-only contractor under Section 5(ii) of the Rules Implementing Articles 106-109 of the Labor Code, as amended, since it did not exercise the right to control the performance of the work of respondents.

The lack of control of Interserve over the respondents can be gleaned from the Contract of Services between Interserve (as the CONTRACTOR) and petitioner (as the CLIENT). The Contract of Services between Interserve and petitioner did not identify the work needed to be performed and the final result required to be accomplished. Instead, the Contract specified the type of workers Interserve must provide petitioner (“Route Helpers, Salesmen, Drivers, Clericals, Encoders & PD”) and their qualifications (technical/vocational course graduates, physically fit, of good moral character, and have not been convicted of any crime). The Contract also states that, “to carry out the undertakings specified in the immediately preceding paragraph, the CONTRACTOR shall employ the necessary personnel,” thus, acknowledging that Interserve did not yet have in its employ the personnel needed by petitioner and would still pick out such personnel based on the criteria provided by petitioner. In other words, Interserve did not obligate itself to perform an identifiable job, work, or service for petitioner, but merely bound itself to provide the latter with specific types of employees. These contractual provisions strongly indicated that Interserve was merely a recruiting and manpower agency providing petitioner with workers performing tasks directly related to the latter’s principal business.

The certification issued by the DOLE stating that Interserve is an independent job contractor does not sway this Court to take it at face value, since the primary purpose stated in the Articles of Incorporation of Interserve is

misleading. According to its Articles of Incorporation, the principal business of Interserve is to provide janitorial and allied services. The delivery and distribution of Coca-Cola products, the work for which respondents were employed and assigned to petitioner, were in no way allied to janitorial services. While the DOLE may have found that the capital and/or investments in tools and equipment of Interserve were sufficient for an independent contractor for janitorial services, this does not mean that such capital and/or investments were likewise sufficient to maintain an independent contracting business for the delivery and distribution of Coca-Cola products.

With the finding that Interserve was engaged in prohibited labor-only contracting, petitioner shall be deemed the true employer of respondents. As regular employees of petitioner, respondents cannot be dismissed except for just or authorized causes, none of which were alleged or proven to exist in this case, the only defense of petitioner against the charge of illegal dismissal being that respondents were not its employees. Records also failed to show that petitioner afforded respondents the twin requirements of procedural due process, i.e., notice and hearing, prior to their dismissal. Respondents were not served notices informing them of the particular acts for which their dismissal was sought. Nor were they required to give their side regarding the charges made against them. Certainly, the respondents’ dismissal was not carried out in accordance with law and, therefore, illegal.


LABOR STANDARDS LAW

54. [G.R. No. 171814. May 8, 2009.] SOUTH DAVAO DEVELOPMENT COMPANY, INC. et al, vs. GAMO, et al.

Facts:Petitioner South Davao Development Company (petitioner or petitioner corporation) is the operator of a coconut and mango farm in San Isidro, Davao Oriental and Inawayan/Baracatan, Davao del Sur. On August 1963 petitioner hired respondent Sergio L. Gamo (Gamo) as a foreman. Sometime in 1987, petitioner appointed Gamo as a copra maker contractor. Respondents Ernesto Belleza, Carlos Rojas, Maximo Malinao were all employees in petitioner's coconut farm, while respondents Felix Terona, Virgilio Cosep, Maximo Tolda, and Nelson Bagaan were assigned to petitioner's mango farm. All of the abovenamed respondents (copra workers) were later transferred by petitioner to Gamo as the latter's copraceros. From 1987 to 1999, Gamo and petitioner entered into a profit-sharing agreement wherein 70% of the net proceeds of the sale of copra went to petitioner and 30% to Gamo. The copra workers were paid by Gamo from his 30% share.Petitioner wanted to standardize payments to its "contractors" in its coconut farms. On 2 October 1999, petitioner proposed a new payment scheme to Gamo. The new scheme provided a specific price for each copra making activity. Gamo submitted his counter proposal. Petitioner did not accept Gamo's counter proposal since it was higher by at least fifty percent (50%) from its original offer. Without agreeing to the new payment scheme, Gamo and his copra workers started to do harvesting work. Petitioner told them to stop. Eventually, petitioner and Gamo agreed that the latter may continue with the harvest provided that it would be his last "contract" with petitioner. Gamo suggested to petitioner to look for a new "contractor" since he was not amenable to the new payment scheme. Gamo and petitioner failed to agree on a payment scheme, thus, petitioner did not renew the "contract" of Gamo. Gamo and the copra workers alleged that they were illegally dismissed.On the other hand, respondent Eleonor Cosep (Eleonor) was employed as a mango classifier in the packing house of petitioner's mango farm in San Isidro, Davao Oriental. Sometime in October 1999, she did not report for work as she had wanted to raise and sell pigs instead. Petitioner, through Malone Pacquiao, tried to convince Eleonor to report for work but to no avail

On 22 March 2000, respondents filed a complaint for illegal dismissal against petitioner. They alleged that sometime in December 1999, petitioner verbally terminated them en masse.Issues: (1) whether the Court of Appeals failed to take judicial notice of the accepted practice of independent contractors in the coconut industry; (2) whether there is a valid job contracting between petitioner and Gamo; and (3) whether Eleonor had effectively abandoned her work.Held:The labor arbiter took judicial notice of the alleged prevailing business practices in the coconut industry that copra making activities are done quarterly; that the workers can contract with other farms; and that the workers are independent from the land owner on all work aspects. Petitioner wants this Court to take judicial notice of the current business practice in the coconut industry which allegedly treats copraceros as independent contractors. In Expertravel & Tours, Inc. v. Court of Appeals, we held, thus:

Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be questionable. Things of "common knowledge", of which courts take judicial matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided, they are of such universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person.


LABOR STANDARDS LAW

As the common knowledge of man ranges far and wide, a wide variety of particular facts have been judicially noticed as being matters of common knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent on the existence or non-existence of a fact of which the court has no constructive knowledge.

An invocation that the Court take judicial notice of certain facts should satisfy the requisites set forth by case law. A mere prayer for its application shall not suffice. Thus, in this case the Court cannot take judicial notice of the alleged business practices in the copra industry since none of the material requisites of matters of judicial notice is present in the instant petition. The record is bereft of any indication that the matter is of common knowledge to the public and that it has the characteristic of notoriety, except petitioners' self-serving claim. CaASIcA related issue is whether Gamo is an independent contractor. In Escario v. NLRC, we ruled that there is permissible job contracting when a principal agrees to put out or farm out with a contractor or a subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job or work service is to be performed within or outside the premises of the principal. To establish the existence of an independent contractor, we apply the following conditions: first, the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and second, the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. The Implementing Rules and Regulation of the Labor Code defines investment — as 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 investment must be sufficient to carry out the job at hand.In the case at bar, Gamo and the copra workers did not exercise independent judgment in the performance of their tasks. The tools used by Gamo and his copra workers like the karit, bolo, pangbunot, panglugit and pangtapok are not sufficient to enable them to complete the job. Reliance on these primitive tools is not enough. In fact, the accomplishment of their task required more expensive machineries and equipment, like the trucks to haul the harvests and the drying facility, which petitioner corporation owns.In order to determine the existence of an employer-employee relationship, the Court has frequently applied the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, or the so called "control test", which is considered

the most important element. From the time they were hired by petitioner corporation up to the time that they were reassigned to work under Gamo's supervision, their status as petitioner corporation's employees did not cease. Likewise, payment of their wages was merely coursed through Gamo. As to the most determinative test — the power of control, it is sufficient that the power to control the manner of doing the work exists, it does not require the actual exercise of such power. In this case, it was in the exercise of its power of control when petitioner corporation transferred the copra workers from their previous assignments to work as copraceros. It was also in the exercise of the same power that petitioner corporation put Gamo in charge of the copra workers although under a different payment scheme. Thus, it is clear that an employer-employee relationship has existed between petitioner corporation and respondents since the beginning and such relationship did not cease despite their reassignments and the change of payment scheme. It is well settled that abandonment as a just and valid ground for dismissal requires the deliberate and unjustified refusal of the employee to return for work. Two elements must be present, namely: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship. The second element is more determinative of the intent and must be evinced by overt acts. Mere absence, not being sufficient, the burden of proof rests upon the employer to show that the employee clearly and deliberately intended to discontinue her employment without any intention of returning. 28 In Samarca v. Arc-Men Industries, Inc., we held that abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts.To constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the employer-employee relationship. Clearly, the operative act is still the employee's ultimate act of putting an end to his employment. 29 However, an employee who takes steps to protest her layoff cannot be said to have abandoned her work because a charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement. 30When Eleonor filed the illegal dismissal complaint, it totally negated petitioner's theory of abandonment.Also, to effectively dismiss an employee for abandonment, the employer must comply with the due process requirement of sending notices to the employee. In Brahm Industries, Inc. v. NLRC, 31 we ruled that this requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of serious concern since it constitutes a safeguard of the highest order in response to man's innate sense of justice. 32 Petitioner was not able to send the necessary notice requirement to Eleonor. Petitioner's belated claim that it was not able to send the notice of infraction prior to the filing of the illegal dismissal case cannot simply unacceptable. 33 Based on the foregoing, Eleonor did not abandon her work.WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED.


LABOR STANDARDS LAW

55. G.R. NO. 164205 SEPTEMBER 3, 2009, TRAVEÑO, ET AL VS. BOBONGON BANANA GROWERS MULTI-PURPOSE COOPERATIVE, ET AL.

FACTS:

a. Origin of Case

The case originated from three separate complaints for illegal dismissal filed by petitioners, individually and collectively, with the National Labor Relations Commission against the respondents including respondent Dole Asia Philippines as it then supposedly owned Timog Agricultural Corporation (TACOR), for unpaid salaries, overtime pay, 13th month pay, service incentive leave pay, damages, and attorney’s fees.

Petitioners Traveno, et. al. were hired by TACOR and Diamond Farms (DFI) to work at a Banana Plantation in Bobongon, Sto. Tomas, Davao del Norte, where they helped to prepare the lands for the planting of banana.

While petitioners worked under the direct control of supervisors from TACOR and DFI, these companies made it appear that they were hired through independent contractors including individuals, unregistered associations and cooperatives, such as the other respondent Bobongon Banana Growers Multi-purpose Cooperative.

Sometime in 2000, the respondents began harassing the respondents in order to ease them out of their jobs. They unilaterally changed their compensation package from being based on a daily rate to a pakyawan rate and then soon after, they stopped paying their salaries which prompted the petitioners to also stop working.

b. Respondents’ Defense

TACOR and DFI (answering as a merged company) claim that they never engaged the services of the petitioners. They allege that when TACOR still existed, it had an arrangement with several land owners in Sto. Tomas that it would extend technical and financial assistance to these landowners for the development of their lands into a banana plantation on the condition that

TACOR would be the exclusive buyer of the bananas produced with such assistance. TACOR maintains that it is the landowners who formed the cooperative who hired laborers for the farms.

c. Petitioners’ Argument

Petitioners argue that while the Cooperative was their employer on paper, the other respondents exercised control and supervision over them and that the Cooperative was a labor-only contractor.

ISSUE/S:

The case is anchored on the issue of whether or not DFI (with which TACOR had been merged) and Dole should be held solidarily liable with the Cooperative for petitioners’ illegal dismissal and money claims.

RULING:

The Cooperative’s co-respondents are not solidarily liable for the illegal dismissal and money claims

Job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out with a contractor or subcontractor the performance 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. The present case does not involve such an arrangement.

Dole entered into a Banana Production and Purchase Agreement (Contract) with the Cooperative. Such contract partakes only the nature of a joint venture agreement and not a job contracting arrangement.

By way of the four-fold test of employer-employee relationship, it is only the Cooperative and not the other co-respondents who can be considered the petitioners’ employer because:

a.) DFI has total lack of knowledge on who actually were engaged by the Cooperative to work in the banana plantation (selection of workers)

b.) The Cooperative handles the fund in the operational expenses including the wages of the workers (payment of wages)

c.) The Contract stipulated that the Cooperative was to be responsible for the proper conduct and general welfare of its members and workers in the plantation (power of dismissal and power of control)


LABOR STANDARDS LAW

56. RAUL G. LOCSIN & EDDIE TOMAQUIN V. PLDT, G.R. NO. 185251

Facts

On November 1, 1990, PLDT and the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement whereby SSCP would provide armed security guards to PLDT to be assigned to its various offices. Petitioners Raul Locsin and Eddie Tomaquin were among those posted at a PLDT office. However, on August 30, 2001, PLDT terminated the Agreement effective October 1, 2001.

However, despite the termination of the Agreement, petitioner continued to secure the premises of the office because they were allegedly told to maintain their posts. Then, on September 30, 2002, petitioners’ services were terminated.

Petitioners sought recourse to the Labor Arbiter for illegal dismissal and recover of money claims, such remedy was thereby granted, finding PLDT liable for the dismissal. PLDT raised its appeal first to the NLRC and then consequently to the CA asking for the nullification of the Resolution issued by the NLRC as well as the Labor Arbiter’s Decision. The CA ruled that SSCP was not a labor-only contractor and was an independent contractor having substantial capital to operate and conduct its own business. Furthermore, the agreement stipulates against an employer-employee relationship.

ISSUE

Whether petitioners became employees of respondent after the Agreement between SSCP and respondent was terminated.

RULING

Yes, petitioners became employees of respondent after the Agreement between SSCP and respondent was terminated.

Notable, ordinarily, business owners or managers would not allow security guards of an agency with whom the owners or managers have severed ties with to continue to stay within the business’ premises. Moreover, from the foregoing circumstances, it can be assumed that petitioners remained at their post under the instructions of respondent. We can further conclude that respondent dictated upon petitioners that the latter perform their regular duties to secure the premises during operating

hours. This, to our mind and under the circumstances, is sufficient to establish the existence of an employer-employee relationship.

While there is no legal relationship with the SSCP because of the termination of the Agreement, petitioners continued to hold post, indicating that the element of control is exercised by the respondent over petitioners.

Furthermore, Article 106 of the Labor Code contains a provision on contractors, to wit: xxx

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.

Thus, the Secretary of Labor issued Department Order No. 18-2002, Series of 2002, implementing Art. 106 as follows:

Section 5. Prohibition against labor-only contracting.––Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:xxx

(ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee.

There is no question that respondent having control over the petitioners must be considered as petitioners’ employer––from the termination of the Agreement onwards––as this was the only time that any evidence of control was exhibited by respondent over petitioners and in light of our ruling inAbella. Thus, as


LABOR STANDARDS LAW

aptly declared by the NLRC, petitioners were entitled to the rights and benefits of employees of respondent, including due process requirements in the termination of their services.

57. ALIVIADO, ET. AL. VS. PROCTOR & GAMBLE PHILS., G.R. NO. 160506, MARCH 9, 2010

Facts:Petitioners worked as merchandisers of P&G from various dates, allegedly starting as early as 1982 or as late as June 1991, to either May 5, 1992 or March 11, 1993. They all individually signed employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a time. They were assigned at different outlets, supermarkets and stores where they handled all the products of P&G. They received their wages from Promm-Gem or SAPS.SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers for reasons such as habitual absenteeism, dishonesty or changing day-off without prior notice.P&G is principally engaged in the manufacture and production of different consumer and health products, which it sells on a wholesale basis to various supermarkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for the promotion and merchandising of its products.In December 1991, petitioners filed a complaint against P&G for regularization, service incentive leave pay and other benefits with damages. The complaint was later amended to include the matter of their subsequent dismissal. On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-employee relationship between petitioners and P&G. He found that the selection and engagement of the petitioners, the payment of their wages, the power of dismissal and control with respect to the means and methods by which their work was accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors. Appealing to the NLRC, petitioners disputed the Labor Arbiter’s findings. On July 27, 1998, the NLRC rendered a Decision dismissing their appeal. Petitioners then filed a petition for certiorari with the CA, alleging grave abuse of discretion amounting to lack or excess of jurisdiction on the

part of the Labor Arbiter and the NLRC. However, said petition was also denied by the CA. Petitioners filed a motion for reconsideration but the motion was also denied. Hence, this petition.

Issue: Whether or not Promm-Gem and SAPS are labor-only contractors

Ruling:Promm-Gem is an independent contractor however, SAPS is a labor-only contractor.The pertinent Labor Code provision on the matter states:ART. 106. Contractor or subcontractor. – Whenever an employer enters into a contract with another person for the performance of the 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. 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. Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 18-02, distinguishes between legitimate and labor-only contracting:Section 3. Trilateral Relationship in Contracting Arrangements. In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. Hence, there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work or service.Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are


LABOR STANDARDS LAW

performing activities which are directly related to the main business of the principal; orii) [T]he contractor does not exercise the right to control over the performance of the work of the contractual employee.The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as amended."Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. Clearly, the law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting.In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space with a floor area of 870 square meters. It also had under its name three registered vehicles which were used for its promotional / merchandising business. Promm-Gem also has other clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE Department Order No. 18-02. The records also show that Promm-Gem supplied its complainant-workers with the relevant materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. Promm-Gem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered the complainants working under it as its regular, not merely contractual or project, employees. This circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No. 18-02, which speaks of contractual employees. This, furthermore, negates – on the part of Promm-Gem – bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the Court to strike down the employment practice or agreement concerned as contrary to public policy, morals, good customs or public order.Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find that it is a legitimate independent contractor. On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31,250.00. There is no other evidence presented to show how much its

working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets. In Vinoya v. National Labor Relations Commission, the Court held that "[w]ith the current economic atmosphere in the country, the paid-in capitalization of PMCI amounting to P75,000.00 cannot be considered as substantial capital and, as such, PMCI cannot qualify as an independent contractor."Applying the same rationale to the present case, it is clear that SAPS – having a paid-in capital of only P31,250 - has no substantial capital. SAPS’ lack of substantial capital is underlined by the records which show that its payroll for its merchandisers alone for one month would already total P44,561.00. It had 6-month contracts with P&G. Yet SAPS failed to show that it could complete the 6-month contracts using its own capital and investment. Its capital is not even sufficient for one month’s payroll. SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the period required for it to generate its needed revenue to sustain its operations independently. Substantial capital refers to capitalization used in the performance or completion of the job, work or service contracted out. In the present case, SAPS has failed to show substantial capital.Furthermore, the petitioners have been charged with the merchandising and promotion of the products of P&G, an activity that has already been considered by the Court as doubtlessly directly related to the manufacturing business, which is the principal business of P&G. Considering that SAPS has no substantial capital or investment and the workers it recruited are performing activities which are directly related to the principal business of P&G, we find that the former is engaged in "labor-only contracting".

"Where ‘labor-only’ contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the ‘labor-only’ contractor." The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Consequently, petitioners recruited and supplied by SAPS -- which engaged in labor-only contracting -- are considered as the employees of P&G while those having worked under, and been dismissed by Promm-Gem, are considered the employees of Promm-Gem, not of P&G.

58. SAN MIGUEL CORPORATION vs. VICENTE B. SEMILLANO


LABOR STANDARDS LAW

FACTS:AMPCO hired the services of Vicente Semillano, Nelson Mondejar, Jovito Remada and Alex Hawod, herein respondents. All of them were assigned to work in SMC's Bottling Plant situated at Brgy. Granada Sta. Fe, Bacolod City, in order to perform the following tasks: segregating bottles, removing dirt therefrom, filing them in designated places, loading and unloading the bottles to and from the delivery trucks, and performing other tasks as may be ordered by SMC's officers. They were required to work inside the premises of SMC using SMC’s equipment. They rendered service with SMC for more than 6 months.Subsequently, SMC entered into a Contract of Services with AMPCO designating the latter as the employer of Vicente, et al., As a result, Vicente et al., failed to claim the rights and benefits ordinarily accorded a regular employee of SMC. In fact, they were not paid their 13th month pay. They were not allowed to enter the premises of SMC. The project manager of AMPCO, Merlyn Polidario, told them to wait for further instructions from the SMC's supervisor. Vicente et al., waited for one month, unfortunately, they never heard a word from SMC.Consequently, Vicente et al., as complainants, filed a complaint for illegal dismissal with the Labor Arbiter against AMPCO, Merlyn V. Polidario, SMC and Rufino I. Yatar, SMC Plant Manager, as respondents. Complainants assert that they are regular employees of SMC. However, SMC utilized AMPCO making it appear that the latter was their employer, so that SMC may evade the responsibility of paying the benefits due them under the law. The Labor Arbiter rendered judgment declaring Vicente, et al. as regular employees of San Miguel Corporation. Initially, the NLRC Fourth Division affirmed with modifications the findings of the LA but in a Resolution, the NLRC reversed its earlier ruling. It absolved petitioner from liability and instead held AMPCO, as employer of respondents, as an independent contractor.

The Court of Appeals overturned the Commission’s finding that petitioner SMC wielded the power of control over respondent and the power of dismissal and that AMPCO was a labor-only contractor since "a capital of nearly one

million pesos" was insufficient for it to qualify as an independent contractor.SMC filed a motion for reconsideration but was denied. Hence, this petition for review on certiorari.Petitioner SMC argues that the CA wrongly assumed that it exercised power of control over the respondents just because they performed their work within SMC's premises. In advocacy of its claim that AMPCO is an independent contractor, petitioner relies on the provisions of the service contract between petitioner and AMPCO, wherein the latter undertook to provide the materials, tools and equipment to accomplish the services contracted out by petitioner. The same contract provides that AMPCO shall have exclusive discretion in the selection, engagement and discharge of its employees/personnel or otherwise in the direction and control thereof. Petitioner also adds that AMPCO determines the wages of its employees/personnel who shall be within its full control.In its Comment, respondent AMPCO essentially advanced the same arguments in support of its claim as a legitimate job contractor.ISSUE:WON AMPCO is a legitimate job contractorRULING:NO, AMPCO is a labor-only contractor.The test to determine the existence of independent contractorship is whether or not the one claiming to be an independent contractor has contracted to do the work according to his own methods and without being subject to the control of the employer, except only as to the results of the work. Although there may be indications of an independent contractor arrangement between petitioner and AMPCO, the most determinant of factors exists which indicate otherwise.AMPCO's main business activity is trading, maintaining a store catering to members and the public. Its job contracting with SMC is only a minor activity or sideline. The component of AMPCO's substantial capital are in fact invested and used in the trading business. AMPCO does not have substantial equipment, tools, machineries, and supplies actually and directly used by it in the performance or completion of the segregation and piling job. There is nothing in AMPCO's list of fixed assets, machineries, tools, and equipment which it could have used, actually and directly, in the performance or completion of its contracted job, work or service with petitioner. Thus, there can be no other logical conclusion but that the tools and equipment utilized by respondents are owned by petitioner SMC. It is likewise noteworthy that neither petitioner nor AMPCO has shown that the latter had clients other than petitioner. Therefore, AMPCO has no independent business.In connection therewith, DOLE Department Order No. 10 also states that an independent contractor carries on an independent business and undertakes the contract work on his own account, under his own responsibility, according to his own manner and method, and free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. This embodies what has long been


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jurisprudentially recognized as the control test to determine the existence of employer-employee relationship.In the case at bench, petitioner failed to show how AMPCO took "entire charge, control and supervision of the work and service agreed upon."Moreover, the Court was not convinced that AMPCO wielded "exclusive discretion in the discharge" of respondents. AMPCO's project manager, even told respondents to "wait for further instructions from the SMC's supervisor" after they were prevented from entering petitioner SMC's premises.Despite the fact that the service contracts contain stipulations which are earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither determinative nor conclusive of the relationship between the parties. Petitioner SMC and AMPCO cannot dictate, by a declaration in a contract, the character of AMPCO's business, that is, whether as labor-only contractor, or job contractor. AMPCO's character should be measured in terms of, and determined by, the criteria set by statute. At a closer look, AMPCO's actual status and participation regarding respondents' employment clearly belie the contents of the written service contract. Petitioner cannot rely either on AMPCO's Certificate of Registration as an Independent Contractor issued by the proper Regional Office of the DOLE to prove its claim. It is not conclusive evidence of such status. The fact of registration simply prevents the legal presumption of being a mere labor-only contractor from arising. In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. Thus, petitioner SMC, as principal employer, is solidarily liable with AMPCO, the labor-only contractor, for all the rightful claims of respondents. Under this set-up, AMPCO, as the "labor-only" contractor, is deemed an agent of the principal (SMC). The law makes the principal responsible over the employees of the "labor-only" contractor as if the principal itself directly hired the employees.

59. MANILA WATER COMPANY INC. VS DALUMPINES

Facts:By virtue of Republic Act No. 8041,

otherwise known as the "National Water Crisis Act of 1995," the Metropolitan Waterworks and Sewerage System (MWSS) was given the authority to enter into concession agreements allowing the private sector in its operations. Petitioner Manila Water Company, Inc. (Manila Water) was one of two private concessionaires contracted by the MWSS to manage the water distribution system in the east zone of Metro Manila. The east service area included the following towns and cities: Mandaluyong, Marikina, Pasig, Pateros, San Juan, Taguig, Makati, parts of Quezon City and Manila, Angono, Antipolo, Baras, Binangonan, Cainta, Cardona, Jala-Jala, Morong, Pililla, Rodriguez, Tanay, Taytay, Teresa, and San Mateo.3

On November 21, 1997, before the expiration of the contract of services, the 121 bill collectors formed a corporation duly registered with the Securities and Exchange Commission (SEC) as the "Association Collector’s Group, Inc." (ACGI). ACGI was one of the entities engaged by Manila Water for its courier service. However, Manila Water contracted ACGI for collection services only in its Balara Branch.6

In December 1997, Manila Water entered into a service agreement with respondent First Classic Courier Services, Inc. (FCCSI) also for its courier needs. The service agreements between Manila Water and FCCSI covered the periods 1997 to 1999 and 2000 to 2002.7 Earlier, in a memorandum dated November 28, 1997, FCCSI gave a deadline for the bill collectors who were members of ACGI to submit applications and letters of intent to transfer to FCCSI. The individual respondents in this case were among the bill collectors who joined FCCSI and were hired effective December 1, 1997.8

On various dates between May and October 2002, individual respondents were terminated from employment. Manila Water no longer renewed its contract with FCCSI because it decided to implement a "collectorless" scheme whereby Manila Water customers would instead remit payments through "Bayad Centers."9 The aggrieved bill collectors individually filed complaints for illegal dismissal, unfair labor practice, damages, and attorney’s fees, with prayer for reinstatement and backwages against petitioner Manila Water and respondent FCCSI. The complaints were consolidated and jointly heard.

Petitioner Manila Water, for its part, denied that there was an employer-employee relationship between its company and respondent bill collectors. Based on the agreement between FCCSI and Manila Water, respondent bill collectors are the employees of the former, as it is the former that has the right to select/hire, discipline, supervise, and control. FCCSI has a separate and distinct legal personality from Manila Water, and it was duly registered as an independent contractor before the DOLE.

Issues: WON FCCSI was a labor-only contractor and that respondent bill collectors are employees of petitioner Manila WaterHeld:Yes. FCCSI was a labor-only contractor and that respondent bill collectors are employees of petitioner Manila Water.

"Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or


http://www.lawphil.net/judjuris/juri2010/oct2010/gr_175501_2010.html#fnt9





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completed within or outside the premises of the principal.

Department Order No. 18-02, Series of 2002, enunciates that labor-only contracting refers to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal, and any of the following elements are present: (i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) the contractor does not exercise the right to control the performance of the work of the contractual employee.

FCCSI has no sufficient investment in the form of tools, equipment and machinery to undertake contract services for Manila Water involving a fleet of around 100 collectors assigned to several branches and covering the service area of Manila Water customers spread out in several cities/towns of the East Zone. The only rational conclusion is that it is Manila Water that provides most if not all the logistics and equipment including service vehicles in the performance of the contracted service, notwithstanding that the contract between FCCSI and Manila Water states that it is the Contractor which shall furnish at its own expense all materials, tools and equipment needed to perform the tasks of collectors.

60. TENG VS. PAHAGAC, G.R. NO. 169704, NOVEMBER 17, 2010

Facts:Albert Teng Fish Trading is engaged in

deep sea fishing and, for this purpose, owns boats (basnig), equipment, and other fishing paraphernalia. As owner of the business, Teng claims that he customarily enters into joint venture agreements with master fishermen (maestros) who are skilled and are experts in deep sea fishing; they take charge of the management of each fishing venture, including the hiring of the members of its complement. He avers that the maestros hired the respondent workers as checkers to determine the volume of the fish caught in every fishing voyage.

On February 20, 2003, the respondent workers filed a complaint for illegal dismissal against Albert Teng Fish Trading, Teng, and Chua before the NCMB, Region Branch No. IX, Zamboanga City.

Issues:1. WON the VA’s decision is not subject to a

motion for reconsideration.2. WON an employer-employee relationship existed

between Teng and the respondent workers.

Held: The petition is denied.1. Article 262-A of the Labor Code does not

prohibit the filing of a motion for reconsideration.On March 21, 1989, Republic Act No.

6715 took effect, amending, among others, Article 263 of the Labor Code which was originally worded as:

Art. 263 x x x Voluntary arbitration awards or decisions shall be final, unappealable, and executory.As amended, Article 263 is now Article 262-A,

which states:Art. 262-A. x x x [T]he award or decision x x x shall contain the facts and the law on which it is based. It shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties.

Notably, Article 262-A deleted the word "unappealable" from Article 263. The deliberate selection of the language in the amendatory act differing from that of the original act indicates that the legislature intended a change in the law, and the court should endeavor to give effect to such intent. We recognized the intent of the change of phraseology in Imperial Textile Mills, Inc. v. Sampang, where we ruled that:

It is true that the present rule [Art. 262-A] makes the voluntary arbitration award final and executory after ten calendar days from receipt of the copy of the award or decision by


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the parties. Presumably, the decision may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for reconsideration duly filed during that period.

Teng’s allegation that the VA’s decision had become final and executory by the time the respondent workers filed an appeal with the CA thus fails. We consequently rule that the respondent workers seasonably filed a motion for reconsideration of the VA’s judgment, and the VA erred in denying the motion because no motion for reconsideration is allowed.

2. There exists an employer-employee relationship between Teng and the respondent workers.

While Teng alleged that it was the maestros who hired the respondent workers, it was his company that issued to the respondent workers identification cards (IDs) bearing their names as employees and Teng’s signature as the employer. Generally, in a business establishment, IDs are issued to identify the holder as a bona fide employee of the issuing entity.

For the 13 years that the respondent workers worked for Teng, they received wages on a regular basis, in addition to their shares in the fish caught. The worksheet showed that the respondent workers received uniform amounts within a given year, which amounts annually increased until the termination of their employment in 2002. Teng’s claim that the amounts received by the respondent workers are mere commissions is incredulous, as it would mean that the fish caught throughout the year is uniform and increases in number each year.

More importantly, the element of control – which we have ruled in a number of cases to be a strong indicator of the existence of an employer-employee relationship – is present in this case. Teng not only owned the tools and equipment, he directed how the respondent workers were to perform their job as checkers; they, in fact, acted as Teng’s eyes and ears in every fishing expedition.

Teng cannot hide behind his argument that the respondent workers were hired by the maestros. To consider the respondent workers as employees of the maestros would mean that Teng committed impermissible labor-only contracting. As a policy, the Labor Code prohibits labor-only contracting:

ART. 106. Contractor or Subcontractor – x x x The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor.x x x x

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are

directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

Section 5 of the DO No. 18-02, which implements Article 106 of the Labor Code, provides:

Section 5. Prohibition against labor-only contracting. – Labor-only contracting is hereby declared prohibited.For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:

(i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or

(ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee.

In the present case, the maestros did not have any substantial capital or investment. Teng admitted that he solely provided the capital and equipment, while the maestros supplied the workers. The power of control over the respondent workers was lodged not with the maestros but with Teng. As checkers, the respondent workers’ main tasks were to count and classify the fish caught and report them to Teng. They performed tasks that were necessary and desirable in Teng’s fishing business. Taken together, these incidents confirm the existence of a labor-only contracting which is prohibited in our jurisdiction, as it is considered to be the employer’s attempt to evade obligations afforded by law to employees.

Accordingly, we hold that employer-employee ties exist between Teng and the respondent workers. A finding that the maestros are labor-only contractors is equivalent to a finding that an employer-employee relationship exists between Teng and the respondent workers. As regular employees, the respondent workers are entitled to all the benefits and rights appurtenant to regular employment.


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61. GSIS VS. NLRC, ET. AL., G.R. NO. 180045, NOV. 17, 2010

Facts:

Respondents Dionisio Banlasan, Alfredo T. Tafalla, Telesforo D. Rubia, Rogelio A. Alvarez, Dominador A. Escobal, and Rosauro Panis were employed as security guards by DNL Security Agency (DNL Security). By virtue of the service contract entered into by DNL Security and petitioner Government Service Insurance System on May 1, 1978, respondents were assigned to petitioner’s Tacloban City office, each receiving a monthly income ofP1,400.00. Sometime in July 1989, petitioner voluntarily increased respondents’ monthly salary to P3,000.00.3

In February 1993, DNL Security informed respondents that its service contract with petitioner was terminated. This notwithstanding, DNL Security instructed respondents to continue reporting for work to petitioner. Respondents worked as instructed until April 20, 1993, but without receiving their wages; after which, they were terminated from employment.4

On June 15, 1995, respondents filed with the National Labor Relations Commission (NLRC), Regional Arbitration Branch No. VIII, Tacloban City, a complaint against DNL Security and petitioner for illegal dismissal, separation pay, salary differential, 13th month pay, and payment of unpaid salary.

Issue: WON GSIS is jointly and severally liable with DNL Security Agency for payment of the unsubstantiated amounts of Salary Differentials and the 13th Month Pay to the private respondent security guards.

Held:

The fact that there is no actual and direct employer-employee relationship between petitioner and respondents does not absolve the former from liability for the latter’s monetary claims. When petitioner contracted DNL Security’s services, petitioner became an indirect employer of respondents, pursuant to Article 107 of the Labor Code, which reads:

ART. 107. Indirect employer. – The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.

After DNL Security failed to pay respondents the correct wages and other monetary benefits, petitioner, as principal,

became jointly and severally liable, as provided in Articles 106 and 109 of the Labor Code, which state:

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. x x x.

x x x x

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.

This statutory scheme is designed to give the workers ample protection, consonant with labor and social justice provisions of the 1987 Constitution.

Petitioner’s liability covers the payment of respondents’ salary differential and 13th month pay during the time they worked for petitioner. In addition, petitioner is solidarily liable with DNL Security for respondents’ unpaid wages from February 1993 until April 20, 1993. While it is true that respondents continued working for petitioner after the expiration of their contract, based on the instruction of DNL Security, petitioner did not object to such assignment and allowed respondents to render service. Thus, petitioner impliedly approved the extension of respondents’ services. Accordingly, petitioner is bound by the provisions of the Labor Code on indirect employment. Petitioner cannot be allowed to deny its obligation to respondents after it had benefited from their services. So long as the work, task, job, or project has been performed for petitioner’s benefit or on its behalf, the liability accrues for such services. The principal is made liable to its indirect employees because, after all, it can protect itself from irresponsible contractors by withholding payment of such sums that are due the employees and by paying the employees directly, or by requiring a bond from the contractor or subcontractor for this purpose.

Petitioner’s liability, however, cannot extend to the payment of separation pay. An order to pay separation pay is invested with a punitive character, such that an indirect employer should not be made liable without a finding that it had conspired in the illegal dismissal of the employees.


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Lastly, we do not agree with petitioner that the enforcement of the decision is impossible because its charter unequivocally exempts it from execution.

To be sure, petitioner’s charter should not be used to evade its liabilities to its employees, even to its indirect employees, as mandated by the Labor Code.

62. SY, ET AL. VS. FAIRLAND KNITCRAFT CO., INC.,

X--------------------------------------X (CONSOLIDATED WITH)SUSAN T. DE LEON VS. FAIRLAND KNITCRAFT CO., INC., ET AL.

Facts:

Fairland is a domestic corporation engaged in garments business, while Susan de Leon (Susan) is the owner/proprietress of Weesan Garments (Weesan).

On the other hand, the complaining workers, Marialy Sy and 33 others (the workers) are sewers, trimmers, helpers, a guard and a secretary who were hired by Weesan.

The workers filed separate complaints for underpayment and/or non-payment of wages, overtime pay, premium pay, 13th month pay and other monetary benefits against Susan/Weesan. These complaints were then consolidated by the Arbitration Branch of the NLRC in January 2003.

February 5, 2003, Weesan filed before the Department of Labor and Employment-National Capital Region (DOLE-NCR) a report on its temporary closure for a period of not less than six months. On the same day, the workers were not anymore allowed to work. So on February 18, 2003 they filed an Amended Complaint, and on March 13, 2003, another pleading entitled Amended Complaints and Position Paper for Complainants, to include the charge of illegal dismissal and impleaded Fairland and its manager, Debbie Manduabas (Debbie), as additional respondents.

At the Hearings set by the Labor Arbiter Ramon Valentin Reyes, Atty. Antonio Geronimo represented both Susan/Weesan and Fairland. He submitted 2 position papers for the two entities. The workers filed a Reply, to which Atty. Geronimo also submitted a Consolidated Reply by Susan/Weesan and Fairland. Workers answered back through a Rejoinder.

The Labor Arbiter dismissed the case for lack of merit, but ordered the respondent companies to pay each complainant P5,000.00 by way of financial assistance.

The NLRC granted the worker’s appeal and set aside the Labor Arbiter’s decision. The Commission declared the dismissal of the workers as illegal and ordered reinstatement, will full backwages from February 5, 2003 and payment all the unpaid benefits to be paid solidarily by Susan/Weesan and Fairland.

Atty. Geronimo filed a Motion for Reconsideration. However, Fairland filed another Motion for Reconsideration through Atty. Melina O. Tecson (Atty. Tecson) assailing the jurisdiction of the Labor Arbiter and the NLRC over it, claiming that it was never summoned to appear, attend or participate in all the proceedings conducted therein. It also denied that it engaged the services of Atty. Geronimo. These MRs were denied by the NLRC.

Thus, Fairland and Susan/Weesan filed their petitions for certiorari before the Court of Appeals.

CA’s decision on Fairland’s petition:

The CA denied Fairland’s petition and affirmed the NLRC ruling which held Fairland solidarily liable with Susan.

On MR, Fairland moved also for the voluntary inhibition of Justices Leagogo and Maambong. The CA granted the motion for voluntary inhibition and transferred the case from the First Division to the Ninth Division. The Ninth Division reversed the earlier denial of Fairland’s petition It held that the labor tribunals did not acquire jurisdiction over the person of Fairland, and even assuming they did, Fairland is not liable to the workers since Weesan is not a mere labor-only contractor but a bona fide independent contractor. The Special Ninth Division thus annulled and set aside the assailed NLRC Decision and Resolution insofar as Fairland is concerned and excluded the latter therefrom.

Workers appealed this decision to the Supreme Court.

CA’s decision on Susan’s petition:

Susan’s petition was denied due course and dismissed for lack of merit. The CA affirmed the NLRC ruling with respect to Susan.

Her MR was denied by the CA.

Before the Supreme Court:

Susan filed a petition for review on certiorari with the SC, which was dismissed by the Supreme Court on technicality and for failure to sufficiently show any reversible error in the assailed judgment. Susan filed an appeal but before it could be resolved, the Supreme Court consolidated Susan’s case with that the workers.

The Supreme Court granted Susan’s Motion for Reconsideration and reinstated her petition for review on certiorari.

Issues:

1. Whether or not Susan/Weesan is a labor-only contracting agent acting as an agent of Fairland?

2. Whether or not the individual private respondents (Sy, et al.) were illegal dismissed?


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Ruling:

G.R. No. 182915 (Susan de Leon vs. Fairland, Sy et al.)

1. Susan is a mere labor-only contractor.

“There is labor-only contracting when the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present:

(a) The person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and

(b) The workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer.”

The workers, majority of whom are sewers, were recruited by Susan/Weesan and that they performed activities which are directly related to Fairland’s principal business of garments. Did Susan/Weesan have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others? The SC said that there was nothing in the records that would show that Weesan has investment in the form of tools, equipment or machineries. The records show that Fairland has to furnish Weesan with sewing machines for it to be able to provide the sewing needs of the former. Weesan was unable to show that apart from the borrowed sewing machines, it owned and possessed any other tools, equipment, and machineries necessary to its being a contractor or sub-contractor for garments. Neither was Weesan able to prove that it has substantial capital for its business.

Further, the work premises utilized by Weesan is owned by Fairland, which significantly, was not in the business of renting properties. They also advanced that there was no showing that Susan/Weesan paid any rentals for the use of the premises. Instead of refuting the worker’s allegations, Susan instead claimed that Weesan rented the premises from another entity, De Luxe. To support this, she attached to her petition two Contracts of Lease purportedly entered into by her and De Luxe for the lease of the premises covering the periods August 1, 1997 to July 31, 2000 and January 1, 2001 to December 31, 2004 as well as TCTs and Tax declarations in De Luxe’s name but the SC found it wanting. There were no rental receipts presented nor did the TCTs indicate with certainty that the registered property is the same one used for Weesan’s work premises. Weesan does not have its own workplace and is only utilizing the workplace of Fairland to whom it supplied workers for its garment business.

Suffice it to say that “[t]he presumption is that a contractor is a labor-only contractor unless such contractor overcomes the burden of proving that it has substantial capital, investment, tools and the like.” As Susan/Weesan was not able to adduce evidence that Weesan had any substantial

capital, investment or assets to perform the work contracted for, the presumption that Weesan is a labor-only contractor stands.

2. Yes, the worker’s were illegally dismissed.

Susan relies on Article 283 of the Labor Code which allows as a mode of termination of employment the closure or termination of business, which is a management prerogative. The exercise of which requires: a) that the closure/cessation of business is bona fide, i.e., its purpose is to advance the interest of the employer and not to defeat or circumvent the rights of employees under the law or a valid agreement; b) that written notice was served on the employees and the DOLE at least one month before the intended date of closure or cessation of business; and c) in case of closure/cessation of business not due to financial losses, that the employees affected have been given separation pay equivalent to ½ month pay for every year of service or one month pay, whichever is higher.”

The burden of proving that a temporary suspension is bona fide falls upon the employer. Clearly here, Susan/Weesan was not able to discharge this burden. The documents Weesan submitted to support its claim of severe business losses cannot be considered as proof of financial crisis to justify the temporary suspension of its operations since they clearly appear to have not been duly filed with the BIR. Weesan failed to satisfactorily explain why the Income Tax Returns and financial statements it submitted do not bear the signature of the receiving officers. Also hard to ignore is the absence of the mandatory 30-day prior notice to the workers. Hence, the Court finds that Susan failed to prove that the suspension of operations of Weesan was bona fide and that it complied with the mandatory requirement of notice under the law. Susan likewise failed to discharge her burden of proving that the termination of the workers was for a lawful cause. Therefore, the NLRC and the CA, in CA-G.R. SP No. 93860, did not err in their findings that the workers were illegally dismissed by Susan/Weesan. The court also ruled that Fairland’s claim of prescription does not deserve consideration. Fairland says that they only engaged Weesan’s services 1996 to 1997, but in January 31, 2003, Fairland wrote Weesan requesting for the sewing machines back. G.R. No. 182915 (Sy vs. Fairland) “It is basic that the Labor Arbiter cannot acquire jurisdiction over the person of the respondent without the latter being served with summons.” However, “if there is no valid service of summons, the court can still acquire jurisdiction over the person of the defendant by virtue of the latter’s voluntary appearance.” Although not served with summons, jurisdiction over Fairland and Debbie was acquired through their voluntary appearance. When the worker’s complaint was before the Labor Arbiter, it is confirmed that Fairland and Debbie were never summoned.


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The crucial question now is: Did Fairland and Debbie voluntarily appear before the Labor Arbiter as to submit themselves to its jurisdiction? Fairland argued before the CA that it did not engage Atty. Geronimo as its counsel. However, the Court held in Santos v. National Labor Relations Commission viz:

Moreover, jurisdiction over the person of the defendant in civil cases is acquired not only by service of summons but also by voluntary appearance in court and submission to its authority. ‘Appearance’ by a legal advocate is such ‘voluntary submission to a court’s jurisdiction’. It may be made not only by actual physical appearance but likewise by the submission of pleadings in compliance with the order of the court or tribunal.

The fact that Atty. Geronimo entered his appearance for Fairland and Debbie and that he actively defended them before the Labor Arbiter raised the presumption that he is authorized to appear for them. As held in Santos, it is unlikely that Atty. Geronimo would have been so irresponsible as to represent Fairland and Debbie if he were not in fact authorized. As an officer of the Court, Atty. Geronimo is presumed to have acted with due propriety. Moreover, “[i]t strains credulity that a counsel who has no personal interest in the case would fight for and defend a case with persistence and vigor if he has not been authorized or employed by the party concerned.” The presumption of authority of counsel to appear on behalf of a client is found both in the Rules of Court and in the New Rules of Procedure of the NLRC.

Sec. 8, Rule III of the New Rules of Procedure of the NLRC, which is the rules prevailing at that time, states in part: SECTION 8. APPEARANCES. - An attorney appearing for a party is presumed to be properly authorized for that purpose. However, he shall be required to indicate in his pleadings his PTR and IBP numbers for the current year.

As Atty. Geronimo consistently indicated his PTR and IBP numbers in the pleadings he filed, there is no reason for the Labor Arbiter not to extend to Atty. Geronimo the presumption that he is authorized to represent Fairland. Moreover, the fact that Debbie signed the verification attached to the position paper filed by Atty. Geronimo, without a secretary’s certificate or board resolution attached thereto, is not sufficient reason for the Labor Arbiter to be on his guard and require Atty. Geronimo to prove his authority. Debbie, as General Manager of Fairland is one of the officials of the company who can sign the verification without need of a board resolution because as such, she is in a position to verify the allegations in the petition.

Suffice it to say that an attorney’s presumption of authority is a strong one. “A mere denial by a party that he authorized an attorney to appear for him, in the absence of a compelling reason, is insufficient to overcome the presumption, especially when the denial comes after the rendition of an adverse judgment,” such as in the present case. To stress, Article 224 contemplates the furnishing of copies of final decisions, orders or awards both to the parties and their counsel in connection with the execution of such final decisions, orders or awards. However, for the purpose of computing the period for filing an appeal from the NLRC to the CA, same shall be counted from receipt of the decision, order or award by the counsel of record pursuant to the established rule that notice to counsel is notice to party. In sum, we hold that the Labor Arbiter had validly acquired jurisdiction over Fairland and its manager, Debbie, through the appearance of Atty. Geronimo as their counsel and likewise, through the latter’s filing of pleadings on their behalf. Further proof that Fairland is Weesan’s principal: (1) aside from sewing machines, Fairland also lent Weesan other equipment such as fire extinguishers, office tables and chairs, and plastic chairs; (2) no proof evidencing the contractual arrangement between Weesan and Fairland was ever submitted by Fairland; (3) while both Weesan and Fairland assert that the former had other clients aside from the latter, no proof of Weesan’s contractual relationship with its other alleged client is extant on the records; and (4) there is no showing that any of the workers were assigned to other clients aside from Fairland. Moreover, the activities, the manner of work and the movement of the workers were subject to Fairland’s control. Fairland, therefore, as the principal employer, is solidarily liable with Susan/Weesan, the labor-only contractor, for the rightful claims of the employees. Under this set-up, Susan/Weesan, as the "labor-only" contractor, is deemed an agent of the principal, Fairland, and the law makes the principal responsible to the employees of the "labor-only" contractor as if the principal itself directly hired or employed the employees. WHEREFORE, the Court,

1) in GR No. 189658 denies Susan’s Petition for Review on Certiorari. The CA decision declaring her a labor-only contractor is affirmed. 2) in G.R. No. 182915, grants the worker’s Petition for Review on Certiorari. Decision of the CA (ninth division) which excluded Fairland from being solidarily liable is reversed and set aside. The Decision of the CA (first division) which held Fairland as solidarily liable with Susan/Weesan is reinstated and affirmed.


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63. POLYFOAM-RGC INTERNATIONAL CORP., VS. CONCEPCION G.R. NO. 172349, JUNE 13, 2012

Facts:

Respondent filed a complaint against petitioner Polyfoam for illegal dismissal alleging that he was an all-around factory worker who served for almost six years. He was illegally dismissed when he discovered that his time card was not in the rack and that he was informed by the security guard that he can no longer punch his card. Protesting to the supervisor, he found out that he was dismissed due to an infraction of a company rule. A request was sent to Polyfoam’s manager asking for respondent’s re-admittance but was unheeded.

Co-petitioner Gramaje filed a Motion for Intervention claiming to be the real employer of respondent. She alleges that her business PAGES is a legitimate job contractor. Polyfoam, then, filed a Motion to Dismiss since there was no employer-employee relationship between Polyfoam and respondent. Gramaje assert that respondent was not illegally dismissed but rather, it was respondent that abandoned work.

The Motion to Intervene was granted but the Motion to Dismiss was denied. In denying the motion to dismiss, the Labor Arbiter ruled that the non-existence of the relationship is a matter of defense. In deciding the case, the Labor Arbiter ruled in favor of respondent finding him to be illegally dismissed and awarded his money claims. It ruled that Polyfoam and Gramaje are solidarily liable to respondent. On appeal the NLRC, the LA’s decision was modified by exonerating Polyfoam from responsibility and deleting some of the money awards. It ruled that Gramaje is an independent contractor and was not illegally dismissed but abandoned work. On appeal to the CA, the NLRC’s decision was reversed and the LA’s decision reinstated. Aggrieved, petitioners filed this petition for review on ceritiorari.

Issues: Whether or not Polyfoam is solidarily liable?Whether or not respondent was illegally dismissed?

Ruling:

Yes, Polyfoam is solidarily liable. Yes, respondent was illegally dismissed. The Court ruled that Gramaje was involved in labor-only contracting and that respondent did not abandon work but was illegally dismissed.

In support of its conclusion that Polyfoam is involved in labor-only contracting, the following were considered by the Court: (a) Gramaje has no substantial capital; and (b) Gramaje did not

carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, Polyfoam. On the first ground, it was not able to prove ownership over the equipment in Polyfoam’s premises that is allegedly owned by Gramaje.

Respondent was illegally dismissed. Credence was given to respondent’s narration of facts. Several circumstance also negated the theory of abandonment like: (a) he immediately inquired from his supervisor; (b) he wrote a letter asking to be re-admitted and (c) he filed a case for illegal dismissal.


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64. SUPERIOR PACKAGING CORP., VS. BALAGSAY ET AL., G.R. NO. 178909, OCTOBER 10, 2012

Facts:Superior Packaging Corporation (Superior) is involved in the manufacture and sale of commercial and industrial corrugated boxes. It engaged the services of Lancer Staffing & Services Network, Inc. (Lancer) to provide reliever services to its business. The respondents in this case are the workers of Lancer assigned to Superior for such reliever services.

The workers filed a complaint with the DOLE against Superior for underpayment of wages, non- payment of premium pay for worked rest, overtime pay and non-payment of salaries. The DOLE then conducted an inspection of the Superior’s premises and made a finding, among others, that Superior is engaged in labor-only contracting and is consequently an indirect employer of the workers. Having found that Superior committed the violations alleged by the workers, the DOLE issued an Order finding in favor of the workers and ordering Superior to pay their claims.

Superior filed a motion for reconsideration on the ground that the workers are not its employees but of Lancer. It objects to the finding that it is engaged in labor-only contracting and is consequently an indirect employer, and alleges that it is beyond the visitorial and enforcement power of the DOLE to make such conclusion. According to Superior, such conclusion may be made only upon consideration of evidentiary matters and cannot be determined solely through a labor inspection.

Issue:Can the DOLE make a finding as to the existence or non-existence of employer-employee relationship in the course of an inspection conducted pursuant to its visitorial and enforcement power?

Ruling:Yes, the DOLE can.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power.

The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer-employee relationship, force the referral of the matter to the NLRC. At least a prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer- employee relationship.

Here, the DOLE finding Lancer was not an independent contractor and that Superior and Lancer were engaged in “labor-only contracting” is a finding as to the existence of employer-employee relationship. Hence, Superior was considered an indirect employer of the workers and liable to the latter for their unpaid money claims.


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65. DIGITAL TELECOMMUNICATIONS PHIL., INC. VS. DIGITEL EMPLOYEES UNION (G.R. NOS. 184903, 10OCT2012)

FACTS:

By virtue of a certification election, Digitel Employees Union (Union) became the exclusive bargaining agent of all rank and file employees of Digitel in 1994. The Union and Digitel then commenced collective bargaining negotiations which resulted in a bargaining deadlock. The Union threatened to go on strike, but then the Labor Secretary assumed jurisdiction over the dispute and eventually directed the parties to execute a CBA.

However, no CBA was forged between Digitel and the Union. Some Union members abandoned their employment with Digitel. The Union later became dormant. Ten (10) years thereafter or on 28 September 2004, Digitel received from Esplana, who was President of the Union, a letter containing the list of officers, CBA proposals and ground rules.

Digitel was reluctant to negotiate with the Union and demanded that the latter Union show compliance with the provisions of the Union’s Constitution and By -laws on union membership and election of officers. On 4 November 2004, Esplana and his group filed a case for Preventive Mediation before the National Conciliation and Mediation Board based on Digitel’s violation of the duty to bargain. On 25 November 2004, Esplana filed a notice of strike. On 10 March 2005, the then Labor Secretary issued an Order.

Assuming jurisdiction over the labor dispute. During the pendency of the controversy, Digitel Service, Inc. (Digiserv), a non-profit enterprise engaged in call center servicing, filed with the DOLE an Establishment Termination Report stating that it will cease its business operation. The closure affected at least 100 employees, 42 of whom are members of the herein respondent Union. Alleging that the affected employees are its members and in reaction to Digiserv’s action, Esplana and his group filed another Notice of Strike for union busting, illegal lock-out, and violation of the assumption order. On 23 May 2005, the Labor Secretary ordered the second notice of strike subsumed by the previous Assumption Order.

Meanwhile, on 14 March 2005, Digitel filed a petition with the Bureau of Labor Relations (BLR) seeking cancellation of the Union’s registration. In a Decision dated 11 May 2005, the Regional Director of the DOLE dismissed the petition forcancellation of union registration for lack of merit. The appeal filed by Digitel with the BLR was eventually dismissed for lackof merit in a Resolution dated 9 March 2007. In an Order dated 13 July 2005, the Secretary of Labor directed Digitel to commence the CBA negotiation with theUnion and certified for compulsory arbitration before the NLRC the issue of unfair labor practice.In accordance with the 13 July 2005 Order of the Secretary of Labor, the unfair labor practice issue was

certified forcompulsory arbitration before the NLRC. On 31 January 2006, NLRC rendered a Decision dismissing the unfair labor practicecharge against Digitel but declaring the dismissal of the 13 employees of Digiserv as illegal and ordering their reinstatement.

The Union manifested that out of 42 employees, only 13 remained, as most had already accepted separation pay.In view of this unfavorable decision, Digitel filed a petition on 9 June 2006 before the Court of Appeals, challenging theabove NLRC Decision and Resolution and arguing mainly that Digiserv employees are not employees of Digitel.On 18 June 2008, CA partially granted the case for ULP, thus modifying the assailed NLRC dispositions. The CAlikewise sustained the finding that Digiserv is engaged in labor-only contracting and that its employees are actually employeesof Digitel.Digitel filed a motion for reconsideration but was denied in a Resolution dated 9 October 2008. Hence, this petition forreview on certiorari.

ISSUES:

1) Whether Digiserv is a legitimate contractor; and

2) Whether there was a valid dismissal.

RULING:

Digiserv is a labor-only contractor.

Labor-only contracting is expressly prohibited by our labor laws. After an exhaustive review of the records, there is no showing that first, Digiserv has substantial investment in the form of capital, equipment or tools. The NLRC, as echoed by the CA, did not find substantial Digiserv’s authorized capital stock of P 1,000,000.00. It pointed out that only P 250,000.00 of the authorized capital stock had been subscribed and only P 62,500.00 had been paid up. There was no increase in capitalization for the last 10 years.

Moreover, in the Amended Articles of Incorporation, as well as in the General Information Sheets for the years 1994, 2001 and 2005, the primary purpose of Digiserv is to provide manpower services. In PCI Automation Center, Inc. v. National Labor Relations Commission the Court made the following distinction: "the legitimate job contractor provides services while the labor-only contractor provides only manpower. The legitimate job contractor undertakes to perform a specific job for the principal employer while the labor-only contractor merely provides the personnel to work for the principal employer."The services provided by employees of Digiserv are directly related to the business of Digitel. It is undisputed that as early as March 1994, the affected employees, except for two, were already performing their job as Traffic Operator which was later renamed as Customer Service Representative (CSR). It is equally undisputed that all throughout their employment, their function as CSR remains the same until they were terminated effective May 30, 2005. Their long period of employment as such is an indication that their job is directly related to the main


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business of DIGITEL which is telecommunications. Furthermore, Digiserv does not exercise control over the affected employees. Digiserv shared the same Human Resources, Accounting, Audit and Legal Departments with Digitel which manifested that it was Digitel who exercised control over the performance of the affected employees. The NLRC also relied on the letters of commendation, plaques of appreciation and certification issued by Digitel to the Customer Service Representatives as evidence of control. Considering that Digiserv has been found to be engaged in labor-only contracting, the dismissed employees aredeemed employees of Digitel.

The affected employees were illegally dismissed.

In addition to finding that Digiserv is a labor-only contractor, records teemwith proof that its dismissed employees are in fact employees of Digitel. The NLRC enumerated these pieces of evidence, thus:

The remaining affected employees, except for two (2), were already hired by DIGITEL even before the existence of DIGISERV. Likewise, the remaining affected employees continuously held the position of Customer Service Representative, which was earlier known as Traffic Operator, from the time they were appointed on March 1, 1994until they were terminated on May 30, 2005.

Further, the Certificates issued to Customer Service Representative likewise show that they are employees of DIGITEL, Take for example the "Service Award" issued to Ma. Loretta C. Esen, one of the remaining affected employees. The "Service Award" was signed by the officers of DIGITEL - the VP-Customer Services Division, the VP-Human Resources Division and the Group Head-Human Resources Division. It cannot be gainsaid that it is only the employer that issues service award to its employees.

As an alternative argument, Digitel maintains that the affected employees were validly dismissed on the grounds of closure of Digiserv, a department within Digitel. In the recent case of Waterfront Cebu City Hotel v. Jimenez.

We reffered to the closure of a department or division of a company as retrenchment. For a valid retrenchment, the following elements must be present:(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, must be substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least ½ month pay for every year of service, whichever is higher;(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

Only the 3 elements of a valid retrenchment had been here satisfied. Indeed, it is management prerogative to close a department of the company. Digitel’s decision to outsource the call center operation of the company is a valid reason to close down the operations of a department under which the affected employees were employed. The fifth element regarding the criteria to be observed by Digitel clearly does not apply because all employees under Digiserv were dismissed. The instant case is all about the fourth element, that is, whether or not the affected employees were dismissed in good faith. We find that there was no good faith in the retrenchment. Prior to the cessation of Digiserv’s operations, the Secretary of Labor had issued the first and second assumption order. The effects of the assumption order issued by the Secretary of Labor are two-fold. It enjoins an impending strike on the part of the employees and orders the employer to maintain the status quo. There is no doubt that Digitel defied the assumption order by abruptly closing down Digiserv. The closure of a department is not illegal per se. What makes it unlawful is when the closure is undertaken in bad faith. In St. John Colleges, Inc.v. St. John Academy Faculty and Employees Union, bad faith was evidenced by the timing of and reasons for the closure andthe timing of and reasons for the subsequent opening.


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66. NORKIS TRADING CORPORATION vs. JOAQUIN BUENA VISTA et alG.R. No. 182018 October 10, 2012

The FactsThe respondents were hired by Norkis Trading, a domestic corporation engaged in the business of manufacturing and marketing of Yamaha motorcycles and multi-purpose vehicles, on separate dates and for various positions.Although they worked for Norkis Trading as skilled workers assigned in the operation of industrial and welding machines owned and used by Norkis Trading for its business, they were not treated as regular employees by Norkis Trading. Instead, they were regarded by Norkis Trading as members of PASAKA, a cooperative organized under the Cooperative Code of the Philippines, and which was deemed an independent contractor that merely deployed the respondents to render services for Norkis Trading.4 The respondents nonetheless believed that they were regular employees of Norkis Trading, citing in their Position Paper5 the following circumstances that allegedly characterized their employment with the company:The work of the operators involves operating industrial machines, such as, press machine, hydraulic machine, and spotweld machine. On the other hand, the welders used the welding machines. The machines used by complainants herein respondents in their work are all owned by respondent Norkis Trading herein petitioner and these are installed and located in the working area of the complainants inside the company’s premises.The salaries of complainants are paid inside the premises of respondent Norkis Trading by Dalia Rojo and Belen Rubio, who are also employees of the said company assigned at the accounting office.Despite having served respondent Norkis Trading for many years and performing the same functions as regular employees, complainants were not accorded regular status. It was made to appear that complainants are not employees of said company but that of respondent PASAKA.6

Against the foregoing scenario, the respondents, together with several other complainants,7 filed on June 9, 1999 with the Department of Labor and Employment (DOLE) a complaint against Norkis Trading and PASAKA for labor-only contracting and non-payment of minimum wage and overtime pay. The complaint was docketed as LSED Case No. RO700-9906-CI-CS-168.The filing of the complaint for labor-only contracting allegedly led to the suspension of the respondents’ membership with PASAKA. On July 22, 1999, they were served by PASAKA with memoranda charging them with a violation of the rule against commission of acts injurious or prejudicial to the interest or welfare of the cooperative. The memoranda cited that the respondents’ filing of a case against Norkis Trading had greatly prejudiced the interest and welfare of the cooperative.8 In their answer9 to the memoranda, the respondents explained that they merely wanted to be recognized as regular employees of Norkis Trading. The case records include copies of the memoranda sent to respondents Buenavista, Fabroa and Dondoyano.10

On August 16, 1999, the respondents received another set of memoranda from PASAKA, now charging them with the following violations of the cooperative’s rules and regulations: (1) serious misconduct or willful disobedience of superior’s instructions or orders; (2) gross and habitual neglect of duties by abandoning work without permission; (3) absences without filing leave of absence; and (4) wasting time or loitering on company’s time or leaving their post temporarily without permission during office hours.11 Copies of the memoranda12 sent to Fabroa and Cape form part of the records.On August 26, 1999, PASAKA informed the respondents of the cooperative’s decision to suspend them for fifteen (15) working days, to be effective from September 1 to 21, 1999, for violation of PASAKA rules.The records include copies of the memoranda13 sent to Fabroa and Cape. The suspension prompted the respondents to file with the NLRC the complaint for illegal suspension against Norkis Trading and PASAKA.The 15-day suspension of the respondents was extended for another period of 15 days, from September 22, 1999 to October 12, 1999.14 Copies of PASAKA’s separate letters15 to Buenavista, Fabroa, Cape and Dondoyano on the cooperative’s decision to extend the suspension form part of the records.On October 13, 1999, the respondents were to report back to work but during the hearing in their NLRC case, they were informed by PASAKA that they would be transferred to NorkisTradings’ sister company, PortaCoeli Industrial Corporation (PortaCoeli), as washers of Multicab vehicles.The respondents opposed the transfer as it would allegedly result in a change of employers, from Norkis Trading to PortaCoeli. The respondents also believed that the transfer would result in a demotion since from being skilled workers in NorkisTrading, they would be reduced to being utility workers.These circumstances made the respondents amend their complaint for illegal suspension, to include the charges of unfair labor practice, illegal dismissal, damages and attorney’s fees.For their part, both Norkis Trading and PASAKA claimed that the respondents were not employees of Norkis Trading. They insisted that the respondents were members of PASAKA, which served as an independent contractor that merely supplied services to Norkis International Co., Inc. (Norkis International) pursuant to a job contract16 which PASAKA and Norkis International executed on January 14, 1999 for 121,500 pieces of F/GF-Series Reinforcement Production. After PASAKA received reports from its coordinator at Norkis International of the respondents’ low efficiency and violation of the cooperative’s rules, and after giving said respondents the chance to present their side, a penalty of suspension was imposed upon them by the cooperative. The illegal suspension being complained of was then not linked to the respondents’ employment, but to their membership with PASAKA.Norkis Trading stressed that the respondents were deployed by PASAKA to Norkis International, a company that is entirely separate and distinct from Norkis Trading.ISSUES:1) THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS


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WHEN IT MADE ITS OWN FACTUAL FINDINGS AND DISREGARDED THE UNIFORM AND CONSISTENT FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC, WHICH MUST BE ACCORDED GREAT WEIGHT, RESPECT AND EVEN FINALITY. IN SO DOING, THE COURT OF APPEALS EXCEEDED ITS AUTHORITY ON CERTIORARI UNDER RULE 65 OF THE RULES OF COURT BECAUSE SUCH FACTUAL FINDINGS WERE BASED ON SPECULATIONS AND NOT ON OTHER EVIDENCES [SIC] ON RECORD.4) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT THE RESPONDENTS WERE CONSTRUCTIVELY DISMISSED CONTRARY TO THE FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC AND WITHOUT SHOWING ANY EVIDENCE TO OVERTURN SUCH FINDING OF FACT.42

This Court’s RulingThe Court resolves to deny the petition.

Factual findings of labor officialsmay be examined by the courtswhen there is a showing that theywere arrived at arbitrarily or indisregard of evidence on record.As regards the first ground, the petitioner questions the CA’s reversal of LA Gutierrez’s and the NLRC’s rulings, and argues that said rulings should have been accorded great weight and finality by the appellate court as these were allegedly supported by substantial evidence.On this matter, the settled rule is that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion. We emphasize, nonetheless, that these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. The CA can then grant a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, has made a factual finding that is not supported by substantial evidence. It is within the jurisdiction of the CA, whose jurisdiction over labor cases has been expanded to review the findings of the NLRC.47

We have thus explained in Cocomangas Hotel Beach Resort v. Visca48 that the CA can take cognizance of a petition for certiorari if it finds that the NLRC committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence which are material to or decisive of the controversy. The CA cannot make this determination without looking into the evidence presented by the parties. The appellate court needs to evaluate the materiality or significance of the evidence, which are alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record.This case falls within the exception to the general rule that findings of fact of labor officials are to be accorded respect and finality on appeal. As our discussions in the other grounds that are raised in this petition will demonstrate, the

CA has correctly held that the NLRC has disregarded facts and evidence that are material to the outcome of the respondents’ case. No error can be ascribed to the appellate court for making its own assessment of the facts that are significant to the case to determine the presence or absence of grave abuse of discretion on the part of the NLRC, even if the CA’s findings turn out to be different from the factual findings of both the LA and NLRC.Termination of an employment forno just or authorized causeamounts to an illegal dismissal.As to the issue of whether the respondents were illegally dismissed by Norkis Trading, we answer in the affirmative, although not by constructive dismissal as declared by the CA, but by actual dismissal.Where an entity is declared to be a labor-only contractor, the employees supplied by said contractor to the principal employer become regular employees of the latter. Having gained regular status, the employees are entitled to security of tenure and can only be dismissed for just or authorized causes and after they had been afforded due process.66 Termination of employment without just or authorized cause and without observing procedural due process is illegal.1âwphi1In claiming that they were illegally dismissed from their employment, the respondents alleged having been informed by PASAKA that they would be transferred, upon the behest of Norkis Trading, as Multicab washers or utility workers to PortaCoeli, a sister company of Norkis Trading. Norkis Trading does not dispute that such job transfer was relayed by PASAKA unto the respondents, although the company contends that the transfer was merely an "offer" that did not constitute a dismissal. It bears mentioning, however, that the respondents were not given any other option by PASAKA and Norkis Trading but to accede to said transfer. In fact, there is no showing that Norkis Trading would still willingly accept the respondents to work for the company. Worse, it still vehemently denies that the respondents had ever worked for it. Again, all defenses of Norkis Trading that anchor on the alleged lack of employer-employee relationship between it and the respondents no longer merit any consideration, given that this Court’s findings in G.R. Nos. 180078-79 have become conclusive. Thus, the respondents’ transfer to PortaCoeli, although relayed to the respondents by PASAKA was effectively an act of Norkis Trading. Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.67

No further evidence or document should then be required from the respondents to prove such fact of dismissal, especially since Norkis Trading maintains that it has no duty to admit and treat said respondents as its employees. Considering that PortaCoeli is an entity separate and distinct from Norkis Trading, the respondents’ employment with Norkis Trading was necessarily severed by the change


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in work assignment. It then did not even matter whether or not the transfer involved a demotion in the respondents’ rank and work functions; the intention to dismiss, and the actual dismissal of the respondents were sufficiently established.In the absence of a clear showing that the respondents’ dismissal was for just or authorized causes, the termination of the respondents’ employment was illegal. What may be reasonably deduced from the records was that Norkis Trading decided on the transfer, after the respondents had earlier filed their complaint for labor-only contracting against the company. Even Norkis Trading’s contention that the transfer may be deemed a valid exercise of management prerogative is misplaced. First, the exercise of management prerogative presupposes that the transfer is only for positions within the business establishment. Second, the exercise of management prerogative by employers is not absolute, as it is limited by law and the general principles of fair play and justice.WHEREFORE, premises considered, the petition is DENIED.SO ORDERED.

67. GOYA, INC. v. GOYA, INC. EMPLOYEES UNION-FFW G.R. No. 170054 : January 21, 2013

FACTS:Goya, Inc. (Company) is a domestic corporation

engaged in the manufacture, importation, and wholesale of top quality food products.

Sometime in January 2004, the company hired contractual employees from PESO Resources Development Corporation (PESO) to perform temporary and occasional services. Respondent Goya, Inc. Employees UnionFFW (Union) requested for a grievance conference on the ground that the contractual workers do not belong to the categories of employees stipulated in the existing CBA.

The hiring of contractual employees was in contravention to their CBA agreement which has been applied since 1970 where there are only 3 kinds of employees: regular employees, probationary employees and casual employees. The Union asserted that the hiring of contractual employees from PESO is not a management prerogative and in gross violation of the CBA tantamount to unfair labor practice (ULP).

The Union moreover advanced that sustaining the Company’s position would easily weaken and ultimately destroy the former with the latters resort to retrenchment and/or retirement of employees and not filling up the vacant regular positions through the hiring of contractual workers from PESO, and that a possible scenario could also be created by the Company wherein it could "import" workers from PESO during an actual strike.

The case was brought before the NCMB when the matter remained unsolved for voluntary arbitration. Voluntary Arbitrator Bienvenido E. Laguesma manifested that amicable settlement was no longer possible; hence, they agreed to submit for resolution the solitary issue of "[w]hether or not the Company is guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence."

ISSUE:

Whether or not the Company is guilty of unfair labor acts in engaging the services of PESO, a third party service provider, under the existing CBA, laws, and jurisprudence.

RULING:

The company’s defense is that their act of hiring contractual employees is a management prerogative and is a valid act thereof.

Declaring that a particular act falls within the concept of management prerogative is significantly different from acknowledging that such act is a valid exercise thereof. What the VA and the CA correctly ruled was that the Companys act of contracting out/outsourcing is within the purview of management prerogative. Both did not say, however, that such act is a valid exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by the Company and the Union delimit the free exercise of management prerogative pertaining to the hiring of contractual employees. Indeed, the VA opined that "the right of the management to outsource parts of its operations is not totally eliminated but is merely limited by the CBA," while the CA held that "this management prerogative of contracting out services, however, is not without limitation. x x x These categories of employees particularly with respect to casual employees serve as limitation to the Companys prerogative to outsource parts of its operations especially when hiring contractual employees.”

A collective bargaining agreement is the law between the parties.

It is familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions.

A collective bargaining agreement or CBA refers to the negotiated contract between a legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to law, morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes the law between the parties and compliance therewith is mandated by the express policy of the law.

Moreover, if the terms of a contract, as in a CBA, are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control.


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On the power of the voluntary arbitrator:

In general, the arbitrator is expected to decide those questions expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the submission empowers the arbitrator to decide whether an employee was discharged for just cause, the arbitrator in this instance can reasonably assume that his powers extended beyond giving a yes-or-no answer and included the power to reinstate him with or without back pay.

68. VIGILLA ET AL., VS. PHIL. COLLEGE OF CRIMINOLOGY INC., G.R. NO. 200094, JUNE 10, 2013

Facts: PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses and supervisor in the Maintenance Department of PCCr under the supervision and control of Atty. Florante A. Seril (Atty. Seril), PCCr’s Senior Vice President for Administration. The petitioners, however, were made to understand, upon application with respondent school, that they were under MBMSI, a corporation engaged in providing janitorial services to clients. Atty. Seril is also the President and General Manager of MBMSI.Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had been revoked as of July 2, 2003. On March 16, 2009, PCCr, through its President, respondent Gregory Alan F. Bautista (Bautista), citing the revocation, terminated the school’s relationship with MBMSI, resulting in the dismissal of the employees or maintenance personnel under MBMSI, except Alfonso Bongot (Bongot) who was retired.In September, 2009, the dismissed employees, led by their supervisor, Benigno Vigilla (Vigilla), filed their respective complaints for illegal dismissal, reinstatement, back wages, separation pay (for Bongot), underpayment of salaries, overtime pay, holiday pay, service incentive leave, and 13th month pay against MBMSI, Atty. Seril, PCCr, and Bautista.In their complaints, they alleged that it was the school, not MBMSI, which was their real employer because (a) MBMSI’s certification had been revoked; (b) PCCr had direct control over MBMSI’s operations; (c) there was no contract between MBMSI and PCCr; and (d) the selection and hiring of employees were undertaken by PCCr.On the other hand, PCCr and Bautista contended that (a) PCCr could not have illegally dismissed the complainants because it was not their direct employer; (b) MBMSI was the one who had complete and direct control over the complainants; and (c) PCCr had a contractual agreement with MBMSI, thus, making the latter their direct employer.On September 11, 2009, PCCr submitted several documents before LA Ronaldo Hernandez, including releases, waivers and quitclaims in favor of MBMSI executed by the complainants to prove that they were employees of MBMSI and not PCCr.

Ruling of the Labor ArbiterAfter due proceedings, the LA handed down his decision, finding that (a) PCCr was the real principal employer of the complainants ; (b) MBMSI was a mere adjunct or alter ego/labor-only contractor; (c) the complainants were regular employees of PCCr; and (d) PCCr/Bautista were in bad faith in dismissing the complainants.The LA explained that PCCr was actually the one which exercised control over the means and methods of the work of the petitioners, thru Atty. Seril, who was acting, throughout the time in his capacity as Senior Vice President for Administration of PCCr, not in any way or time as the supposed employer/general manager or president of MBMSI..Ruling of the NLRCNot satisfied, the respondents filed an appeal before the NLRC. In its Resolution, dated February 11, 2011, the NLRC affirmed the LA’s findings. Nevertheless, the respondents were excused from their liability by virtue of the releases, waivers and quitclaims executed by the petitioners. In their motion for reconsideration, petitioners attached as annexes their affidavits denying that they had signed the releases, waivers, and quitclaims. They prayed for the reinstatement in toto of the July 30, 2010 Decision of the LA.8 MBMSI/Atty. Seril also filed a motion for reconsideration9 questioning the declaration of the NLRC that he was solidarily liable with PCCr.On April 28, 2011, NLRC modified its February 11, 2011 Resolution by affirming the July 30, 2010 Decision10 of the LA only in so far as complainants Ernesto B. Ayento and Eduardo B. Salonga were concerned. As for the other 17 complainants, the NLRC ruled that their awards had been superseded by their respective releases, waivers and quitclaims.Ruling of the Court of AppealsOn September 16, 2011, the CA denied the petition and affirmed the two Resolutions of the NLRC, dated February 11, 2011 and April 28, 2011. The CA pointed out that based on the principle of solidary liability and Article 121711 of the New Civil Code, petitioners’ respective releases, waivers and quitclaims in favor of MBMSI and Atty. Seril redounded to the benefit of the respondents. The CA also upheld the factual findings of the NLRC as to the authenticity and due execution of the individual releases, waivers and quitclaims because of the failure of petitioners to substantiate their claim of forgery and to overcome the presumption of regularity of a notarized document. Petitioners’ motion for reconsideration was likewise denied by the CA in its January 4, 2012 Resolution.Hence, this petition under Rule 45 challenging the CA Decision Issue:

Whether or not their claims against the respondents were amicably settled by virtue of the releases, waivers and quitclaims which they had executed in favor of MBMSI.

o whether or not petitioners executed the said releases, waivers and quitclaims

o whether or not a labor-only contractor is solidarily liable with the employer.


http://www.lawphil.net/judjuris/juri2013/jun2013/gr_200094_2013.html#fnt11




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Ruling:

The petition fails.

The Releases, Waivers and Quitclaims are Valid

We noted that the individual quitclaims, waivers and releases executed by the complainants showing that they received their separation pay from MBMSI were duly notarized by a Notary Public. Such notarization gives prima facie evidence of their due execution. Further, said releases, waivers, and quitclaims were not refuted nor disputed by complainants herein, thus, we have no recourse but to uphold their due execution

A Labor-only Contractor is Solidarily Liable with the Employer

The issue of whether there is solidary liability between the labor-only contractor and the employer is crucial in this case. If a labor-only contractor is solidarily liable with the employer, then the releases, waivers and quitclaims in favor of MBMSI will redound to the benefit of PCCr. On the other hand, if a labor-only contractor is not solidarily liable with the employer, the latter being directly liable, then the releases, waivers and quitclaims in favor of MBMSI will not extinguish the liability of PCCr.

xxx

The NLRC and the CA correctly ruled that the releases, waivers and quitclaims executed by petitioners in favor of MBMSI redounded to the benefit of PCCr pursuant to Article 1217 of the New Civil Code. The reason is that MBMSI is solidarily liable with the respondents for the valid claims of petitioners pursuant to Article 109 of the Labor Code.

As correctly pointed out by the respondents, the basis of the solidary liability of the principal with those engaged in labor-only contracting is the last paragraph of Article 106 of the Labor Code, which in part provides: "In such cases labor-only contracting, 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."

Xxx

Under the general rule set out in the first and second paragraphs of Article 106, an employer who enters into a contract with a contractor for the performance of work for the employer, does not thereby create an employer-employees relationship between himself and the

employees of the contractor. Thus, the employees of the contractor remain the contractor's employees and his alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance with the Labor Code, the employer who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the employees of the latter "to the extent of the work performed under the contract" as such employer were the employer of the contractor's employees. The law itself, in other words, establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, i.e., in order to ensure that the latter get paid the wages due to them.

A similar situation obtains where there is "labor only" contracting. The "labor-only" contractor-i.e "the person or intermediary" - is considered "merely as an agent of the employer." The employer is made by the statute responsible to the employees of the "labor only" contractor as if such employees had been directly employed by the employer. Thus, where "labor-only" contracting exists in a given case, the statute itself implies or establishes an employer-employee relationship between the employer (the owner of the project) and the employees of the "labor only" contractor, this time for a comprehensive purpose: "employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code." The law in effect holds both the employer and the "laboronly" contractor responsible to the latter's employees for the more effective safeguarding of the employees' rights under the Labor Code.35


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69. BPI Employees Union-Davao city-FUBU vs. Bank of the Phil Islands et al., G.R. No. 174912, July 24, 2013

Facts:

BOMC, which was created pursuant to Central Bank Circular No. 1388, Series of 1993 (CBP Circular No. 1388, 1993), and primarily engaged in providing and/or handling support services for banks and other financial institutions, is a subsidiary of the Bank of Philippine Islands (BPI) operating and functioning as an entirely separate and distinct entity.

A service agreement between BPI and BOMC was initially implemented in BPI’s Metro Manila branches. In this agreement, BOMC undertook to provide services such as check clearing, delivery of bank statements, fund transfers, card production, operations accounting and control, and cash servicing, conformably with BSP Circular No. 1388. Not a single BPI employee was displaced and those performing the functions, which were transferred to BOMC, were given other assignments.

The Manila chapter of BPI Employees Union (BPIEU-Metro ManilaFUBU) then filed a complaint for unfair labor practice (ULP). The Labor Arbiter (LA) decided the case in favor of the union. The decision was, however, reversed on appeal by the NLRC. BPIEU-Metro Manila-FUBU filed a petition for certiorari before the CA which denied it, holding that BPI transferred the employees in the affected departments in the pursuit of its legitimate business. The employees were neither demoted nor were their salaries, benefits and other privileges diminished.

On January 1, 1996, the service agreement was likewise implemented in Davao City. Later, a merger between BPI and Far East Bank and Trust Company (FEBTC) took effect on April 10, 2000 with BPI as the surviving corporation. Thereafter, BPI’s cashiering function and FEBTC’s cashiering, distribution and bookkeeping functions were handled by BOMC. Consequently, twelve (12) former FEBTC employees were transferred to BOMC to complete the latter’s service complement.

BPI Davao’s rank and file collective bargaining agent, BPI Employees Union-Davao City-FUBU (Union), objected to the transfer of the functions and the twelve (12) personnel to BOMC contending that the functions rightfully belonged

to the BPI employees and that the Union was deprived of membership of former FEBTC personnel who, by virtue of the merger, would have formed part of the bargaining unit represented by the Union pursuant to its union shop provision in the CBA.7

The Union then filed a formal protest on June 14, 2000 addressed to BPI Vice Presidents Claro M. Reyes and Cecil Conanan reiterating its objection. It requested the BPI management to submit the BOMC issue to the grievance procedure under the CBA, but BPI did not consider it as "grievable." Instead, BPI proposed a Labor Management Conference (LMC) between the parties.

Thereafter, the Union demanded that the matter be submitted to the grievance machinery as the resort to the LMC was unsuccessful. As BPI allegedly ignored the demand, the Union filed a notice of strike before the National Conciliation and Mediation Board (NCMB) on the following grounds:

a) Contracting out services/functions performed by union members that interfered with, restrained and/or coerced the employees in the exercise of their right to self-organization;

b) Violation of duty to bargain; and

c) Union busting.

BPI then filed a petition for assumption of jurisdiction/certification with the Secretary of the Department of Labor and Employment (DOLE), who subsequently issued an order certifying the labor dispute to the NLRC for compulsory arbitration. The DOLE Secretary directed the parties to cease and desist from committing any act that might exacerbate the situation.

On October 27, 2000, a hearing was conducted. Thereafter, the parties were required to submit their respective position papers

On December 21, 2001, the NLRC came out with a resolution upholding the validity of the service agreement between BPI and BOMC and dismissing the charge of ULP. It ruled that the engagement by BPI of BOMC to undertake some of its activities was clearly a valid exercise of its management prerogative. It further stated that the spinning off by BPI to BOMC of certain services and functions did not interfere with, restrain or coerce employees in the exercise of their right to self-organization. The Union did not present even an iota of evidence showing that BPI had terminated employees, who were its members. In fact, BPI exerted utmost diligence, care and effort to see to it that no union member was terminated.13 The NLRC also stressed that Department Order (D.O.) No. 10 series of 1997, strongly relied upon by the Union, did not apply in this case as BSP Circular No. 1388, series of 1993, was the applicable rule.

After the denial of its motion for reconsideration, the Union elevated its grievance to the CA via a petition for certiorari under Rule 65. The CA, however, affirmed the NLRC’s


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December 21, 2001 Resolution with modification that the enumeration of functions listed under BSP Circular No. 1388 in the said resolution be deleted. The CA noted at the outset that the petition must be dismissed as it merely touched on factual matters which were beyond the ambit of the remedy availed of.14 Be that as it may, the CA found that the factual findings of the NLRC were supported by substantial evidence and, thus, entitled to great respect and finality. To the CA, the NLRC did not act with grave abuse of discretion as to merit the reversal of the resolution.

As to the applicability of D.O. No. 10, the CA agreed with the NLRC that the said order did not apply as BPI, being a commercial bank, its transactions were subject to the rules and regulations of the BSP.

Not satisfied, the Union filed a motion for reconsideration which was, however, denied by the CA.

Hence, the present petition

Issue:

Whether or not the act of BPI to outsource the cashiering, distribution and bookkeeping functions to BOMC is in conformity with the law and the existing CBA. Particularly in dispute is the validity of the transfer of twelve (12) former FEBTC employees to BOMC, instead of being absorbed in BPI after the corporate merger.

Ruling:

ART. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. – x x x Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement.

Clearly, only gross violations of the economic provisions of the CBA are treated as ULP. Otherwise, they are mere grievances.

In the present case, the alleged violation of the union shop agreement in the CBA, even assuming it was malicious and flagrant, is not a violation of an economic provision in the agreement. The provisions relied upon by the Union were those articles referring to the recognition of the union as the sole and exclusive bargaining representative of all rank-and-file employees, as well as the articles on union security, specifically, the maintenance of membership in good standing as a condition for continued employment and the union shop clause.26 It failed to take into consideration its recognition of the bank’s exclusive rights and

prerogatives, likewise provided in the CBA, which included the hiring of employees, promotion, transfers, and dismissals for just cause and the maintenance of order, discipline and efficiency in its operations

The Union, however, insists that jobs being outsourced to BOMC were included in the existing bargaining unit, thus, resulting in a reduction of a number of positions in such unit. The reduction interfered with the employees’ right to self-organization because the power of a union primarily depends on its strength in number.28

It is incomprehensible how the "reduction of positions in the collective bargaining unit" interferes with the employees’ right to self-organization because the employees themselves were neither transferred nor dismissed from the service. As the NLRC clearly stated:

In the case at hand, the union has not presented even an iota of evidence that petitioner bank has started to terminate certain employees, members of the union. In fact, what appears is that the Bank has exerted utmost diligence, care and effort to see to it that no union member has been terminated. In the process of the consolidation or merger of the two banks which resulted in increased diversification of functions, some of these non-banking functions were merely transferred to the BOMC without affecting the union membership


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70. ALILIN ET AL., VS PETRON CORP., GR. NO. 177592, JUNE 9, 2014

FACTS: Petron is a domestic corporation engaged in the oil business. It owns several bulk plants in the country for receiving, storing and distributing its petroleum products.

In 1968, Romualdo D. Gindang Contractor, which was owned and operated by Romualdo D. Gindang (Romualdo), started recruiting laborers for fielding to Petron’s Mandaue Bulk Plant. When Romualdo died in 1989, his son Romeo D. Gindang (Romeo), through Romeo D. Gindang Services (RDG), took over the business and continued to provide manpower services to Petron. Petitioners were among those recruited by Romualdo D. Gindang Contractor and RDG to work in the premises of the said bulk plant, with the corresponding dates of hiring and work duties.

On June 1, 2000, Petron and RDG entered into a Contract for Services9 for the period from June 1, 2000 to May 31, 2002, whereby RDG undertook to provide Petron with janitorial, maintenance, tanker receiving, packaging and other utility services in its Mandaue Bulk Plant. This contract was extended on July 31, 2002 and further extended until September 30, 2002. Upon expiration thereof, no further renewal of the service contract was done.

Alleging that they were barred from continuing their services on October 16, 2002, petitioners Alilin, Calesa, Hindang, Gindang, Sungahid, Lee, Morato and Gabilan filed a Complaint10 for illegal dismissal, underpayment of wages, damages and attorney’s fees against Petron and RDG on November 12, 2002.

Petitioners did not deny that RDG hired them and paid their salaries. They, however, claimed that the latter is a labor-only contractor, which merely acted as an agent of Petron, their true employer.

ISSUE: Whether RDG is a legitimate job contractor.

RULING: No. Petron failed to discharge the burden of proving that RDG is a legitimate contractor. Hence, the presumption that RDG is a labor-only contractor stands. Here, the audited financial statements and other financial documents of RDG for the years 1999 to 2001 establish that it does have sufficient working capital to meet the requirements of its service contract. In fact, the financial

evaluation conducted by Petron of RDG’s financial statements for years 1998-2000 showed RDG to have a maximum financial capability of Php4.807 Million as of December 1998,49 and Php1.611 Million as of December 2000.50 Petron was able to establish RDG’s sufficient capitalization when it entered into the service contract in 2000.


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71. AMPELELOQUIO VS JAKA DISTRIBUTION INC, GR. NO. 196936, JULY 2, 2014

FACT: Petitioner Monchito R. Ampeloquio (Ampeloquio) is a reinstated employee of respondent Jaka Distribution, Inc. (JAKA), formerly RMI Marketing Corporation (RMI). Previously, Ampeloquio had filed a complaint for illegal dismissal against RMI before the National Labor Relations Commission (NLRC). Subsequently, the Labor Arbiter found RMI guilty of illegal dismissal. On 6 August 2004, Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s outlets within Metro Manila, Shopwise Makati and Alabang. He received a daily wage of P252.00, without meal and transportation allowance.

On 4 April 2005, Ampeloquio was transferred outside of Metro Manila, to Lucena City and subsequently to San Pablo City. At that time, he was receiving the same daily wage of ?252.00, without meal and transportation allowance. Ampeloquio was given a monthly cost of living allowance (COLA) of P720.00. Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC, a complaint for underpayment of wages, COLA, non-payment of meal and transportation allowances docketed as NLRC NCR Case No. 00-06-04702-06.

ISSUE: The issue for our resolution is the scope viz-a-viz wages of reinstatement “without loss of seniority rights and other privileges.”

RULING: Seniority rights refer to the creditable years of service in the employment record of the illegally dismissed employee as if he or she never ceased working for the employer. In other words, the employee’s years of service is deemed continuous and never interrupted. Such is likewise the rationale for reinstatement’s twin relief of full backwages.13

Ampeloquio is correct in asserting that he is a senior employee compared to the other merchandisers whom he himself designates as casual or contractual merchandisers. He is likewise senior to other regular employees subsequently hired by JAKA, specifically two regular messenger employees which Ampeloquio claims receive wages higher than what he is receiving from JAKA.

Attached to the recognition of seniority rights of a reinstated employee who had been illegally dismissed is the entitlement to wages appurtenant thereto.

The case of Ampeloquio is outside the ordinary. His reinstatement was ordered when merchandisers like him were no longer employed by JAKA.

He is not entitled to the same terms and conditions of employment as that which was offered to the other regular employees (not merchandisers) subsequently hired by JAKA.


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72. FVR SKILLS & SERVICES EXPONENETS INC. VS SEVA, ET AL., GR NO. 200857, OCT. 22, 2014

FACTS: The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills and Services Exponents, Inc. (petitioner), an independent contractor engaged in the business of providing janitorial and other manpower services to its clients. As early as 1998, some of the respondents had already been under the petitioner's employ. On April 21, 2008, the petitioner entered into a Contract of Janitorial Service (service contract)8 with Robinsons Land Corporation (Robinsons). Both agreed that the petitioner shall supply janitorial, manpower and sanitation services to Robinsons Place Ermita Mall for a period of one year -from January 1, 2008 to December 31, 2008.9 Pursuant to this, the respondents were deployed to Robinsons.

Halfway through the service contract, the petitioner asked the respondents to execute individual contracts which stipulated that their respective employments shall end on December 31, 2008, unless earlier terminated.10

The petitioner and Robinsons no longer extended their contract of janitorial services. Consequently, the petitioner dismissed the respondents as they were project employees whose duration of employment was dependent on the petitioner's service contract with Robinsons.

The respondents responded to the termination of their employment by filing a complaint for illegal dismissal with the NLRC. They argued that they were not project employees; they were regular employees who may only be dismissed for just or authorized causes.

ISSUE: Whether the petitioner's regular employees, who are entitled to all the rights and benefits of regular employment.

RULING: Yes. A careful look at the factual circumstances of this case leads us to the legal conclusion that the respondents are regular and not project employees.

The primary standard in determining regular employment is the reasonable connection between the particular activity performed by the employee and the employer's business or trade. This connection can be ascertained by considering the nature of the work performed and its relation to the scheme of the particular business, or the trade in its entirety.25cralawred

Guided by this test, we conclude that the respondents' work as janitors, service crews and sanitation aides, are necessary or desirable to the petitioner's business of providing janitorial and manpower services to its clients as an independent contractor.

Lastly, under Department Order (DO) 18-02,27 the applicable labor issuance to the petitioner's case, the contractor or subcontractor is considered as the employer of the contractual employee for purposes of enforcing the provisions of the Labor Code and other social legislation.28

DO 18-02 grants contractual employees all the rights and privileges due a regular employee, including the following: (a) safe and healthful working conditions; (b) labor standards such as service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and separation pay; (c) social security and welfare benefits; (d) self-organization, collective bargaining and peaceful concerted action; and (e) security of tenure.


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73. FONTERRA BRAND PHILS VS LARGADO ET AL GR. NO. 205300, MARCH 18, 2015

FACTS: Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing and Promotions Corp. (Zytron) for the marketing and promotion of its milk and dairy products. Pursuant to the contract, Zytron provided Fonterra with trade merchandising representatives (TMRs), including respondents Leonardo Largado (Largado) and Teotimo Estrellado (Estrellado). The engagement of their services began on September 15, 2003 and May 27, 2002, respectively, and ended on June 6, 2006.

On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions contract, effective June 5, 2006. Fonterra then entered into an agreement for manpower supply with A.C. Sicat Marketing and Promotional Services (A.C. Sicat). Desirous of continuing their work as TMRs, respondents submitted their job applications with A.C. Sicat, which hired them for a term of five (5) months, beginning June 7, 2006 up to November 6, 2006.

When respondents’ 5-month contracts with A.C. Sicat were about to expire, they allegedly sought renewal thereof, but wereallegedly refused. This prompted respondents to file complaints for illegal dismissal, regularization, non-payment of service incentive leave and 13th month pay, and actual and moral damages, against petitioner, Zytron, and A.C. Sicat.

ISSUE: Whether or not Zytron and A.C. Sicat are labor-only contractors, making Fonterra the employer of herein respondents

RULING: Yes. As correctly held by the Labor Arbiter and the NLRC, the termination of respondents’ employment with Zytron was brought about by the cessation of their contracts with the latter. We give credence to the Labor Arbiter’s conclusion that respondents were the ones who refused to renew their contracts with Zytron, and the NLRC’s finding that they themselves acquiesced to their transfer to A.C. Sicat.

By refusing to renew their contracts with Zytron, respondents effectively resigned from the latter. Resignation is the voluntary act of employees who are compelled by personal reasons to dissociate themselves from their employment, done with the intention of relinquishing an office, accompanied by the act of abandonment.5chanroblesvirtuallawlibra

Here, it is obvious that respondents were no longer interested in continuing their employment with Zytron. Their voluntary refusal to renew their contracts was brought about by their desire to continue their assignment in Fonterra which could not happen in view of the conclusion of Zytron’s contract with Fonterra. Hence, to be able to continue with their assignment, they applied for work with A.C. Sicat with the hope that they will be able to continue rendering services as TMRs at Fonterra since A.C. Sicat is Fonterra’s new manpower supplier.

In short, respondents voluntarily terminated their employment with Zytron by refusing to renew their employment contracts with the latter, applying with A.C. Sicat, and working as the latter’s employees, thereby abandoning their previous employment with Zytron. Too, it is well to mention that for obvious reasons, resignation is inconsistent with illegal dismissal.

In this regard, We defer to the findings of the CA anent A.C. Sicat’s status as a legitimate job contractor, seeing that it is consistent with the rules on job contracting and is sufficiently supported by the evidence on record.


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74. DBP vs. NLRC, 242 SCRA 59 [1995]

Facts: In September 1983, petitioner Development Bank

of the Philippines, as mortgagee of TPWII, foreclosed its plant facilities and equipment. Nevertheless, TPWII continued its business operations interrupted only by brief shutdowns for the purpose of servicing its plant facilities and equipment. In January 1986 petitioner took possession of the foreclosed properties. From then on the company ceased its operations. As a consequence private respondent Leonor A. Ang was on 15 April 1986 verbally terminated from the service.

After hearing on a complaint for separation pay, 13th month pay, vacation and sick leave pay, salaries and allowances against TPWII, its General Manager, and petitioner, the Labor Arbiter found TPWII primarily liable to private respondent but only for her separation pay and vacation and sick leave pay because her claims for unpaid wages and 13th month pay were later paid after the complaint was filed. The General Manager was absolved of any liability. But with respect to petitioner, it was held subsidiarily liable in the event the company failed to satisfy the judgment. The Labor Arbiter rationalized that the right of an employee to be paid benefits due him from the properties of his employer is superior to the right of the latter's mortgagee, citing this Court's resolution in PNB v. Delta Motor Workers Union.

On 16 November 1992 public respondent National Labor Relations Commission affirmed the ruling of the Labor Arbiter.Petitioner argues that the decision of public respondent runs counter to the consistent rulings of this Court in a long line of cases emphasizing that the applicant of Art. 110 of the Labor Code is contingent upon the institution of bankruptcy or judicial liquidation proceedings against the employer.

Issue: Whether or not Art. 110 of the Labor Code, as

amended, which refers to worker preference in case of bankruptcy or liquidation of an employer's business, is applicable to the present case notwithstanding the absence of any formal declaration of bankruptcy or judicial liquidation of TPWII. In other words, is declaration of bankruptcy or judicial liquidation required before the worker's preference may be invoked under Art. 110 of the Labor Code?

Ruling: Article 110 is NOT applicable in the absence of any formal declaration of bankruptcy or judicial liquidation of TPWII.We hold that public respondent gravely abused its discretion in affirming the decision of the Labor Arbiter. Art. 110 should not be treated apart from other laws but applied in conjunction with the pertinent provisions of the Civil Code and the Insolvency Law to the extent that piece-meal distribution of the assets of the debtor is avoided. Art. 110, then prevailing, provides:

ARTICLE 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision to the contrary notwithstanding. Unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.

Complementing Art. 110, Sec. 10, Rule VIII, Book III, of the Revised Rules and Regulations Implementing the Labor Code provides:

SECTION 10. Payment of wages in case of bankruptcy. — Unpaid wages earned by the employees before the declaration of bankruptcy or judicial liquidation of the employer's business shall be given first preference and shall be paid in full before other creditors may establish any claim to a share in the assets of the employer.

We interpreted this provision in Development Bank of the Philippines v. Santos to mean that —. . . a declaration of bankruptcy or a judicial liquidation must be present before the worker's preference may be enforced. Thus, Article 110 of the Labor Code and its implementing rule cannot be invoked by the respondents in this case absent a formal declaration of bankruptcy or a liquidation order . . .

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

ARTICLE 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid.

Obviously, the amendment expanded the concept of "worker preference" to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed


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subordinate. The Rules and Regulations Implementing R.A. 6715, approved 24 May 1989, also amended the corresponding implementing rule, and now reads:

SECTION 10. Payment of wages and other monetary claims in case of bankruptcy. — In case of bankruptcy or liquidation of the employer's business, the unpaid wages and other monetary claims of the employees shall be given first preference and shall be paid in full before the claims of government and other creditors may be paid.

Although the terms "declaration" (of bankruptcy) or "judicial" (liquidation) have been notably eliminated, still in Development Bank of the Philippines v. NLRC , this Court did not alter its original position that the right to preference given to workers under Art. 110 cannot exist in any effective way prior to the time of its presentation in distribution proceedings. In effect, we reiterated our previous interpretation in Development Bank of the Philippines v. Santos where we said:

It (worker preference) will find application when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the 'claims of the Government and other creditors' may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Thereby, an orderly determination of preference of creditors' claims is assured (Philippine Savings Bank vs. Lantin, No. L-33929, September 2, 1983, 124 SCRA 476); the adjudication made will be binding on all parties-in-interest since those proceedings are proceedings in rem; and the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code is preserved in harmony.

In ruling, as we did, in Development Bank of the Philippines v. Santos, we took into account the following pronouncements: In the event of insolvency, a principal objective should be to effect an equitable distribution of the insolvent's property among his creditors. To accomplish this there must first be some proceeding where notice to all of the insolvent's creditors may be given and where the claims of preferred creditors may be bindingly adjudicated. The rationale therefore has been expressed in the recent case of DBP v. Secretary of Labor (G.R. No. 79351, 28 November 1989), which we quote:

A preference of credit bestows upon the preferred creditor an advantage of having his credit satisfied first ahead of other claims which

may be established against the debtor. Logically, it becomes material only when the properties and assets of the debtors are insufficient to pay his debts in full; for if the debtor is amply able to pay his various creditors in full, how can the necessity exist to determine which of his creditors shall be paid first or whether they shall be paid out of the proceeds of the sale (of) the debtor's specific property. Indubitably, the preferential right of credit attains significance only after the properties of the debtor have been inventoried and liquidated, and the claims held by his various creditors have been established. In the present case, there is as yet no declaration

of bankruptcy nor judicial liquidation of TPWII. Hence, it would be premature to enforce the worker's preference. The additional ratiocination of public respondent that "under Article 110 of the Labor Code complainant enjoys a preference of credit over the properties of TPWII being held in possession by DBP," is a dismal misconception of the nature of preference of credit.

The DBP anchors its claims on a mortgage credit. A mortgage directly and immediately subjects the property upon which it is imposed, whoever the possessor may be, to the fulfillment of the obligation for whose security it was constituted (Article 2176, Civil Code). It creates a real right which is enforceable against the whole world. It is a lien on an identified immovable property, which a preference is not. A recorded mortgage credit is a special preferred credit under Article 2242 (5) of the Civil Code on classification of credits. The preference given by Article 110, when not falling within Article 2241 (6) and Article 2242 (3) of the Civil Code and not attached to any specific property, is an ordinary preferred credit although its impact is to move it from second priority to first priority in order of preference established by Article 2244 of the Civil Code.

The present controversy could have been easily settled by public respondent had it referred to ample jurisprudence which already provides the solution. Stare decisis et non quietamovere. Once a case is decided by this Court as the final arbiter of any justiciable controversy one way, then another case involving exactly the same point at issue should be decided in the same manner. Public respondent had no choice on the matter. It could not have ruled any other way. This Court having spoken in a string of cases against public respondent, its duty is simply to obey judicial precedents. Any further disregard, if not defiance, of our rulings will be considered a ground to hold public respondent in contempt.


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75. BATONGBUHAY GOLD MINES VS. DE LA SERNA G.R. NO. 86963 AUGUST 6, 1999

Facts:On February 5, 1987, respondents Ty,

Mendelebar, Reyes and 1,247 others filed a complaint against BatongBuhay Gold Mines, Inc. for:

(1) Non-payment of their basic pay and allowances for the period of July 1983 to July 1984, inclusive, under Wage Order No. 2;

(2) Non-payment of their basic pay and allowances for the period June 1984 to October 1986, inclusive under Wage Order No. 5;

(3) Non-payment of their salaries for the period March 1986 to the present;

(4) Non-payment of their 13th month pay for 1985, 1986 and 1987;

(5) Non-payment of their vacation and sick leave, and the compensatory leaves of mine site employees; and

(6) Non-payment of the salaries of employees who were placed on forced leaves since November, 1985 to the present, if this is not feasible, the affected employees be awarded corresponding separation pay.

On February 27, 1987, the complainants filed a Motion for the issuance of an inspection authority. After said inspection, the Labor Standards and Welfare Officers submitted their report with the recommendations that an Order of Compliance be issued directing BatongBuhay Gold Mines Inc. to pay complainants' Elsie Rosalina Ty, et al. P4,818,746.40 by way of unpaid salaries of workers from March 16, 1987 to present, unpaid and ECOLA differentials under Wage Order Nos. 2 and 5 unpaid 13th months pay for 1985 and 1986, and unpaid (sic) vacation/sick/compensatory leave benefits.

RD adopted recommendation of LSWOs. Complainant filed an ex-parte motion for issuance of a writ of execution and appointment of special sheriff. The Regional Director issued an Order directing BBGMI to put up a cash or surety bond otherwise a writ of execution will be issued. Respondent, however, failed to do so and RD appointed a special sheriff thereafter to collect amount from respondent. The Special Sheriff proceeded to execute the order

and seized properties by respondent and sold them at public auction.

On December 1987, BBGMI finally posted a supersedeas bond which prompted this Office to issue an Order restraining the complainants and Sheriff Ramos from enforcing the writ of execution. Herein petitioner appealed the Order dated July 31, 1987 of Regional Director Luna C. Piezas to respondent Undersecretary Dionisio de la Serna, contending that the Regional Director had no jurisdiction over the case. But the respondent upheld the jurisdiction of the Regional Director and annulled all the auction sales conducted by Special Sheriff John Ramos.

Issues:

Whether the Regional Director has jurisdiction over the complaint filed by the employees of BBGMI

SC Ruling:

(1) YES. The Regional Director has jurisdiction over the BBGMI employees who are the complainants in Case Number NCR-LSED-CI-2047-87. The subject labor standards case of the petition arose from the visitorial and enforcement powers by the Regional Director of Department of Labor and Employment (DOLE). Labor standards cases are governed by Article 128(b) of the Labor Code. As can be gleaned from the records on hand, subject labor standards case was filed on February 5, 1987 at which time Article 128 (b) read as follows:

Art. 128 (b) Visitorial and enforcement powers.(b) The Minister of Labor or his duly authorized representative shall have the power to order and administer, after due notice and hearing, compliance with the labor standards provisions of this Code based on the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection.

Respondent Undersecretary Dionisio C. DelaSerna, upheld the jurisdiction of Regional Director Luna C. Piezas by relying on Sec 2 of E.O. 111, which states:

The provisions of article 217 of this code to the contrary notwithstanding and in cases where the relationship of employer-employee still exists, the Minister of Labor and Employment or his duly authorized representative shall


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have the power to order and administer, after due notice and hearing, compliance with the labor standards provision of this Code based on the findings of the findings of labor regulation officers or industrial safety engineers made in the course of inspection, and to issue writs of execution to the appropriate authority for the enforcement of their order, except in cases where the employer contests the findings of the labor regulations officers and raises issues which cannot be resolved without considering evidentiary matters that are not verifiable in the ordinary course of inspection.

The Court would have ruled differently had the petitioner shown that subject labor standards case is within the purview of the exception clause in Article 128 (b) of the Labor Code. Said provision requires the concurrence of the following elements in order to divest the Regional Director or his representatives of jurisdiction, to wit: (a) that the petitioner (employer) contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection.

Nowhere in the records does it appear that the petitioner alleged any of the aforestated grounds. The only instance when there was a semblance of raising the aforestated grounds, was when they filed an Appeal Memorandum wherein petitioner comes up with the defense that the Regional Director was without jurisdiction, as employer-employee relationship was absent, since petitioner had ceased doing business since 1985.

Records indicate that the Labor Standards and Welfare Officers, pursuant to Complaint Inspection Authority No. CI-2-047-87, were not allowed to look into records, vouchers and other related documents. The officers of the petitioner alleged that the company is presently under receivership of the Development Bank of the Philippines. In lieu of this, the Regional Director had ordered that a summary investigation be conducted. Despite proper notices, the petitioner refused to appear before the Regional Director. To give it another chance, an order to file its position paper was issued to substantiate its defenses. Notwithstanding all these opportunities to be heard, petitioner chose not to avail of such.

As held in the case of M. Ramirez Industries vs. Sec. of Labor and Employment, . . .Under Art. 128(a) of the Labor Code, the Secretary of Labor of his duly authorized representatives, such as the Regional Directors, has visitorial powers which authorize him to inspect the records and premises of an

employer at any time of the day or night whenever work is being undertaken therein, to question any employee and investigate any fact, condition or matter, and to determine violations of labor laws, wage orders or rules and regulations. If the employer refuses to attend the inspection or conference or to submit any record, such as payrolls and daily time records, he will be deemed to have waived his right to present evidence.

Petitioner's refusal to allow the Labor Standards and Welfare Officers to conduct inspection in the premises of their head office in Makati and the failure to file their position paper is equivalent to a waiver of its right to contest the claims of the employees. This Court had occasion to hold there is no violation of due process where the Regional Director merely required the submission of position papers and resolved the case summarily thereafter. Furthermore, the issuance of the compliance order was well within the jurisdiction of the Regional Director, as Section 14 of the Rules on the Disposition of Labor Standards Cases provides:Sec. 14.Failure to Appear. Where the employer or the complainant fails or refuses to appear during the investigation, despite proper notice, for two (2) consecutive hearings without justifiable reasons, the hearing officer may recommend to the Regional Director the issuance of a compliance order based on the evidence at hand or an order of dismissal of the complaint as the case may be.

It bears stressing that this petition involves a labor standards case and it is in keeping with the law that "the worker need not litigate to get what legally belongs to him, for the whole enforcement machinery of the Department of Labor exists to insure its expeditious delivery to him free of charge." Thus, their claim of closure for business, among other things, are factual issues which cannot be brought here for the first time. As petitioner refused to participate in the proceedings below where it could have ventilated the appropriate defenses, to do so in this petition is unavailing. The reason for this is that factual issues are not proper subjects of a special civil action for certiorari to the Supreme Court. It is therefore abundantly clear that at the time of the filing of the claims of petitioner's employees, the Regional Director was already exercising visitorial and enforcement powers.

The present law, RA 7730, can be considered a curative statute to reinforce the conclusion that the Regional Director has jurisdiction over the present labor standards case. Republic Act 7730, the law governing the


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visitorial and enforcement powers of the Labor Secretary and his representatives reads:Art. 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. The Secretary or his duly authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

76. ABUNDIO BARAYOGA and BISUDECO-PHILSUCORCORFARM WORKERS UNION (PACIWU CHAP-TPC) v. ASSET PRIVATIZATION

G.R. No. 160073; October 24, 2005

Facts: Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar Development Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili, Camarines Sur. Asset Privatization Trust (APT), a public trust was created under Proclamation No. 50, as amended, mandated to take title to and possession of, conserve, provisionally manage and dispose of non-performing assets of the Philippine government identified for privatization or disposition. Pursuant to Section 23 of Proclamation No. 50, former President Corazon Aquino issued Administrative Order No. 14identifying certain assets of government institutions that were to be transferred to the National Government. Among the assets transferred was the financial claim of the Philippine National Bank

against BISUDECO in the form of a secured loan. Consequently, by virtue of a Trust Agreement executed between the National Government and APT on February 27, 1987, APT was constituted as trustee over BISUDECO‟s account with the PNB.

Sometime later, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor) to take over the management of the sugar plantation and milling operations until August 31, 1992.Meanwhile, because of the continued failure of BISUDECO to pay its outstanding loan with PNB, its mortgaged properties were foreclosed and subsequently sold in a public auction to APT, as the sole bidder. On April 2, 1991, APT was issued a Sheriff’s Certificate of Sale.

The union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages and other labor standard benefits plus damages. In the meantime, APT’s Board of Trustees issued a resolution accepting the offer of Bicol-Agro-Industrial Cooperative (BAPCI) to buy the sugar plantation and mill. Again, on September 23, 1992, the board passed another resolution authorizing the payment of separation benefits to BISUDECO’s employees in the event of the company’s privatization.

Then, on October 30, 1992, BAPCI purchased the foreclosed assets of BISUDECO from APT and took over its sugar milling operations under the trade name Peafrancia Sugar Mill (Pensumil). The union alleged that when Philsucor initially took over the operations of the company, it retained BISUDECO’s existing personnel under the same terms and conditions of employment. Nonetheless, at the start of the season sometime in May1991, Philsucor started recalling workers back to work, to the exception of the union members. Management told them thatthey will be re-hired only if they resign from the union. Just the same, thereafter, the company started to employ the services of outsiders under the pakyaw system.

Issue: whether APT is liable to pay petitioners’ monetary claims, including back wages from May 1, 1991, to October 30, 1992 (the date of the sale of BISUDECO assets to BAPCI).

Held: No. Pursuant to Administrative Order No. 14, Series of 1987, PNB’s assets, loans and receivables from its borrowers were transferred to APT as trustee of the national government. Among the liabilities transferred to APT was PNB’s financial claim against BISUDECO, not the latter’s assets and chattel. BISUDECO remained the owner of the mortgaged properties in August 1988, when the Philippine Sugar Corporation (Philsucor) undertook the operation and management of the sugar plantation until August 31, 1992, under a so-called Contract of Lease between the two corporations. At the time, APT was merely a secured creditor of BISUDECO.


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77. G.R. 166996 FEBRUARY 6, 2007PHILIPPINE AIRLINES VS ZAMORA

FACTS:

Respondent Zamora had been in the employ of petitioner PAL since 9 February 1981 when the former was hired as a Cargo Representative at petitioner PAL’s Import Operations Division. Respondent Zamora was then dismissed from service for having been found by petitioner PAL’s management to be liable for insubordination, neglect of customer, disrespect for authority and absence without official leave.

On 12 March 1996, respondent Zamora filed a complaint against petitioners PAL and Francisco X. Yngente IV before the NLRC for illegal dismissal, unfair labor practice, non-payment of wages, damages and attorney’s fees

On 1 February 2005, the Court of Appeals promulgated an Amended Decision modifying its 13 August 2004 Decision but at the same time resolving petitioner PAL's Motion for Reconsideration in this wise: WHEREFORE, this Court's August 13, 2004 decision is hereby AMENDED, the dispositive portion to read as follows:

WHEREFORE, in view of the foregoing, the petition is GRANTED. The NLRC resolution dated April 27, 2001 is MODIFIED. Considering that petitioner is a detention prisoner making reinstatement impossible, PAL is hereby ordered to pay petitioner Zamora his separation pay, in lieu of reinstatement, to be computed at one month salary for every year of service from February 9, 1981 and back wages to be computed from December 19, 1995, both up to October 1, 2000, the date of his incarceration.

Considering that PAL is still under receivership, the monetary claims of petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits. The Court of Appeals took into account respondent Zamora's incarceration when it recalled its order of reinstatement. Anent its earlier pronouncement against the suspension of the proceedings of the case owing to the present rehabilitation of petitioner PAL, the appellate court only had this to say: However, since PAL is still under receivership, the provisions of PD 902-A, should apply. The enforcement of the monetary claims of petitioner should be brought before the PAL Rehabilitation Receiver for proper disposition.

ISSUE:WON respondent Zamora’s monetary claim should be presented to the PAL rehabilitation receiver, subject to the rules on preference of credits

RULING:

No. The relevant law dealing with the suspension of actions for claims against corporations is Presidential Decree No. 902-A, 52 as amended. The term "claim," as contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers "to debts or demands of a pecuniary nature. It means 'the assertion of a right to have money paid.

It is plain from the foregoing provisions of law that "upon the appointment [by the SEC] of a management committee or a rehabilitation receiver" all actions for claims against the corporation pending before any court, tribunal or board shall ipso jure be suspended.

The law is clear: upon the creation of a management committee or the appointment of a rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions, neither should this Court.


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Otherwise stated, no other action may be taken in, including the rendition of judgment during the state of suspension— what are automatically stayed or suspended are the proceedings of an action or suit and not just the payment of claims during the execution stage after the case had become final and executory.

The suspension of action for claims against a corporation under rehabilitation receiver or management committee embraces all phases of the suit, be it before the trial court or any tribunal or before this Court. Furthermore, the actions that are suspended cover all claims against a distressed corporation whether for damages founded on a breach of contract of carriage, labor cases, collection suits or any other claims of a pecuniary nature. As to the appellate court's amended directive that "the monetary claims of petitioner Zamora must be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits," the same is erroneous for there has been no declaration of bankruptcy or judicial liquidation. Thus, the rules on preference of credits do not apply.

78. PAL VS. PALEA G.R. NO. 142399 JUNE 19, 2007

Facts:

This case arose from a labor Complaint, filed by herein PALEA against herein PAL and one Mary Anne del Rosario, Director of Personnel, PAL, on 1 March 1989, charging them with unfair labor practice for the non-payment of 13th month pay of employees who had not been regularized as of the 30th of April 1988, as allegedly stipulated in the Collective Bargaining Agreement (CBA) entered into by herein parties.the facts are:On 6 February 1987, herein parties, PAL and PALEA, the collective bargaining agent of the rank and file employees of PAL, entered into a CBA that was to cover the period of 1986 – 1989. Part of said agreement required PAL to pay its rank and file employees the following bonuses:

Section 4 – 13th Month Pay (Mid-year Bonus)

A 13th month pay, equivalent to one month's current basic pay, consistent with the existing practice shall be paid in advance in May.Section 5 – Christmas BonusThe equivalent of one month's basic pay as of November 30, shall be paid in December as a Christmas bonus. Payment may be staggered in two (2) stages. It is distinctly understood that nothing herein contained shall be construed to mean that the Company may not at its sole discretion give an additional amount or increase the Christmas bonus.

Prior to the payment of the 13th month pay (mid – year bonus), PAL released an implementing guideline on 22 April 1988. It stated that:

1) Eligibilitya) Ground employees in the general payroll who are regular as of April 30, 1988;b) Other ground employees in the general payroll, not falling within category a) above shall receive their 13th Month Pay on or before December 24, 1988;

2) Amounta) For category a) above, one month basic salary as of April 30, 1988;b) Employees covered under 1 b) above shall be paid not less than 1/12 of their basic salary for every month of service within the calendar year.

3) Payment Date: May 9, 1988 for category 1 a) above.

PALEA assailed the implementation of the foregoing guideline. In response to the above, PAL informed PALEA that rank and file employees who were regularized after 30 April 1988 were not entitled to the 13 th month pay as they were already given the Christmas bonus in December of 1988, per the Implementing Rules of Presidential Decree No. 851. PALEA, disagreeing with PAL, filed a Complaint for unfair labor practice before the NLRC.PAL answered that those rank and file employees who were not regularized by 30 April of a particular year are, in principle, not denied their 13 month pay, considering they receive said mandatory bonus in the form of the Christmas Bonus.The Labor Arbiter rendered his decision dismissing the complaint for lack of merit. The Labor Arbiter ruled that PAL was not guilty of unfair labor practice in withholding the grant of the 13th Month Pay or Mid-Year Bonus, as set out in Section 4 of the CBA, to the concerned employees. The giving of the particular bonus was said to be merely an additional practice made in the past, "such being the case, it violated no agreement or existing practice or committed unfair labor practice, as charged." On appeal to the NLRC, the assailed decision of the Labor Arbiter was reversed.Undaunted, PAL went to this Court via a Petition for Review on Certiorari, however, the petition was referred to the Court of Appeals for proper resolution.


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The Court of Appeals promulgated its Decision dismissing the petition filed by PAL. It affirmed the 28 January 1998 NLRC Resolution.Hence, this Petition for Review on Certiorari.Issue:Can a court or quasi-judicial agency amend or alter a Collective Bargaining Agreement by expanding its coverage to non-regular employees who are not covered by the bargaining unit?"Ruling:The Securities and Exchange Commission (SEC) had mandated the rehabilitation of PAL. Thus, PAL is still undergoing rehabilitation.The pertinent law concerning the suspension of actions for claims against corporations due to its rehabilitation is Presidential Decree No. 902-A, as amended.The aforementioned law provides that SEC assumes jurisdiction in cases where the corporation is undergoing rehabilitation with pending money claims against the corporation. The underlying principle behind the suspension of claims pending rehabilitation proceedings was explained in the case of BF Homes, Incorporated v. Court of Appeals:“the real justification is to enable the management committee or rehabilitation receiver to effectively exercise its/his powers free from any judicial or extra-judicial interference that might unduly hinder or prevent the "rescue" of the debtor company. To allow such other action to continue would only add to the burden of the management committee or rehabilitation receiver, whose time, effort and resources would be wasted in defending claims against the corporation instead of being directed toward its restructuring and rehabilitation.”The Supreme Court citing Rubberworld vs. NLRC said:“we held that worker's claims before the NLRC and labor arbiters are included among the actions suspended upon the placing under receivership of the employer-corporations. Although strictly speaking, the ruling in Rubberworld dealt with actions for claims pending before the NLRC and labor arbiters, we find that the rationale for the automatic suspension therein set out would apply to the instant case where the employee's claim was elevated on certiorari before this Court”In another PAL case, specifically, Philippine Airlines, Inc. v. Court of Appeal, the SC held that:“that this Court is "not prepared to depart from the well-established doctrines" essentially maintaining that all actions for claims against a corporation pending before any court, tribunal or board shall ipso jure be suspended in whatever stage such actions may be found upon the appointment by the SEC of a management committee or a rehabilitation receiver.”In view of the ongoing rehabilitation of petitioner Philippine Airlines, Inc., herein proceedings are heretoforeSUSPENDED

79. GARCIA VS. PHIL. AIR LINES, G.R. NO. 164856, JANUARY 20, 2009

Facts:

The case stemmed from the administrative charge filed by PAL against its employees-herein petitioners3 after they were allegedly caught in the act of sniffing shabu when a team of company security personnel and law enforcers raided the PAL Technical Center’s Toolroom Section on July 24, 1995.After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL Code of Discipline, prompting them to file a complaint for illegal dismissal and damages resolved by the Labor Arbiter in their favor, thus ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the decision.Prior to the promulgation of the Labor Arbiter’s decision, the Securities and Exchange Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering from severe financial losses, under an Interim Rehabilitation Receiver, who was subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.The Labor Arbiter issued a Writ of Execution (Writ) respecting therein statement aspect of his January 11, 1999 Decision, and on October 25, 2000, he issued a Notice of Garnishment (Notice). Respondent thereupon moved to quash the Writ and to lift the Notice while petitioners moved to release the garnished amount.

Issue:1. Whether petitioners may collect their wages

during the period between the Labor Arbiter’s order of reinstatement pending appeal and the NLRC decision overturning that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings.

2. WON peculiar predicament of a corporate rehabilitation rendered it impossible for respondent to exercise its option under the circumstances.

Ruling:86. The decision of the Labor Arbiter reinstating a

dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.

The view as maintained in a number of cases is that:x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more so if he actually rendered services during the period.In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon reinstatement, which is


http://www.lawphil.net/judjuris/juri2009/jan2009/gr_164856_2009.html#fnt3

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immediately executory. Unless there is a restraining order, it is ministerial upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith.The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. It settles the view that the Labor Arbiter's order of reinstatement is immediately executory and the employer has to either re-admit them to work under the same terms and conditions prevailing prior to their dismissal, or to reinstate them in the payroll, and that failing to exercise the options in the alternative, employer must pay the employee’s salaries.

87. The spirit of the rule on reinstatement pending appeal animates the proceedings once the Labor Arbiter issues the decision containing an order of reinstatement. The immediacy of its execution needs no further elaboration.Reinstatement pending appeal necessitates its immediate execution during the pendency of the appeal, if the law is to serve its noble purpose. At the same time, any attempt on the part of the employer to evade or delay its execution, as observed in Panuncillo and as what actually transpired in Kimberly, Composite, Air Philippines, and Roquero, should not be countenanced.

After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the reinstatement pending appeal was without fault on the part of the employer.The test is two-fold: (1) there must be actual delay or the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must not be due to the employer’s unjustified act or omission. If the delay is due to the employer’s unjustified refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiter’s decision.The new NLRC Rules of Procedure, which took effect on January 7, 2006, now require the employer to submit areport of compliance within 10 calendar days from receipt of the Labor Arbiter’s decision, disobedience to which clearly denotes a refusal to reinstate. The employee need not file a motion for the issuance of the writ of execution since the Labor Arbiter shall thereafter motu proprio issue the writ. With the new rules in place, there is hardly any difficulty in determining the employer’s intransigence in immediately complying with the order.In the case at bar, petitioners exerted efforts to execute the Labor Arbiter’s order of reinstatement until they were able to secure a writ of execution, albeit issued on October 5, 2000 after the reversal by the NLRC of the Labor Arbiter’s decision. Technically, there was still actual delay which brings to the question of whether the delay was due to respondent’s unjustified act or omission.It is apparent that there was inaction on the part of respondent to reinstate them, but whether such omission

was justified depends on the onset of the exigency of corporate rehabilitation.It is settled that upon appointment by the SEC of a rehabilitation receiver, all actions for claims before any court, tribunal or board against the corporation shall ipso jure be suspended. As stated early on, during the pendency of petitioners’ complaint before the Labor Arbiter, the SEC placed respondent under an Interim Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation Receiver.Case law recognizes that unless there is a restraining order, the implementation of the order of reinstatement is ministerial and mandatory. This injunction or suspension of claims by legislative fiat partakes of the nature of a restraining order that constitutes a legal justification for respondent’s non-compliance with the reinstatement order. Respondent’s failure to exercise the alternative options of actual reinstatement and payroll reinstatement was thus justified. Such being the case, respondent’s obligation to pay the salaries pending appeal, as the normal effect of the non-exercise of the options, did not attach.While reinstatement pending appeal aims to avert the continuing threat or danger to the survival or even the life of the dismissed employee and his family, it does not contemplate the period when the employer-corporation itself is similarly in a judicially monitored state of being resuscitated in order to survive.The parallelism between a judicial order of corporation rehabilitation as a justification for the non-exercise of its options, on the one hand, and a claim of actual and imminent substantial losses as ground for retrenchment, on the other hand, stops at the red line on the financial statements.More importantly, there are legal effects arising from a judicial order placing a corporation under rehabilitation. Respondent was, during the period material to the case, effectively deprived of the alternative choices under Article 223 of the Labor Code, not only by virtue of the statutory injunction but also in view of the interim relinquishment of management control to give way to the full exercise of the powers of the rehabilitation receiver. Had there been no need to rehabilitate, respondent may have opted for actual physical reinstatement pending appeal to optimize the utilization of resources. Then again, though the management may think this wise, the rehabilitation receiver may decide otherwise, not to mention the subsistence of the injunction on claims.In sum, the obligation to pay the employee’s salaries upon the employer’s failure to exercise the alternative options under Article 223 of the Labor Code is not a hard and fast rule, considering the inherent constraints of corporate rehabilitation


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80. BANK OF THE PHILIPPINES ISLAND VS. NLRC, 171 SCRA 556

Facts:

On March 22, 1983, the NLRC resolved the bargaining deadlock between BPI and its employees by fixing the wage increases and other economic benefits and ordering them to be embodied in a new collective bargaining agreement to be concluded by BPIEU-Metro Manila and ALU with BPI. It did not decide the intra-union dispute, however, holding that this was under the original jurisdiction of the med-arbiter and the exclusive appellate jurisdiction of the Bureau of Labor Relations.

Following the promulgation by the NLRC of its decision of March 23, 1983, in Certified Cases Nos. 0279 and 0281, private respondent Ignacio Lacsina filed a motion for the entry of attorney's lien for legal services to be rendered by him as counsel of BPIEU in the negotiation of the new collective bargaining agreement with BPI.The basis of this motion was a resolution dated August 26, 1982, signed by members of the BPI Employees Union, providing for the terms and conditions, including attorney’s fees and his authority to check-off with the company.

Accordingly, BPI deducted the amount of P200.00 from each of the employees who had signed the authorization. Upon learning about this, the petitioners (ALU and BPIEU-ALU) challenged the said order, on the ground that it was not authorized under the Labor Code.

On April 15, 1983, the NLRC issued a resolution setting aside the order and requiring BPI to safe-keep the amounts sought to be deducted "until the rights thereto of the interested parties shall have been determined in appropriate proceedings. Subsequently, the NLRC issued an en banc resolution dated September 27, 1983, ordering the release to Lacsina of the amounts deducted "except with respect to any portion thereof as to which no individual signed authorization has been given by the members concerned or where such authorization has been withdrawn.

The petitioners now impugn this order as contrary to the provisions and spirit of the Labor Code. While conceding that Lacsina is entitled to payment for his legal services, they argue that this must be made not by the individual workers directly, as this is prohibited by law, but by the union itself from its own funds. In support of this contention, they invoke Article 222(b) of the Labor Code, providing as follows:

Art. 222. Appearances and Fees.(b) No attorney's fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusions of the collective agreement shall be imposed on any individual member of the contracting union: Provided, however, that attorney’s fees may be charged against union funds in an amount to be

agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void.

They also cite the case of Pacific Banking Corporation v. Clave, where the lawyer's fee was taken not from the total economic benefits received by the workers but from the funds of their labor union.

Issue:

Is the mentioned Resolution signed by the BPI employees granting attorney’s fees to Lacsina to be deducted from the employees’ wages valid?

Ruling:

Yes. The Court reads the afore-cited provision as prohibiting the payment of attorney's fees only when it is effected through forced contributions from the workers from their own funds as distinguished from the union funds.

The purpose of the provision is to prevent imposition on the workers of the duty to individually contribute their respective shares in the fee to be paid the attorney for his services on behalf of the union in its negotiations with the management. The obligation to pay the attorney's fees belongs to the union and cannot be shunted to the workers as their direct responsibility. Neither the lawyer nor the union itself may require the individual workers to assume the obligation to pay the attorney's fees from their own pockets. So categorical is this intent that the law also makes it clear that any agreement to the contrary shall be null and void ab initio.

We see no such imposition in the case at bar. A reading of the above-cited resolution will clearly show that the signatories thereof have not been in any manner compelled to undertake the obligation they have there assumed. On the contrary, it is plain that they were voluntarily authorizing the check-off of the attorney's fees from their payment of benefits and the turnover to Lacsina of the amounts deducted, conformably to their agreement with him. There is no compulsion here. And significantly, the authorized deductions affected only the workers who adopted and signed the resolution and who were the only ones from whose benefits the deductions were made by BPI. No similar deductions were taken from the other workers who did not sign the resolution and so were not bound by it.

That only those who signed the resolution could be subjected to the authorized deductions was recognized and made clear by the order itself of the NLRC. It was there categorically declared that the check-off could not be made where "no individual signed authorization has been given by the members concerned or where such authorization has been withdrawn.”

The Pacific Banking Corporation case is not applicable to the present case because there was there no similar


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agreement as that entered into between Lacsina and the signatories of the resolution in question. Absent such an agreement, there was no question that the basic proscription in Article 222 would have to operate. It is noteworthy, though, that the Court there impliedly recognized arrangements such as the one at bar with the following significant observation.

Moreover, the case is covered squarely by the mandatory and explicit prescription of Art. 222 which is another guarantee intended to protect the employee against unwarranted practices that would diminish his compensation without his knowledge and consent.

A similar recognition was made in Galvadores v. Trajano, where the payment of the attorney's fees from the wages of the employees was not allowed because: "No check-offs from any amount due to employees may be effected without individual written authorities duly signed by the employees specifically stating the amount, purpose and beneficiary of the deduction. The required individual authorizations in this case are wanting.”

Finally, we hold that the agreement in question is in every respect a valid contract as it satisfies all the elements thereof and does not contravene law, morals, good customs, public order, or public policy. On the contrary, it enables the workers to avail themselves of the services of the lawyer of their choice and confidence under terms mutually acceptable to the parties and, hopefully, also for their mutual benefit.

81. TRADERS ROYAL BANK EMPLOYEES UNION VS. NLRC, 269 SCRA 733 [1997]

Facts: Petitioner Traders Royal Bank Employees Union

and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking to render the services enumerated in their contract. During the existence of that agreement, petitioner union referred to private respondent the claims of its members for holiday, mid-year and year-end bonuses against their employer, Traders Royal Bank (TRB). These employees obtained favorable decision from their complaint which went through the SC.

The Supreme Court, in its decision promulgated on August 30, 1990, modified the decision of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the amount of P175,794.32. Petitioner never contested the amount thus found by TRB. The latter duly paid its concerned employees their respective entitlement in said sum through their payroll. After private respondent received the above decision of the Supreme Court on September 18, 1990, he notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay differential through a letter dated October 8, 1990.

Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay and remit said amount to him. The LA and the NLRC affirmed Atty. Cruz’ motion.

Petitioner union filed a comment and opposition to said motion on July 15, 1991. Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in upholding the award of attorney's fees in the amount of P17,574.43, or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in violation of the retainer agreement; and that the challenged resolution of the NLRC is null and void, for the reasons hereunder stated.

Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the award for attorney' s fees should have been incorporated in the main case and not after the Supreme Court had already reviewed and passed upon the decision of the NLRC. Since the claim for attorney's fees by private respondent was neither taken up nor approved by the Supreme Court, no attorney's fees should have been


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allowed by the NLRC. Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no longer be altered or modified even by the court which rendered the same.

Issue: Whether or not Atty. Cruz is entitled to 10 % of the judgment award as his attorney’s fees even if it was not taken up in the main decision of the SC.

Ruling: Yes, not in the concept contemplatedin Article

111 of the Labor Code. The Labor Arbiter erroneously set the amount of attorney's fees on the basis of Art. 111 of the Labor Code; a hearing should have been conducted for the proper determination of attorney's fees.

There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client.

In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

It is the first type of attorney's fees which private respondent demanded before the labor arbiter. Also, the present controversy stems from petitioner's apparent misperception that the NLRC has jurisdiction over claims for attorney's fees only before its judgment is reviewed and ruled upon by the Supreme Court, and that thereafter the former may no longer entertain claims for attorney's fees. It will be noted that no claim for attorney's fees was filed by private respondent before the NLRC when it acted on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was only after the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed his claim before the NLRC for a percentage thereof as attorney's fees.

It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme Court thereafter to make an award for attorney's fees when no claim therefor was pending before them. Courts generally rule only on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter ordered the payment of attorney's fees, he did not in any way modify the judgment of the Supreme Court.

A CLAIM FOR ATTORNEY'S FEES MAY BE ASSERTED EITHER IN THE VERY ACTION IN WHICH THE SERVICES OF A LAWYER HAD BEEN RENDERED OR IN A SEPARATE ACTION - It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action. Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid. While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client. It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the award's complete resolution. To declare that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements of this Court.

The provisions of the contract entered into between petitioner and respondents are clear and need no further interpretation; all that is required to be done in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement.

The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a special retainer.

RETAINER FEES, GENERAL RETAINER AND A SPECIAL RETAINER— A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the


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remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities. A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer.

THE P3,000.00 MONTHLY FEE PROVIDED IN THE RETAINER AGREEMENT BETWEEN THE UNION AND THE LAW FIRM REFERS TO A GENERAL RETAINER OR A RETAINING FEE. — The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there. We have already shown that the P3,000.00 is independent and different from the compensation which private respondent should receive in payment for his services. While petitioner and private respondent were able to fix a fee for the latter's promise to extend services, they were not able to come into agreement as to the law firm's actual performance of services in favor of the union. Hence, the retainer agreement cannot control the measure of remuneration for private respondent's services.

PRIVATE RESPONDENT'S ENTITLEMENT TO AN ADDITIONAL REMUNERATION FOR SPECIAL SERVICES RENDERED IN THE INTEREST OF PETITIONER IS BASED ON QUASI-CONTRACT. — The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration therefor in favor of the latter. Obligations do not emanate only from contracts. One of the sources of extra-contractual obligations found in our Civil Code is the quasi-contract premised on the Roman maxim that nemo cum alterius detrimento locupletari protest. As embodied in our law, certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. A quasi-contract between the parties in the case at bar arose from private respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the latter's consent and approval. Petitioner cannot deny that it did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay

differential in favor of the union. It cannot even hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount.

THE LABOR ARBITER ERRONEOUSLY SET THE AMOUNT OF ATTORNEY'S FEES ON THE BASIS OF ART. 111 OF THE LABOR CODE; A HEARING SHOULD HAVE BEEN CONDUCTED FOR THE PROPER DETERMINATION OF ATTORNEY'S FEES. - Here, then, is the flaw we find in the award for attorney's fees in favor of private respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of attorney's fees at P17,574.43. As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits the maximum allowable amount of attorney's fees, it does not direct instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees.

As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits the maximum allowable amount of attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such maximum limit.

It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees.


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It is axiomatic that the reasonableness of attorney's fees is a question of fact. Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by private respondent to petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of private respondent. For that purpose, we have duly taken into account the accepted guidelines therefor and so much of the pertinent data as are extant in the records of this case which are assistive in that regard. On such premises and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by private respondent to petitioner before the labor arbiter and the NLRC.

82. BRAHM INDUSTRIES VS. NLRC, 280 SCRA 824 [1997

Facts:

Roberto M. Durian, Jone M. Comendador and Reynaldo C. Gagarino (respondents) filed a case for illegal suspension, illegal dismissal, illegal lay-off, illegal deductions, non-payment of service incentive leave, 13th month pay, and actual, moral and exemplary damages against Brahm Industries, Inc. (BRAHM) before the Labor Arbiter.

The respondents filed their complaints, they alleged therein that they were over worked, they have to work for 7 days, forced to over time for 3 times a week, and that their overtime was based on minimum wage. And without cause and due process the respondents were terminated.

Brahm contended that Gagarino left the company for abroad, and when he returned in the country, he work for another company, and in the case of 2 other respondents, they left the job for inability to account for some tools amounting to 10,000php. Also, Brahm asserted that these respondents were not employees, since they have their own customers and clients, and the character of their work is based upon the availability of projects or it depends if there are contracts for projects such as constructing water purifier or water control devices.

On Feb. 8, 1994, the labor arbiter ruled in favor of the respondents, BRAHM was ordered to reinstate them, pay their back wages and pay their attorneys fees. However, with regards to Gagarino’s case, it was dismissed by the labor arbiter since it was found out that he really left the company for more than 2 years before he filed the complaint. Gagarino did not appeal the order of the labor arbiter.

The decision was appealed by BRAHM to the NLRC with regards to ruling of the labor arbiter which did not favor them. However, NLRC affirmed the ruling of labor arbiter.

This prompted BRAHM to appeal the decision in Supreme Court (SC).

Issue:

Whether or not Durian and Comendador are project employees.

Ruling:

No, they are no project employees.

A project employee is one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the


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employment is for the duration of the season.[6] Before an employee hired on a per project basis can be dismissed, a report must be made to the nearest employment office of the termination of the services of the workers everytime it completed a project, pursuant to Policy Instruction No. 20.

Based on the facts, BRAHM did not follow anything mentioned above and in pursuant to the case of Ochoco v. National Labor Relations Commission, where the SC held that the failure of the employer to follow such rule is a proof that the employee is not a project employee rather a regular employee.

Furthermore, in pursuant to the Art. 280 of the Labor Code which provides:

Art. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: provided, that, any employee who has rendered at least one (1) 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 (underscoring supplied).

Those respondents, namely durian worked for 5 years while comendador worked for 9 years under BRAHM. Mere self serving statements coming from the petitioners will not prove that the respondents are project employees.

Even in the issue of abandonment raised by BRAHM, it doesn’t disprove that they illegally terminate the respondent, sense they did not offer any proof to such issue.

Thus, the petition was dismissed.

83. HEIRS OF ANIBAN VS NLRC, GR 116354, DECEMBER 4, 1997

FACTS:

Reynaldo Aniban was employed by the Philippine Transmarine Carriers, Inc. (TRANSMARINE) as radio operator (R/O) on board the vessel "Kassel" for a contract period of nine (9) to eleven (11) months. During the period of his employment, R/O Aniban died due to myocardial infarction. He was survived by a pregnant wife and three (3) minor children who prayed for death benefits provided under par. (1) of the POEA Standard Employment Contract thus -

1. In case of death of the seaman during the term of his contract, the employer shall pay his beneficicaries the Philippine currency equivalent to the amount of: x x x x b. US$13,000.00 for other officers including radio operators and master electricians.

A claim was also made for additional death benefits under the Collective Bargaining Agreement executed between Associated Marine Officers and Seamen's Union of the Philippines and NORWEGIAN represented by TRANSMARINE, to wit:

Article 11

Compensation for loss of Life

Death caused by an Occupational Injury or Disease. - In the event of death of an officer due to an occupational injury or disease while serving on board, while travelling to and from the vessel on Company's business or due to marine peril, the Company will pay his beneficiaries a compensation in accordance with the POEA's rules and regulations x x x x It is agreed that these beneficiaries will be the following next of kin: The officer's spouse, children or parents in this preferential order.

The company will pay an additional compensation to the beneficiaries listed above with same preferential order to that compensation provided by the POEA Rules and Regulations. The


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additional compensation will be US$30,000.00 plus US$8,000.00 to each child under the age of eighteen (18) years, maximum US$24,000.00 (not exceeding 3 children).

Only $13,000 was granted under the POEA Standard Employment Contract. The claim under the CBA was rejected on the ground that myocardial infarction of which R/O Aniban died was not an occupational disease as to entitle his heirs to the additional death benefits provided therein. Consequently, Brigida Aniban (wife) and her children filed a formal complaint for non-payment of death compensation benefits under the CBA.

ISSUES:

(a) WON the POEA has jurisdiction to determine the claim of petitioners for death benefits---YES

(b) WON myocardial infarction is an occupational disease as to entitle petitioners to the death benefits provided under the CBA. ---YES

HELD:

(a)

It is not disputed that R/O Reynaldo Aniban was a Filipino seaman and that he died on board the vessel of his foreign employer during the existence of his employment contract, hence, this claim for death benefits by his widow and children.

The law applicable at the time the complaint was filed on 13 November 1992 was Art. 20 of the Labor Code as amended by E. O. Nos. 797 and 247 which clearly provided that "original and exclusive jurisdiction over all matters or cases including money claims, involving employer-employee relations, arising out of or by virtue of any law or contract involving Filipino seamen for overseas employment is vested with the POEA.

On the other hand, the jurisdiction of the ECC comes into play only when the liability of the State Insurance Fund is in issue, as correctly suggested by the Solicitor General. The ECC was created under Title II, Bk. IV, of the Labor Code with the heading of Employees Compensation and State Insurance Fund. In addition to its powers and duties enumerated in Art. 177, Art. 180 explicitly provides that the Commission exercises appellate jurisdiction only over decisions rendered by either the Government Service Insurance System (GSIS) or Social Security System (SSS) in the exercise of their respective original and exclusive jurisdictions. Hence, the ECC may not be considered as having jurisdiction over money claims, albeit death compensation benefits, of overseas contract workers. Thus, in so ruling, the NLRC clearly committed grave abuse of discretion.

(b)

The POEA ruled in the affirmative when it likened the infirmity to a "heart attack" commonly aggravated by pressure and strain. It was observed that R/O Aniban, in addition to undergoing physical exertion while performing his duties as radio operator, was also exposed to undue pressure and strain as he was required to be on call twenty-four (24) hours a day to receive/transmit messages and to keep track of weather conditions. Such pressure and strain were aggravated by being away from his family, a plight commonly suffered by all seamen. In the case of R/O Aniban, the separation was particularly distressful as his pregnant wife was due to deliver their fourth child. Hence, the POEA ruled that myocardial infarction was an occupational disease.

We cannot rule otherwise. Reynaldo Aniban was healthy at the time he boarded the vessel of his foreign employer. His medical records reveal that he had no health problem except for a "defective central vision secondary to injury." Hence, he was certified "fit to work as radio operator" by the examining physician. However, R/O Aniban died three (3) months after he boarded "Kassel" due to myocardial infarction. As aforesaid, the POEA ruled that the cause of death could be considered occupational. Being a factual finding by the administrative agency tasked with its determination, such conclusion deserves respect and must be accorded finality. Besides we have already repeatedly ruled that death due to myocardial infarction is compensable. In Eastern Shipping Lines, Inc. v. POEA, although compensability was not the main issue, we upheld the decision of the POEA adjudging as compensable the death of a seaman on board the vessel of his foreign employer due to myocardial infarction.

Although it may be conceded in the instant case that the physical exertion involved in carrying out the functions of a radio operator may have been quite minimal, we cannot discount the pressure and strain that went with the position of radio operator. As radio operator, Reynaldo Aniban had to place his full attention in hearing the exact messages received by the vessel and to relay those that needed to be transmitted to the mainland or to other vessels. We have already recognized that any kind of work or labor produces stress and strain normally resulting in the wear and tear of the human body. It is not required that the occupation be the only cause of the disease as it is enough that the employment contributed even in a small degree to its development.

It must be stressed that the strict rules of evidence are not applicable in claims for compensation considering that probability and not the ultimate degree of certainty is the test of proof in compensation proceedings.

It is a matter of judicial notice that an overseas worker, having to ward off homesickness by reason of being physically separated from his family for the entire duration of his contract, bears a great degree of emotional strain while making an effort to perform his work well. The strain is even greater in the case of a seaman who is constantly subjected to the perils of the sea while at work abroad and away from his family. In this case, there is


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substantial proof that myocardial infarction is an occupational disease for which Aniban's employer obligated itself to pay death benefits and additional compensation under the CBA in the event of the demise of its employee by reason thereof.

84. SAPIO VS. UNDALOC CONSTRUCTION ET AL., G.R. NO. 155034, MAY 22, 2008

Facts:

Petitioner filed against Undaloc Construction and/or Engineer Cirilo Undaloc for illegal dismissal, underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction business in Cebu City.

Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was terminated on the ground that the project he was assigned to was already finished, he being allegedly a project employee. Petitioner asserted he was a regular employee having been engaged to perform works which are “usually necessary or desirable” in respondents’ business. He claimed that from 1 May to 31 August 1995 and from 1 September to 31 December 1995, his daily wage rate was only P80.00 and P90.00, respectively, instead of P121.87 as mandated by Wage Order No. ROVII-03. From 1 March 1996 to 30 May 1998, his daily rate was P105.00. He further alleged that he was made to sign two payroll sheets, the first bearing the actual amount he received wherein his signature was affixed to the last column opposite his name, and the second containing only his name and signature. To buttress this allegation, petitioner presented the payroll sheet covering the period from 4 to 10 December 1995 in which the entries were written in pencil. He also averred that his salary from 18 to 30 May 1998 was withheld by respondents.

Respondent Cirilo Undaloc maintained that petitioner was hired as a project employee on 1 May 1995 and was assigned as watchman from one project to another until the termination of the project on 30 May 1998. Refuting the claim of underpayment, respondent presented the payroll sheets from 2 September to 8 December 1996, 26 May to 15 June 1997, and 12 January to 31 May 1998.On 12 July 1999, the Labor Arbiter rendered a

decision finding complainant to be a project employee and his termination was for an authorized cause. However, respondent is found liable to pay complainant’s salary of P2,648.45 and 13th month pay of P2,489.00. Respondent is also found liable to pay complainant’s salary differential in the amount of P24,902.88. Attorney’s fee of P3,000.00 is also awarded.

Respondents appealed the award of salary differential to the NLRC, which sustained the findings of the Labor Arbiter.

Upon appeal, the Court of Appeals deleted the award of salary differential and attorney’s fees, who did not subscribe to the common findings of the Labor Arbiter and the NLRC. It pointed out that allegations of fraud in the preparation of payroll sheets must be substantiated by evidence and not by mere suspicions or conjectures,Issue:Whether or not petitioner was entitled to the award of salary differential and attorney’s fees.Ruling:

While the SC adhered to the position of the appellate court that the “tendency” to alter the entries in the payrolls was not substantiated, it did subscribe to the total deletion of the award of salary differential and attorney’s fees. The Labor Arbiter erred in his computation, it granted a higher salary differential. He fixed the daily wage rate actually received by petitioner at P105.00 without taking into consideration the P141.00 rate indicated in the typewritten payroll sheets submitted by respondents. Moreover, the Labor Arbiter misapplied the wage orders when he wrongly categorized respondent as falling within the first category. Based on the stipulated number of employees and audited financial statements, respondents should have been covered by the second category (which is lower).

The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00 However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188. Respondents are required to pay double the amount owed to petitioner, bringing their total liability to P13,156.00.

Section 12. Any person, corporation, trust, firm, partnership, association or entity which refuses or fails to pay any of the prescribed increases or adjustments in the wage rates made in accordance with this Act shall be punished by a fine not less than Twenty-five thousand pesos (P25,000.00) nor more than One hundred thousand pesos (P100,000.00) or imprisonment of not less than two (2) years nor more than four (4) years, or both such fine and imprisonment at the discretion of the court: Provided, That any person convicted under this Act shall not be entitled to the benefits provided for under the Probation Law.

The employer concerned shall be ordered to pay an amount equivalent to double the unpaid benefits owing to the employees: Provided, That payment of indemnity shall not absolve the employer from the criminal liability imposable under this Act.

If the violation is committed by a corporation, trust or firm, partnership, association or any other


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entity, the penalty of imprisonment shall be imposed upon the entity’s responsible officers, including, but not limited to, the president, vice president, chief executive officer, general manager, managing director or partner. (Emphasis supplied)

The award of attorney’s fees is warranted under the circumstances of this case. Under Article 2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of wages of laborers and actions for indemnity under employer's liability laws but shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

85. JOSE MAX S. ORTIZ vs. SAN MIGUEL CORPORATION, G.R. Nos. 15198 3-84 July 31, 2008

This case is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to modify or partially reconsider the Decision dated 22 August 2001 and Resolution dated 9 January 2002 of the Court of Appeals in CA-G.R. SP No. 54576-77, insofar as the award of attorney’s fees is concerned. Herein petitioner Jose Max S. Ortiz prays that this Court affirm the award of attorney’s fees equivalent to 10% of the monetary award adjudged by the National Labor Relations Commission (NLRC) in its Decisions dated 21 July 1995 and 25 July 1995 in NLRC Cases No. V-0255-94 and No. V-0068-95, respectively. Petitioner asserts that he is entitled to the said attorney’s fees.

FACTSThe petitioner in this case, Jose Max S. Ortiz, is a

member of the Philippine Bar who represented the complainants in NLRC Cases No. V-0255-94 (hereinafter referred to as the Aguirre Cases) and No. V-0068-95 (hereinafter referred to as the Toquero Case) instituted

against herein private respondent San Miguel Corporation sometime in 1992 and 1993.The respondent is a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines. It is primarily engaged in the manufacture and sale of food and beverage particularly beer products. In line with its business, it operates breweries and sales offices throughout the Philippines.The complainants in NLRC Cases, Aguirre Cases and Toquero Case were employees at private respondent's Sales Offices in the Province of Negros Occidental.

The complainants of Cases, Aguire and Toquero got a favorable decision in NLRC regarding their money claims against San Miguel Corporation. In effect, San Miguel Corporation filed a Petitions for Certiorari. While this respondent’s petitions were pending before the Court of Appeals, all but one of the remaining complainants in Aguirre and Toquero Cases on various dates before two Labor Arbiters and in the presence of two witnesses, signed separate Deeds of Release, Waiver and Quitclaim in favor of private respondent. Based on the Deeds they executed, complainants agreed to settle their claims against private respondent for amounts less than what the NLRC actually awarded. Private respondent withheld 10% of the total amount agreed upon by the parties in the said Deeds as attorney's fees and handed it over to petitioner. Private respondent then attached the Deeds to its Manifestation and Motion filed before the appellate court. Then the Court of appeals rendered a decision affirming the NLRC decisions, only in so far as it concerned complainant Alfredo Gadian, Jr. (complainant Gadian), the only complainant who did not execute a Deed of Release, Waiver and Quitclaim. With respect to the other complainants in the Aguirre and Toquero Cases, their complaints were dismissed on account of their duly executed Deeds of Release, Waiver and Quitclaim. In a Resolution dated 9 January 2002, the appellate court denied the motion of complainant Gadian and his counsel, herein petitioner , that the award of attorney's fees of 10% should be based on the monetary awards adjudged by the NLRC. Thus, this petition filed before the Court praying to affirm the award of attorney's fees equivalent to 10% of the monetary award adjudged by the NLRC in its Decisions dated 21 July 1995 and 25 July 1995 in Toquero Case and Aguirre Cases respectively.

ISSUEWhether he is entitled to the amount of attorney's

fees as adjudged by the NLRC in its Decisions in the Aguirre and Toquero Cases or only to the 10% of the amounts actually paid to his clients, the complainants who signed the Deeds of Release, Waiver and Quitclaim.

RULING

This Court has consistently ruled that a question of law exists when there is a doubt or controversy as to what the law is on a certain state of facts. On the other hand, there is a question of fact when the doubt or difference arises as to the alleged truth or falsehood of the alleged facts. For a question to be one of law, it


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must involve no examination of the probative value of the evidence presented by the litigants or any of them. The test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a question of fact.

The aforesaid issue evidently involves a question of law. What it needs to do is ascertain and apply the relevant law and jurisprudence on the award of attorney's fees to the prevailing parties in labor cases

Article 111 of the Labor Code, as amended, specifically provides: ART. 111. ATTORNEY'S FEES. —(a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered. b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorney's fees which exceed ten percent of the amount of wages recovered.

In PCL Shipping Philippines, Inc. v. National Labor Relations Commission citing Dr. Reyes v. Court of Appeals, this Court enunciated that there are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services the former has rendered to the latter. The basis of this compensation is the fact of the attorney's employment by and his agreement with the client. In its extraordinary concept, attorney's fees are deemed indemnity for damages ordered by the court to be paid by the losing party in a litigation. The instances in which these may be awarded are those enumerated in Article 2208 of the Civil Code, specifically paragraph 7 thereof, which pertains to actions for recovery of wages, and is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. Article 111 of the Labor Code, as amended, contemplates the extraordinary concept of attorney's fees.

Based on the foregoing, the attorney's fees awarded by the NLRC in its Decisions in the Aguirre and Toquero Cases pertain to the complainants, petitioner's clients, as indemnity for damages; and not to petitioner as compensation for his legal services. Records show that the petitioner neither alleged nor proved that his clients, the complainants, willingly agreed that the award of attorney's fees would accrue to him as an additional compensation or part thereof. What the complainants explicitly agreed to in their individual Deeds of Release, Waiver, and Quitclaim was that the 10% attorney's fees of the petitioner shall be deducted from the amount of the gross settlement.

Thus, this Court has no recourse but to interpret the award of attorney's fees by the NLRC in its extraordinary concept. And since the attorney's fees pertained to the complainants as indemnity for damages, it was totally within the complainants' right to waive the amount of said attorney's fees and settle for a lesser amount thereof in exchange for the immediate end to litigation.

Petitioner cannot prevent complainants from compromising and/or withdrawing their complaints at any stage of the proceedings just to protect his anticipated attorney's fees.

Even assuming arguendo that the complainants in the Aguirre and Toquero Cases did indeed agree that the attorney's fees awarded by the NLRC should be considered in their ordinary concept, i.e., as compensation for petitioner's services, we refer back to Article 111 of the Labor Code, as amended, which provides that the attorney's fees should be equivalent to 10% of the amount of wages recovered. Since the complainants decided to settle their complaints against the private respondent, the amounts actually received by them pursuant to the Deeds of Release, Waiver and Quitclaim are the amounts "recovered" and the proper basis for determining the 10% attorney's fees.

In the case at bar, it is beyond cavil that the petitioner is not the real party in interest; hence, he cannot file this Petition to recover the attorney's fees as adjudged by the NLRC in its Decisions dated 21 July 1995 and 25 July 1995 in the Aguirre and Toquero Cases, respectively. To reiterate, the award of attorney's fees pertain to the prevailing parties in the NLRC cases, namely, the complainants, all but one of whom no longer pursued their complaints against private respondent after executing Deeds of Release, Waiver and Quitclaim. Not being the party to whom the NLRC awarded the attorney's fees, neither is the petitioner the proper party to question the non-awarding of the same by the appellate court.

This would show that petitioner has been compensated for the services he rendered the complainants. It may do well for petitioner to remember that as a lawyer, he is a member of an honorable profession, the primary vision of which is justice. The practice of law is a decent profession and not a money-making trade. Compensation should be but a mere incident.

If petitioner earnestly believes that the amounts he already received are grossly deficient, petitioner's remedy is not against the private respondent, but against his own clients, the complainants. He should file a separate action for collection of sum of money against complainants to recover just compensation for his legal services, and not the present Petition for Review to claim from private respondent the attorney's fees which were adjudged by the NLRC in favor of complainants as the prevailing parties in the Aguirre and Toquero Cases.

WHEREFORE, the instant Petition is hereby DENIED.


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86. G.R. NO. 183385: February 13, 2009 MASMUD, v. NATIONAL LABOR RELATIONS COMMISSION

FACTS: On July 9, 2003, Evangelina Masmud's

(Evangelina) husband, the late Alexander J. Masmud (Alexander), filed a complaint against First Victory Shipping Services and Angelakos (Hellas) S.A. for non-payment of permanent disability benefits, medical expenses, sickness allowance, moral and exemplary damages, and attorney's fees. Alexander engaged the services of Atty. Rolando B. Go, Jr. (Atty. Go) as his counsel.

In consideration of Atty. Go's legal services, Alexander agreed to pay attorney's fees on a contingent basis, as follows: twenty percent (20%) of total monetary claims as settled or paid and an additional ten percent (10%) in case of appeal. It was likewise agreed that any award of attorney's fees shall pertain to respondent's law firm as compensation.

On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary claims of Alexander.

Alexander's employer filed an appeal before the National Labor Relations Commission (NLRC). During the pendency of the proceedings before the NLRC, Alexander died. After explaining the terms of the lawyer's fees to Evangelina, Atty. Go caused her substitution as complainant. On April 30, 2004, the NLRC rendered a Decision dismissing the appeal of Alexander's employer.

Eventually, the decision of the NLRC became final and executory. Atty. Go moved for the execution of the NLRC decision, which was later granted by the LA. The surety bond of the employer was garnished. Upon motion of Atty. Go, the surety company delivered to the NLRC

Cashier, through the NLRC Sheriff, the check amounting to P3,454,079.20. Thereafter, Atty. Go moved for the release of the said amount to Evangelina.

On January 10, 2005, the LA directed the NLRC Cashier to release the amount of P3,454,079.20 to Evangelina. Out of the said amount, Evangelina paid Atty. Go the sum of P680,000.00.

Dissatisfied, Atty. Go filed a motion to record and enforce the attorney's lien alleging that Evangelina reneged on their contingent fee agreement. Evangelina paid only the amount of P680,000.00, equivalent to 20% of the award as attorney's fees, thus, leaving a balance of 10%, plus the award pertaining to the counsel as attorney's fees.

In response to the motion filed by Atty. Go, Evangelina filed a comment with motion to release the amount deposited with the NLRC Cashier. In her comment, Evangelina manifested that Atty. Go's claim for attorney's fees of 40% of the total monetary award was null and void based on Article 111 of the Labor Code.

ISSUE: WHETHER OR NOT THE 40% LAWYER’S FEE ON CONTINGENT BASIS OF ATTY. GO IS PROPER? (AFFIRMATIVE)

There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services rendered to the latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party, such that, in any of the cases provided by law where such award can be made, e.g., those authorized in Article 2208 of the Civil Code, the amount is payable not to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

Here, we apply the ordinary concept of attorney's fees, or the compensation that Atty. Go is entitled to receive for representing Evangelina, in substitution of her husband, before the labor tribunals and before the court.

Evangelina maintains that Article 111 of the Labor Code is the law that should govern Atty. Go's compensation as her counsel and assiduously opposes their agreed retainer contract.

Article 111 of the said Code provides: ART. 111. Attorney's fees. - (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of the wages recovered.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Contrary to Evangelina's proposition, Article 111 of the Labor Code deals with the extraordinary concept of attorney's fees. It regulates the amount recoverable as attorney's fees in the nature of damages sustained by and


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awarded to the prevailing party. It may not be used as the standard in fixing the amount payable to the lawyer by his client for the legal services he rendered.

In this regard, Section 24, Rule 138 of the Rules of Court should be observed in determining Atty. Go's compensation. The said Rule provides:SEC. 24. Compensation of attorney's; agreement as to fees. - An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable.

The retainer contract between Atty. Go and Evangelina provides for a contingent fee. The contract shall control in the determination of the amount to be paid, unless found by the court to be unconscionable or unreasonable. Attorney's fees are unconscionable if they affront one's sense of justice, decency or reasonableness. The decree of unconscionability or unreasonableness of a stipulated amount in a contingent fee contract will not preclude recovery.

The criteria found in the Code of Professional Responsibility are also to be considered in assessing the proper amount of compensation that a lawyer should receive.ςrαlαω Canon 20, Rule 20.01 of the said Code provides:CANON 20 - A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.Rule 20.01. - A lawyer shall be guided by the following factors in determining his fees:(a) The time spent and the extent of the services rendered or required;(b) The novelty and difficulty of the question involved;(c) The importance of the subject matter;(d) The skill demanded;(e) The probability of losing other employment as a result of acceptance of the proffered case;(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;(g) The amount involved in the controversy and the benefits resulting to the client from the service;(h) The contingency or certainty of compensation;(i) The character of the employment, whether occasional or established; and(j) The professional standing of the lawyer.

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order that clients may be protected from unjust charges. The amount of contingent fees agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers. A much higher compensation is allowed as contingent fees because of the risk that the lawyer may

get nothing if the suit fails. The Court finds nothing illegal in the contingent fee contract between Atty. Go and Evangelina's husband. The CA committed no error of law when it awarded the attorney's fees of Atty. Go and allowed him to receive an equivalent of 39% of the monetary award.

Considering that Atty. Go successfully represented his client, it is only proper that he should receive adequate compensation for his efforts. Even as we agree with the reduction of the award of attorney's fees by the CA, the fact that a lawyer plays a vital role in the administration of justice emphasizes the need to secure to him his honorarium lawfully earned as a means to preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to judicial protection against injustice or imposition of fraud on the part of his client as the client is against abuse on the part of his counsel. The duty of the court is not alone to ensure that a lawyer acts in a proper and lawful manner, but also to see that a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client, he himself would not get his due.


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87. KAISAHAN AT KAPATIRAN NG MGA MANGGAGAWA AT KAWANI SA MWC-EAST ZONE UNION and EDUARDO BORELA vs. MANILA WATER COMPANY, INC.,

FACTS:

The Union is the duly-recognized bargaining agent of the rank-and-file employees of the respondent Manila Water Company, Inc. while Borela is the Union President. In 1997, the Metropolitan Waterworks and Sewerage System (MWSS) entered into a Concession Agreement with the Company to privatize the operations of the MWSS. The Agreement provides that “the Concessionaire shall grant its employees benefits no less favorable than those granted to MWSS employees at the time of their separation from MWSS.” Among the benefits enjoyed by the employees of the MWSS were the amelioration allowance (AA) and the cost-of-living allowance (COLA). The payment of the AA and the COLA was discontinued pursuant to Republic Act No. 6758, otherwise known as the “Salary Standardization Law,” which integrated the allowances into the standardized salary. The Company agreed to reinstate them upon renegotiation of the parties’ CBA but however failed to give them. As a result, the Union and Borela filed a complaint against the Company for payment of the AA, COLA, moral and exemplary damages, legal interest, and attorney’s fees before the National Labor Relations Commission (NLRC). In his decision of August 20, 2003, Labor Arbiter Aliman D. Mangandog ( LA) ruled in favor of the petitioners and ordered the payment of ten percent (10%) attorney’s fees in addition to their benefits and interests. The award of attorney’s fees was upheld by NLRC. However, this was reversed by the CA. CA’s Decision: The additional grant of 10% attorney’s fees violates Article 111 of the Labor Code considering that the MOA between the parties already ensured the payment of 10% attorney’s fees, deductible from the AA and CBA receivables of the Union’s members.

ISSUE:

1.Whether or not the workers are entitled to attorney’s fees.

RULING:

Yes.

In the present case, the ten percent (10%) attorney’s fees awarded by the NLRC on the basis of Article 111 of the Labor Code accrue to the Union’s members as indemnity for damages and not to the Union’s counsel as compensation for his legal services, unless, they agreed that the award shall be given to their counsel as additional or part of his compensation; in this case the Union bound itself to pay 10% attorney’s fees to its counsel under the MOA and also gave up the attorney’s fees awarded to the Union’s members in favor of their counsel. This is supported by Borela’s affidavit which stated that “[t]he 10% attorney’s fees paid by the members/employees is separate and distinct from the obligation of the company to pay the 10% awarded attorney’s fees which we also gave to our counsel as part of our contingent fee agreement.”[43] The limit to this agreement is that the indemnity for damages imposed by the NLRC on the losing party (i.e., the Company) cannot exceed ten percent (10%).

Properly viewed from this perspective, the award cannot be taken to mean an additional grant of attorney’s fees, in violation of the ten percent (10%) limit under Article 111 of the Labor Code since it rests on an entirely different legal obligation than the one contracted under the MOA. Simply stated, the attorney’s fees contracted under the MOA do not refer to the amount of attorney’s fees awarded by the NLRC; the MOA provision on attorney’s fees does not have any bearing at all to the attorney’s fees awarded by the NLRC under Article 111 of the Labor Code. Based on these considerations, it is clear that the CA erred in ruling that the LA’s award of attorney’s fees violated the maximum limit of ten percent (10%) fixed by Article 111 of the Labor Code.

Under this interpretation, the Company’s argument that the attorney’s fees are unconscionable as they represent 20% of the amount due or about P21.4 million is more apparent than real. Since the attorney’s fees awarded by the LA pertained to the Union’s members as indemnity for damages, it was totally within their right to waive the amount and give it to their counsel as part of their contingent fee agreement. Beyond the limit fixed by Article 111 of the Labor Code, such as between the lawyer and the client, the attorney’s fees may exceed ten


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percent (10%) on the basis of quantum meruit, as in the present case.

88. MALVAR VS. KRAFT FOOD PHILS INC. ET AL., G.R. NO. 183952, SEPT. 9, 2013

Facts:The case initially concerned the execution of a final decision of the Court of Appeals (CA) in a labor litigation, but has mutated into a dispute over attorney's fees between the winning employee and her attorney after she entered into a compromise agreement with her employer under circumstances that the attorney has bewailed as designed to prevent the recovery of just professional fees.AntecedentsOn August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI) hired Czarina Malvar (Malvar) as its Corporate Planning Manager. From then on, she gradually rose from the ranks, becoming in 1996 the Vice President for Finance in the Southeast Asia Region of Kraft Foods International (KFI),KFPI’s mother company. On November 29, 1999, respondent Bienvenido S. Bautista, as Chairman of the Board of KFPI and concurrently the Vice President and Area Director for Southeast Asia of KFI, sent Malvar a memo directing her to explain why no administrative sanctions should be imposed on her for possible breach of trust and confidence and for willful violation of company rules and regulations. Following the submission of her written explanation, an investigating body was formed. In due time, she was placed under preventive suspension with pay. Ultimately, on March 16, 2000, she was served a notice of termination.

Obviously aggrieved, Malvar filed a complaint for illegal suspension and illegal dismissal against KFPI and Bautista in the National Labor Relations Commission (NLRC). In a decision dated April 30, 2001, the Labor Arbiter found and declared her suspension and dismissal illegal, and ordered her reinstatement, and the payment of her full backwages, inclusive of allowances and other benefits, plus attorney’s fees.On October 22, 2001, the NLRC affirmed the decision of the Labor Arbiter but additionally ruled that Malvar was entitled to "any and all stock options and bonuses she was entitled to or would have been entitled to had she not been illegally dismissed from her employment," as well as to moral and exemplary damages. KFPI and Bautista sought the reconsideration of the NLRC’s decision, but the NLRC denied their motion to that effect. Undaunted, KFPI and Bautista assailed the adverse outcome before the CA on certiorari, contending that the NLRC thereby committed grave abuse of discretion. However, the petition for certiorari was dismissed by the CA on December 22, 2004, but with the CA reversing the order of reinstatement and instead directing the payment of separation pay to Malvar, and also reducing the amounts awarded as moral and exemplary damages. After the judgment in her favor became final and executory on March14, 2006, Malvar moved for the issuance of a writ of execution. The Executive Labor Arbiter then referred the case to the Research and Computation Unit (RCU) of the NLRC for the computation of the monetary awards under the judgment. The RCU’s computation ultimately arrived at the total sum of P41,627,593.75. On November 9, 2006, however, Labor Arbiter Jaime M. Reyno issued an order, finding that the RCU’s computation lacked legal basis for including the salary increases that the decision promulgated did not include. Hence, Labor Arbiter Reyno reduced Malvar’s total monetary award to P27,786,378.11. Both parties appealed the computation to the NLRC, which, on April19, 2007, rendered its decision setting aside Labor Arbiter Reyno’s November 9, 2006 order, and adopting the computation by the RCU. In its resolution dated May 31, 2007, the NLRC denied the respondents’ motion for reconsideration.Malvar filed a second motion for the issuance of a writ of execution to enforce the decision of the NLRC rendered on April 19, 2007. After the writ of execution was issued, a partial enforcement as effected by garnishing the respondents’ funds deposited with Citibank worth 37,391,696.06. On July 27, 2007, the respondents went to the CA on certiorari (with prayer for the issuance of a temporary restraining order (TRO) or writ of preliminary injunction), assailing the NLRC’s setting aside of the computation by Labor Arbiter Reyno (CA-G.R. SP No. 99865). The petition mainly argued that the NLRC had gravely abused its discretion in ruling that: (a) the inclusion of the salary increases and other monetary benefits in the award to Malvar was final and executory; and (b) the finality of the ruling in CA-G.R. SP No. 69660 precluded the respondents from challenging the inclusion of the salary increases and other monetary benefits. The CA issued a TRO, enjoining


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the NLRC and Malvar from implementing the NLRC’s decision. On April 17, 2008, the CA rendered its decision reversing the NLRC decision.The matter of computation of monetary awards for private respondent is hereby REMANDED to the Labor Arbiter and he is DIRECTED to recompute the monetary award due to private respondent based on her salary at the time of her termination, without including projected salary increases. Malvar sought reconsideration, but the CA denied her motion on July30, 2008. Aggrieved, Malvar appealed to the Court, assailing the CA’s decision.On December 9, 2010, while her appeal was pending in this Court, Malvar and the respondents entered into a compromise agreement, the pertinent dispositive portion of which is quoted as follows:The Compromise Payment includes full and complete payment and settlement of Ms. Malvar’s salaries and wages up to the last day of her employment, allowances, 13th and 14th month pay, cash conversion of her accrued vacation, sick and emergency leaves, separation pay, retirement pay and such other benefits, entitlements, claims for stock, stock options or other forms of equity compensation whether vested or otherwise and claims of any and all kinds against KFPI and KFI and Altria Group, Inc., their predecessors-in-interest, their stockholders, officers, directors, agents or successors-in-interest, affiliates and subsidiaries, up to the last day of the aforesaid cessation of her employment.Thereafter, Malvar filed an undated Motion to Dismiss/Withdraw Case, praying that the appeal be immediately dismissed/withdrawn in view of the compromise agreement, and that the case be considered closed and terminated.Before the Court could act on Malvar’s Motion to Dismiss/Withdraw Case, the Court received on February 15, 2011 a so-called Motion for Intervention to Protect Attorney’s Rights from The Law Firm of Dasal, Llasos and Associates, through its Of Counsel Retired Supreme Court Associate Justice Josue N. Bellosillo (Intervenor), whereby the Intervenor sought, among others, that both Malvar and KFPI be held and ordered to pay jointly and severally the Intervenor’s contingent fees.Upon execution of the Compromise Agreement and pursuant thereto, Petitioner immediately received (supposedly) from RespondentsP40,000,000.00. But despite the settlement between the parties, Petitioner did not pay Intervenor its just compensation as set forth in their engagement agreement; instead, she immediately moved to Dismiss/Withdraw the Present Petition On 15.Opposing the Motion for Intervention,28 Malvar stresses that there was no truth to the Intervenor’s claim to defraud it of its professional fees; that the Intervenor lacked the legal capacity to intervene because it had ceased to exist after Atty. Marwil N. Llasos resigned from the Intervenor and Atty. Richard B. Dasal became barred from private practice upon his appointment as head of the Legal Department of the Small Business Guarantee and Finance Corporation, a government subsidiary; and that Atty. Llasos and Atty. Dasal had personally handled her case.

Issues (a) Whether or not Malvar’s motion to dismiss the petition on the ground of the execution of the compromise agreement was proper; and (b) whether or not the Motion for Intervention to protect attorney’s rights can prosper..Ruling: Client’s right to settle litigationby compromise agreement, andto terminate counsel; limitationsA compromise agreement is a contract, whereby the parties undertake reciprocal obligations to avoid litigation, or put an end to one already commenced. The client may enter into a compromise agreement with the adverse party to terminate the litigation before a judgment is rendered therein. If the compromise agreement is found to be in order and not contrary to law, morals, good customs and public policy, its judicial approval is in order. Compromise agreement, once approved by final order of the court, has the force of res judicata between the parties and will not be disturbed except for vices of consent or forgery. A client has an undoubted right to settle her litigation without the intervention of the attorney, for the former is generally conceded to have exclusive control over the subject matter of the litigation and may at anytime, if acting in good faith, settle and adjust the cause of action out of court before judgment, even without the attorney’s intervention. It is important for the client to show, however, that the compromise agreement does not adversely affect third persons who are not parties to the agreement. By the same token, a client has the absolute right to terminate the attorney-client relationship at any time with or without cause. But this right of the client is not unlimited because good faith is required in terminating the relationship. The right is also subject to the right of the attorney to be compensated. A client may at any time dismiss his attorney or substitute another in his place, but if the contract between client and attorney has been reduced to writing and the dismissal of the attorney was without justifiable cause, he shall be entitled to recover from the client the full compensation stipulated in the contract. However, the attorney may, in the discretion of the court, intervene in the case to protect his rights. For the payment of his compensation the attorney shall have a lien upon all judgments for the payment of money, and executions issued in pursuance of such judgment, rendered in the case wherein his services had been retained by the client. (Bold emphasis supplied)In fine, it is basic that an attorney is entitled to have and to receive a just and reasonable compensation for services performed at the special instance and request of his client. The attorney who has acted in good faith and honesty in representing and serving the interests of the client should be reasonably compensated for his service. 2.Compromise agreement is to be approveddespite favorable action on theIntervenor’s Motion for InterventionOn considerations of equity and fairness, the Court disapproves of the tendencies of clients compromising their cases behind the backs of their attorneys for the purpose of unreasonably reducing or completely setting to naught the stipulated contingent fees. Thus, the Court grants the


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Intervenor’s Motion for Intervention to Protect Attorney’s Rights as a measure of protecting the Intervenor’s right to its stipulated professional fees that would be denied under the compromise agreement. The Court does so in the interest of protecting the rights of the practicing Bar rendering professional services on contingent fee basis.Nonetheless, the claim for attorney’s fees does not void or nullify the compromise agreement between Malvar and the respondents. There being no obstacles to its approval, the Court approves the compromise agreement. The Court adds, however, that the Intervenor is not left without a remedy, for the payment of its adequate and reasonable compensation could not be annulled by the settlement of the litigation without its participation and conformity. It remains entitled to the compensation, and its right is safeguarded by the Court because its members are officers of the Court who are as entitled to judicial protection against injustice or imposition of fraud committed by the client as much as the client is against their abuses as her counsel. In other words, the duty of the Court is not only to ensure that the attorney acts in a proper and lawful manner, but also to see to it that the attorney is paid his just fees.

Even if the compensation of the attorney is dependent only on winning the litigation, the subsequent withdrawal of the case upon the client’s initiative would not deprive the attorney of the legitimate compensation for professional services rendered.40

The stipulations of the written agreement between Malvar and the Intervenors, not being contrary to law, morals, public policy, public order or good customs, were valid and binding on her. They expressly gave rise to the right of the Intervenor to demand compensation. In a word, she could not simply walk away from her contractual obligations towards the Intervenor, for Article 1159 of the Civil Code provides that obligations arising from contracts have the force of law between the parties and should be complied with in good faith.As a final word, it is necessary to state that no court can shirk from enforcing the contractual stipulations in the manner they have agreed upon and written. As a rule, the courts, whether trial or appellate, have no power to make or modify contracts between the parties. Nor can the courts save the parties from disadvantageous provisions. The same

precepts hold sway when it comes to enforcing fee arrangements entered into in writing between clients and attorneys. In the exercise of their supervisory authority over attorneys as officers of the Court, the courts are bound to respect and protect the attorney’s lien as a necessary means to preserve the decorum and respectability of the Law Profession. Hence, the Court must thwart any and every effort of clients already served by their attorneys’ worthy services to deprive them of their hard-earned compensation. Truly, the duty of the courts is not only to see to it that attorneys act in a proper and lawful manner, but also to see to it that attorneys are paid their just and lawful fees.61

WHEREFORE, the Court APPROVES the compromise agreement; GRANTS the Motion for Intervention to Protect Attorney's Rights; and ORDERS Czarina T. Malvar and respondents Kraft Food Philippines Inc. and Kraft Foods International to jointly and severally pay to Intervenor Law Firm, represented by Retired Associate Justice Josue N. Bellosillo, its stipulated contingent fees of 10% of P41,627,593.75, and the further sum equivalent to 10% of the value of the stock option.

89. T&H SHOPFITTERS CORP., VS T&H SHOPFITTER CORP WORKERS UNION, GR NO. 191714, FEBRUARY 26, 2014

FACTS: Respondents treated T&H Shopfitters and Gin Queen as a single entity and their sole employer. In their desire to improve their working conditions, respondents and other employees of petitioners held their first formal meeting on November 23, 2003 to discuss the formation of a union. The following day or on November 24, 2003, seventeen (17) employees were barred from entering petitioners’ factory premises located in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its expansion.

Respondents averred that the following week after the certification elections were held, petitioners retrenched THG–GQ Union officers and members assigned at the Zambales plant. Respondents claimed that the work weeks of those employees in the SBFZ plant were drastically reduced to only three (3) days in a month.In its defense, Gin Queen, claiming that it is a corporation separate and distinct from T&H Shopfitters, stressed that respondents were all employees. Gin Queen claimed that due to the decrease in orders from its customers, they had to resort to cost cutting measures to avoid anticipated financial losses. Thus, it assigned work on a rotational basis. It was of the impression that the employees, who opposed its economic measures, were merely motivated by spite in filing the complaint for ULP against it.


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ISSUE: Whether the award of 10% attorney’s fees on favor of respondent is proper.

RULING: No. Anent the issue on the award of attorney’s fess, the applicable law concerning the grant thereof in labor cases is Article 11120 of the Labor Code. Pursuant thereto, the award of 10% attorney’s fees is limited to cases of unlawful withholding of wages. In this case, however, the Court cannot find any claim or proof that petitioners unlawfully withheld the wages of respondents. Consequently, the grant of 10% attorney’s fees in favor of respondents is not justified under the circumstances. Accordingly, the Court deems it proper to delete the same.

90. BERNARDO VS. NLRC

G.R. No. 122917 July 12, 1999

FACTS: Complainants numbering 43 are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called "Employment Contract for Handicapped Workers".

In 1988, two (2) deaf-mutes were hired under this Agreement; in 1989 another two (2); in 1990, nineteen (19); in 1991 six (6); in 1992, six (6) and in 1993, twenty-one (21). Their employment[s] were renewed every six months such that by the time this case arose, there were fifty-six (56) deaf-mutes who were employed by respondent under the said employment agreement. The last one was Thelma Malindoy who was employed in 1992 and whose contract expired on July 1993.

Disclaiming that complainants were regular employees, respondent Far East Bank and Trust Co maintained that complainants who are special class of workers; the hearing impaired employees were hired temporarily under [a] special employment arrangement which was a result of overtures made by some civic and political personalities to the respondent Bank; that complainants were hired due to "pakiusap" which must be considered in the light of the context career and working environment which is to maintain and strengthen a corps of professionals trained and qualified officers and regular employees who are baccalaureate degree holders from excellent schools which is an unbending policy in the hiring of regular employees; that in addition to this, training continues so that the regular employee grows in the corporate ladder; that the idea of hiring handicapped workers was acceptable to them only on a special arrangement basis; that it was adopted the special program to help tide over a group of workers such as deaf-mutes like the complainants who could do manual work for the

respondent Bank; that the task of counting and sorting of bills which was being performed by tellers could be assigned to deaf-mutes that the counting and sorting of money are tellering works which were always logically and naturally part and parcel of the tellers' normal functions; that from the beginning there have been no separate items in the respondent Bank plantilla for sortes or counters; that the tellers themselves already did the sorting and counting chore as a regular feature and integral part of their duties; that through the "pakiusap" of Arturo Borjal, the tellers were relieved of this task of counting and sorting bills in favor of deaf-mutes without creating new positions as there is no position either in the respondent or in any other bank in the Philippines which deals with purely counting and sorting of bills in banking operations. Petitioners specified when each of them was hired and dimissed, As earlier noted, the LA and NLRC ruled against herein petitioners.

ISSUES: Whether petitioners have become regular employees.

HELD: The petition is meritorious. However, only the employees, who worked for more than six months and whose contracts were renewed are deemed regular. Hence, their dismissal from employement was illegal. Petitioners maintain that they should be considered regular employees, because their task as money sorters and counters was necessary and desirable to the business of respondent bank. They further allege that their contracts served merely to preclude the application of Article280 and to bar them from becoming regular employees. Private respondent, on the other hand, submits that petitioners were hired only as "special workers and should not in any way be considered as part of the regular complement of the Bank."

Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them. In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same terms and conditions of employment as a qualified able-bodied person. Section 5 of the Magna Carta provides:

Sec. 5. Equal Opportunity for Employment; No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person.


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The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80.

Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the LC., which provides:

Art. 280. Regular and Casual Employment; The provisions of writtenagreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered as regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

The test of whether an employee is regular was laid down in De Leon v. NLRC, in which this Court held:

“The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensibility of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exist. Without a doubt, the task of counting and sorting bills is necessary and desirable to the business of respondent bank. With the exception of sixteen of them, petitioners performed these tasks for more than six months. Thus, the following twenty-seven petitioners should be deemed regular

employees. As held by the Court, "Articles 280 and 281 of the Labor Code put an end to the pernicious practice of making permanent casuals of our lowly employees by the simple expedient of extending to them probationary appointments, ad infinitum."

The contract signed by petitioners is akin to a probationary employment, during which the bank determined the employees' fitness for the job. When the bank renewed the contract after the lapse of the six-month probationary period, the employees thereby became regular employees.

No employer is allowed to determine indefinitely the fitness of its employees. As regular employees, the 27 petitioners are entitled to security of tenure; that is, their services may be terminated only for a just or authorized cause. Because respondent failed to show such cause, these 27 petitioners are deemed illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights and other privileges. Considering the allegation of respondent that the job of money sorting is no longer available because it has been assigned back to the tellers to whom it originally belonged, petitioners are hereby awarded separation pay in lieu of reinstatement. Because the other 16 worked only for six months, they are not deemed regular employees and hence not entitled to the same benefits. The award referred to respondents’ backwages and not to withheld salaries to which the Court affirmed. Petition was dismissed.


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91. PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY VS. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 118978 May 23, 1997

FACTS: Grace de Guzman was initially hired by petitioner as a reliever, for a fixed period to substitute one C.F. Tenorio who went on maternity leave. Her services as reliever were again engaged by petitioner, this time in replacement of another person. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated.

She was once more asked to join the company as a probationary employee, the probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier.

When petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Official, sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum, she was reminded about the company's policy of not accepting married women for employment. She stated that she was not aware of PT&T's policy regarding married women at the time, and that all along she had not deliberately hidden her true civil status.

Petitioner nonetheless remained unconvinced by her explanations. Private respondent was dismissed from the company. She filed a complaint for illegal dismissal, coupled with a claim for non-payment of cost of living allowances.

ISSUE: Whether or not the company policy tantamount to unjust and unlawful discrimination against married women.

HELD: Petitioner's policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. Contrary to petitioner's assertion that it dismissed private respondent from employment on account of her dishonesty, the record discloses clearly that her ties with the company were dissolved principally because of the company's policy that married women are not qualified for employment in the said company, and not merely because of her supposed acts of dishonesty.

Petitioner's policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish

any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioner's policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.


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92. DEL MONTE PHILIPPINES, INC. VS. LOLITA VELASCO

G.R. No. 153477 March 6, 2007

FACTS: Lolita M. Velasco started working with Del Monte Philippines on October 21, 1976 as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was as Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences. On May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her absences without permission and a forfeiture of her vacation leave entitlement for the year 1990-1991 was imposed against her. On September 14, 1992, another warning letter was sent to respondent regarding her absences without permission during the year 1991-1992. Her vacation entitlement for the said employment year affected was consequently forfeited. In view of the said alleged absences without permission, on September 17, 1994, a notice of hearing was sent to respondent notifying her of the charges filed against her for violating the Absence Without Official Leave rule: that is for excessive absence without permission on August 15-18, 29-31 and September 1-10, 1994.

The hearing was set on September 23, 1994. Respondent having failed to appear on September 23, 1994 hearing, another notice of hearing was sent to her resetting the investigation on September 30, 1994. It was again reset to October 5, 1994. On January 10, 1995, after hearing, the petitioner terminated the services of respondent effective January 16, 1994 due to excessive absences without permission. Feeling aggrieved, respondent filed a case for illegal dismissal against petitioner asserting that her dismissal was illegal because she was on the family way suffering from urinary tract infection, a pregnancy-borne, at the time she committed the alleged absences. She explained that for her absence from work on August 15, 16, 17 & 18, 1994 she had sent an application for leave to her supervisor, Prima Ybañez. Thereafter, she went to the company hospital for check-up and was advised accordingly to rest in quarters for four (4) days or on August 27 to 30, 1994. Still not feeling well, she failed to work on September 1, 1994 and was again advised two days of rest in quarters on September 2-3, 1994. Unable to recover, she went to see an outside doctor, Dr. Marilyn Casino, and the latter ordered her to rest for another five (5) consecutive days, or from September 5 to 9, 1994. She declared she did not file the adequate leave of absence because a medical certificate was already sufficient per company policy. On September 10, 1994 she failed to report to work but sent an application for leave of absence to her supervisor, Prima Ybañez, which was not anymore accepted.

ISSUE: Whether the employment of respondent had been validly terminated on the ground of excessive absences

without permission. Corollary to this is the question of whether the petitioner discharged the respondent on account of pregnancy, a prohibited act.

HELD: Court upholds and adopts the finding of the NLRC, thus: In this jurisdiction tardiness and absenteeism, like abandonment, are recognized forms of neglect of duties, the existence of which justify the dismissal of the erring employee. Respondent’s rule penalizing with discharge any employee who has incurred six (6) or more absences without permission or subsequent justification is admittedly within the purview of the foregoing standard.

However, while it is not disputed that complainant incurred absences exceeding six (6) days as she actually failed to report for work from August 15-18, 23-26, 29-31, September 1-3, 5-10, 12-17, 21-24, 26-30, and October 1-3, 1994, her being pregnant at the time these absences were incurred is not questioned and is even admitted by respondent. It thus puzzles us why respondent asserts complainant failed to explain satisfactorily her absences on August 15-18, 29-31, September 1-3 and 5-10, 1994, yet reconsidered the rest of her absences for being covered with “rest-in-quarters” (RIQ) advice from its hospital personnel when this advice was unquestionably issued in consideration of the physiological and emotional changes complainant, a conceiving mother, naturally developed. Medical and health reports abundantly disclose that during the first trimester of pregnancy, expectant mothers are plagued with morning sickness, frequent urination, vomiting and fatigue all of which complainant was similarly plagued with. Union official IBB Lesna’s observation on complainant being apparently not feeling well during the investigation conducted by respondent on October 5, 1994 even remains in the records of said proceedings. For respondent to isolate the absences of complainant in August and mid-September, 1994 from the absences she incurred later in said month without submitting any evidence that these were due to causes not in manner associated with her condition renders its justification of complainant’s dismissal clearly not convincing under the circumstances. Despite contrary declaration, the records bear the admission of respondent’s P/A North Supervisor, PB Ybanez, of her receipt of the hospital record showing complainant’s RIQ advice for August 19-20, 1994 which could already serve as respondent’s reference in resolving the latter’s absences on August 15 to 18, 1994. Respondent further admitted complainant was under RIQ advice on September 2-3, 1994, yet, insisted in including these dates among her 16 purported unexplained absences justifying termination of her employment.

The Court agrees with the CA in concluding that respondent’s sickness was pregnancy-related and, therefore, the petitioner cannot terminate respondent’s services because in doing so, petitioner will, in effect, be violating the Labor Code which prohibits an employer to discharge an employee on account of the latter’s


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pregnancy. Art. 137. Prohibited acts. – It shall be unlawful for any employer: (2) To discharge such woman on account of her pregnancy, while on leave or in confinement due to her pregnancy; Second. The petitioner stresses that many women go through pregnancy and yet manage to submit prior notices to their employer, especially if “there is no evidence on record indicating a condition of such gravity as to preclude efforts at notifying petitioner of her absence from work in series.” But it must be emphasized that under petitioner’s company rules, absences may be subsequently justified.

The Court finds no cogent reason to disturb the findings of the NLRC and the CA that the respondent was able to subsequently justify her absences in accordance with company rules and policy; that the respondent was pregnant at the time she incurred the absences; that this fact of pregnancy and its related illnesses had been duly proven through substantial evidence; that the respondent attempted to file leaves of absence but the petitioner’s supervisor refused to receive them; that she could not have filed prior leaves due to her continuing condition; and that the petitioner, in the last analysis, dismissed the respondent on account of her pregnancy, a prohibited act. The Court is convinced that the petitioner terminated the services of respondent on account of her pregnancy which justified her absences and, thus, committed a prohibited act rendering the dismissal illegal.

93. CO VS. VARGAS GR No. 195167 November 16, 2012

Facts: On 22 April 2003, respondent Lina B. Vargas (respondent) filed against Nathaniel Bakeshop and its owner Fernando Co a complaint for underpayment or non-payment of wages and holiday pay. 6 The complaint was later amended to include illegal dismissal as a cause of action and the non-payment of service incentive leave.

Respondent alleged that she started working at the bakeshop in October 1994 as a baker and worked from 8:00 a.m. until 8:30 p.m., Monday to Saturday. Aside from baking, respondent also served the customers and supervised the other workers in the absence of the owner. Furthermore, respondent claimed that she sometimes cooked and did the chores of a housemaid whenever the latter was not available. Respondent had a salary of P220 per day, which she received every Saturday afternoon. During the period of her employment, respondent was not given a payslip and she was never asked to sign a payroll.On 6 April 2003, petitioner Co's wife, Nely Co, told respondent to cook their lunch because the housemaid was ironing clothes. Since respondent was busy preparing customers' orders, she lost track of time and was unable to cook lunch as instructed. Irate at respondent's failure to cook, Nely Co cussed respondent and told her to leave and never to return because she was not needed anymore. Respondent was so humiliated and could no longer bear the treatment she received from her employers that she decided to take her salary and leave that same day. Respondent later filed the complaint against Nathaniel Bakeshop and its owner Fernando Co.

Issue: Whether the "Court of Appeals erred in ruling that at the time Respondent was working with the Co family, the business was being conducted at the residence."

Ruling: We find the petition without merit.

In this case, it was only in petitioner's Supplement to the Motion for Reconsideration of the Court of Appeals' Decision that petitioner raised the issue that contrary to the findings of the Labor Arbiter, NLRC, and the Court of Appeals, the bakery was not located at his residence at the time respondent was in their employ. Furthermore, petitioner would even have this Court evaluate additional documentary evidence which were not offered during the proceedings in the Labor Arbiter, NLRC, and the Court of Appeals. The additional evidence were only submitted after the Court of Appeals promulgated its


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Decision, when petitioner attached the additional evidence in his Supplement to the Motion for Reconsideration.aThe issue raised by petitioner is clearly a question of fact which requires a review of the evidence presented. The Supreme Court is not a trier of facts. It is not the function of this Court to examine, review or evaluate the evidence all over again, specially on evidence raised for the first time on appeal.

Petitioner failed to show that this case falls under any of the exceptions. The finding of the Labor Arbiter that petitioner's bakery and his residence are located at the same place was not reversed by the NLRC. Furthermore, the Court of Appeals upheld this finding of the Labor Arbiter. We find no justifiable reason to deviate from the findings and ruling of the Court of Appeals.


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94. ULTRA VILLA FOOD HAUS vs. GENISTON

GR. No. 120473, June 23, 1999

FACTS: Renato Geniston,private respondent herein filed a complaint for illegal dismissal againtsthe Ultra Vires Food Haus restaurant and/or its alleged owner Rosie Tio. Private respondent alleged that he was employed as a "do it all guy," acting as waiter, driver, and maintenance man, in said restaurant. His employment therein spanned from March 1, 1989 until he was dismissed on May 13, 1992. For his services, private respondent was paid P60.00 in 1989, P70.00 in 1990, P80.00 in 1991 and P90.00 when he was dismissed in 1992.

Petitioner Rosie Tio, on the other hand, maintained that private respondent was her personal driver, not an employee of the Ultra Villa Food Haus. As petitioner's personal driver, private respondent was required to report for work at 7:00 a.m. to drive petitioner to Mandaue City where petitioner worked as the Manager of the CFC Corporation. Private respondent was likewise given free meals as well as 13th month pay at the end of the year. Petitioner denied dismissing private respondent whom she claimed abandoned his job.

During the elections of May 11, 1992, private respondent acted as a Poll Watcher for the National Union of Christian Democrats. Though well aware that May 12, 1992 was a holiday, petitioner called up private respondent that day to ask him to report for work as she had some important matters to attend to. Private respondent's wife, however, coldly told petitioner that private respondent was helping in the counting of ballots. Petitioner was thus forced to hire another driver to replace private respondent. Private respondent came back a week after but only to collect his salary.

The Labor Arbiter concluded that private respondent, being a personal driver, was not entitled to overtime pay, premium pay, service incentive leave pay and 13th month pay. The Labor Arbiter noted Private respondent's admission that he was petitioner's driver contained in the mandatory conference order issued by the Labor Arbiter on January 10, 1994The NLRC ruled that private respondent was an employee of the Ultra Villa Food Haus.

ISSUES: (1) Whether private respondent was an employee of the Ultra Villa Food Haus or the personal driver of petitioner (2) Whether private respondent was illegally dismissed from employment.

HELD: (1) The Supreme Court finds that private

respondent was indeed the personal driver of petitioner, and not an employee of the Ultra Villa Food Haus. There is substantial evidence to support such conclusion, such as Private respondent's admission during the mandatory conference that he was petitioner's personal driver, Copies of the Ultra Villa Food Haus payroll which do not contain private respondent's name and other pertinent documents.

Thus, Article 141 of the Labor Code applies, which provides: Art. 141. Coverage. - This Chapter shall apply to all persons rendering services in households for compensation. "Domestic or household service" shall mean services in the employers home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to the personal comfort and convenience of the members of the employers household, including services of family drivers. The Labor Code is silent on the grant of overtime pay, holiday pay, premium pay and service incentive leave to those engaged in the domestic or household service.

Moreover, the specific provision of LC and Article 82, which defines the scope of the application of these provisions, expressly excludes domestic helpers from its coverage: Art. 82. Coverage. - The provision of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by Secretary of Labor in appropriate regulations.

Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits. Employing the same line of analysis, it would seem that private respondent is not entitled to13 month pay. Nevertheless, we deem it just to award private respondent 13th month pay in view of petitioner's practice of according private respondent such benefit. Indeed, petitioner admitted that she gave private respondent 13th month pay every December (2) No. The Supreme Court disagrees with Petitioner which submits that private respondent abandoned his job, preferring to work as an election watcher instead. To constitute abandonment, two requisites must concur: (1) the failure to report to work or absence without valid or justifiable reason; and

(2) A clear intention to sever the employer-employee relationship as manifested by some overt acts, with the second requisite as the more determinative factor. The burden of proving abandonment as a just cause for dismissal is on the employer. Petitioner failed to discharge this burden. It is quite unbelievable that private


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respondent would leave a stable and relatively well paying job as petitioner's family driver to work as an election watcher.

Consequently, we do not find private respondent to have abandoned his job. His dismissal from petitioner's employ being unjust, petitioner is entitled to an indemnity under Article 149 of the Labor Code: Art. 149. Indemnity for unjust termination of services. If the period of household service is fixed, neither the employer nor the househelper may terminate the contract before the expiration of the term, except for a just cause. If the househelper is unjustly dismissed, he or she shall be paid the compensation already earned plus that for fifteen (15) days by way of indemnity. If the househelper leaves without justifiable reason he or she shall forfeit any unpaid salary due him or her not exceeding fifteen (15) days.

95. REMINGTON INDUSTRIAL SALES CORPORATION VS. ERLINDA CASTANEDA GR NOS. 169295-96 NOVEMBER 20, 2006

FACTS: Erlinda alleged that she started working in August 1983 as company cook with a salary of Php 4,000.00 for Remington, a corporation engaged in the trading business; She averred that she reported for work at the new site in Caloocan

City on January 15, 1998, only to be informed that Remington no longer needed her services. Erlinda believed that her dismissal was illegal because she was not given the notices required by law; hence, she filed her complaint for reinstatement without loss of seniority rights, salary differentials, service incentive leave pay, 13th month pay and 10% attorney’s fees.

Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper, not a regular employee; Erlinda worked as a cook and this job had nothing to do with Remington’s business of trading in construction or hardware materials, steel plates and wire rope products.

ISSUE: Whether or not respondent is considered to be a regular employee or a mere domestic helper.

Whether or not burden of proof rests upon the employer to show that the dismissal is for a just cause.

HELD: In this case, there was no allegation by respondent that complainant had ever worked in the residence of Mr. Tan. What is clear from the facts narrated by the parties is that complainant continuously did her job as a cook in the office of respondent serving the needed food for lunch and merienda of the employees. Thus, her work as cook inured not for the benefit of the family members of Mr. Tan but solely for the individual employees of respondent.

Complainant as an employee of respondent company is even bolstered by no less than the certification dated May 23, 1997 issued by the corporate secretary of the company certifying that complainant is their bonafide employee. This is a solid evidence which the Labor Arbiter simply brushed aside. But, such error would not be committed here as it would be at the height of injustice if we are to declare that complainant is a domestic helper.

The petitioner itself admits in its position paper that respondent worked at the company premises and her duty was to cook and prepare its employees’ lunch and merienda. Clearly, the nature of respondent’s work as a cook, who caters not only to the needs of Mr. Tan and his family but also to that of the petitioner’s employees, makes her fall squarely within the definition of a regular employee.

In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

The petition is DENIED for lack of merit.

96. CO VS VARGAS GR NO. 195167 NOVEMBER 16, 2012

Facts: On 22 April 2003, respondent Lina B. Vargas (respondent) filed against Nathaniel Bakeshop and its owner Fernando Co a complaint for underpayment or non-


http://www.supremecourt.gov.ph/jurisprudence/2006/november2006/169295-96.htm

http://www.supremecourt.gov.ph/jurisprudence/2006/november2006/169295-96.htm

LABOR STANDARDS LAW

payment of wages and holiday pay. 6 The complaint was later amended to include illegal dismissal as a cause of action and the non-payment of service incentive leave.

Respondent alleged that she started working at the bakeshop in October 1994 as a baker and worked from 8:00 a.m. until 8:30 p.m., Monday to Saturday. Aside from baking, respondent also served the customers and supervised the other workers in the absence of the owner. Furthermore, respondent claimed that she sometimes cooked and did the chores of a housemaid whenever the latter was not available. Respondent had a salary of P220 per day, which she received every Saturday afternoon. During the period of her employment, respondent was not given a payslip and she was never asked to sign a payroll.On 6 April 2003, petitioner Co's wife, Nely Co, told respondent to cook their lunch because the housemaid was ironing clothes. Since respondent was busy preparing customers' orders, she lost track of time and was unable to cook lunch as instructed. Irate at respondent's failure to cook, Nely Co cussed respondent and told her to leave and never to return because she was not needed anymore. Respondent was so humiliated and could no longer bear the treatment she received from her employers that she decided to take her salary and leave that same day. Respondent later filed the complaint against Nathaniel Bakeshop and its owner Fernando Co.

Issue: Whether the "Court of Appeals erred in ruling that at the time Respondent was working with the Co family, the business was being conducted at the residence."

Ruling: We find the petition without merit.

In this case, it was only in petitioner's Supplement to the Motion for Reconsideration of the Court of Appeals' Decision that petitioner raised the issue that contrary to the findings of the Labor Arbiter, NLRC, and the Court of Appeals, the bakery was not located at his residence at the time respondent was in their employ. Furthermore, petitioner would even have this Court evaluate additional documentary evidence which were not offered during the proceedings in the Labor Arbiter, NLRC, and the Court of Appeals. The additional evidence were only submitted after the Court of Appeals promulgated its Decision, when petitioner attached the additional evidence in his Supplement to the Motion for Reconsideration.aThe issue raised by petitioner is clearly a question of fact which requires a review of the evidence presented. The Supreme Court is not a trier of facts. It is not the function of this Court to examine, review or evaluate the evidence all over again, specially on evidence raised for the first time on appeal.

Petitioner failed to show that this case falls under any of the exceptions. The finding of the Labor Arbiter that petitioner's bakery and his residence are located at the same place was not reversed by the NLRC. Furthermore, the Court of Appeals upheld this

finding of the Labor Arbiter. We find no justifiable reason to deviate from the findings and ruling of the Court of Appeals.


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97. UNIVERSITY OF THE EAST ET AL., VS. PEPANIO, G.R. NO. 193897, JAN. 23, 2013

FACTS: In 1992, the Department of Education, Culture and Sports (DECS) issued the Revised Manual of Regulations for Private Schools,1Ï‚rÎ½l1 Article IX, Section 44, paragraph l(a), of which requires college faculty members to have a master's degree as a minimum educational qualification for acquiring regular status.2Ï‚rÎ½l1

In 1994 petitioner University of the East (UE) and the UE Faculty Association executed a five-year Collective Bargaining Agreement (CBA) with effect up to 1999 which provided, among others, that UE shall extend only semester-to-semester appointments to college faculty staffs who did not possess the minimum qualifications. Those with such qualifications shall be given probationary appointments and their performance on a full-time or full-load basis shall be reviewed for four semesters.

UE hired respondent Mariti D. Bueno in 19975Ï‚rÎ½l1 and respondent Analiza F. Pepanio in 2000,6Ï‚rÎ½l1 both on a semester-to-semester basis to teach in its college.

Pursuant to the new CBA, UE extended probationary appointments to respondents Bueno and Pepanio. Two years later in October 2003, the Dean of the UE College of Arts and Sciences, petitioner Eleanor Javier, sent notices9Ï‚rÎ½l1 to probationary faculty members, reminding them of the expiration of the probationary status of those lacking in postgraduate qualification by the end of the first semester of the School Year 2003-2004. Pepanio replied that she was enrolled at the Polytechnic University of the Philippines Graduate School. Bueno, on the other hand, replied that she was not interested in acquiring tenure as she was returning to her province.cralawlibrary

Bueno later wrote UE, demanding that it consider her a regular employee based on her six-and-a-half-year service on a full-load basis, given that UE hired her in 1997 when what was in force was still the 1994 CBA. Pepanio made the same demand, citing her three-and-a-half years of service on a full-load basis.10Ï‚rÎ½l1 When UE did not heed their demands, respondents filed cases of illegal dismissal against the school before the Labor Arbiter's (LA) office.cralawlibrary

ISSUE: Whether or not UE illegally dismissed Bueno and Pepanio.cralawlibra

RULING: No. In 1994 the legislature transferred the power to prescribe such qualifications to the Commission on Higher Education (CHED). CHED's charter authorized it to set minimum standards for programs and institutions of higher learning.

The Manual of Regulations continued to apply to colleges and universities and suppletorily the Joint Order until 2010 when CHED issued a Revised Manual of Regulations which specifically applies only to institutions involved in tertiary education.cralawlibrary

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The operation of educational institutions involves public interest. The government has a right to ensure that only qualified persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in such institutions. Government regulation in this field of human activity is desirable for protecting, not only the students, but the public as well from ill-prepared teachers, who are lacking in the required scientific or technical knowledge. They may be required to take an examination22Ï‚rÎ½l1 or to possess postgraduate degrees as prerequisite to employment.cralawlibrary

Respondents were each given only semester-to-semester appointments from the beginning of their employment with UE precisely because they lacked the required master's degree. It was only when UE and the faculty union signed their 2001 CBA that the school extended petitioners a conditional probationary status subject to their obtaining a master's degree within their probationary period. It is clear, therefore, that the parties intended to subject respondents' permanent status appointments to the standards set by the law and the university.cralawlibrary

Here, UE gave respondents Bueno and Pepanio more than ample opportunities to acquire the postgraduate degree required of them. But they did not take advantage of such opportunities. Justice, fairness, and due process demand that an employer should not be penalized for situations where it had little or no participation or control.


LABOR STANDARDS LAW

98. COLEGIO DEL SANTISIMO ROSARIO ET AL., VS. ROJO, G.R. NO. 170388, SEPT. 4, 2013 CITING MERCADO ET AL., VS. AMA COMPUTER COLLEGE-PARANAQUE CITY, GR NO. 183572, APRIL 13, 2010

FACTS: Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on probationary basis for the school years 1992-1993, 1993-19947 and 1994-1995.8cralawlibrary

On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not to renew respondent’s services.9cralawlibrary

Thus, on July 13, 1995, respondent filed a Complaint10 for illegal dismissal. He alleged that since he had served three consecutive school years which is the maximum number of terms allowed for probationary employment, he should be extended permanent employment. Citing paragraph 75 of the 1970 Manual of Regulations for Private Schools (1970 Manual), respondent asserted that “full- time teachers who have rendered three (3) consecutive years of satisfactory services shall be considered permanent.”11cralawlibrary

On the other hand, petitioners argued that respondent knew that his Teacher’s Contract for school year 1994-1995 with CSR would expire on March 31, 1995.12 Accordingly, respondent was not dismissed but his probationary contract merely expired and was not renewed.13 Petitioners also claimed that the “three years” mentioned in paragraph 75 of the 1970 Manual refer to “36 months,” not three school years.14And since respondent served for only three school years of 10 months each or 30 months, then he had not yet served the “three years” or 36 months mentioned in paragraph 75 of the 1970 Manual.

ISSUE: Whether respondent has attained the status of a regular employee after he was employed for three consecutive school years as a full-time teacher and had served CSR satisfactorily.

RULING: Yes. Employment on probationary status of teaching personnel are not governed solely by the Labor Code as the law is supplemented, with respect to the period of probation, by special rules found in the Manual of Regulations for Private Schools (the Manual). With regard to the probationary period, Section 92 of the 1992 Manual.

That teachers on probationary employment also enjoy the protection afforded by Article 281 of the Labor Code is supported by Section 93 of the 1992 Manual which provides:nadcralaw

Sec. 93. Regular or Permanent Status. - Those who have served the probationary period shall be made regular or permanent. Full-time teachers who have satisfactorilycompleted their probationary period shall be considered regular or permanent.(Emphasis supplied)

The above provision clearly provides that full-time teachers become regular or permanent employees once they have satisfactorily completed the probationary period of three school years.37 The use of the termsatisfactorily necessarily connotes the requirement for schools to set reasonable standards to be followed by teachers on probationary employment.


LABOR STANDARDS LAW

99. HERRERA-MANAOIS VS. ST. SCHOLASTICAS COLLEGE, GR NO. 188914, DECEMBER 11, 2013

FACTS: SSC, situated in the City of Manila, is a private educational institution offering elementary, secondary, and tertiary education. Manaois graduated from SSC in October 1992 with a degree in Bachelor of Arts in English. In 1994, she returned to her alma mater as a part–time English teacher. After taking a leave of absence for one year, she was again rehired by SSC for the same position. Four years into the service, she was later on recommended by her Department Chairperson to become a full–time faculty member of the English Department.

Manaois thus applied for a position as full–time instructor for school year 2000–2001. She mentioned in her application letter3 that she had been taking the course Master of Arts in English Studies, Major in Creative Writing, at the University of the Philippines, Diliman (UP); that she was completing her master’s thesis; and that her oral defense was scheduled for June 2000. In a reply letter4 dated 17 April 2000, the Dean of Arts and Sciences informed her of the SSC Administrative Council’s approval of her application. She was then advised to maintain the good performance that she had shown for the past years and to submit the necessary papers pertaining to her master’s degree. Accordingly, SSC hired her as a probationary full–time faculty member with the assigned rank of instructor for the school year 2000–2001.5 Her probationary employment continued for a total of three consecutive years. Throughout her service as a probationary full–time faculty member with no derogatory record, she was given above–satisfactory ratings by both the Department Chairperson and the Dean of Arts and Sciences. Manaois eventually received a letter from the Dean of College and Chairperson of the Promotions and Permanency Board officially informing her of the board’s decision not to renew her contract.

ISSUE: Whether the completion of a master’s degree is required in order for a tertiary level educator to earn the status of permanency in a private educational institution.

RULING: Yes. As correctly pointed out by the CA, the aforecited minimum requirements provided for the rank of instructor merely refer to how instructors are ranked, and not to the academic qualifications required to attain permanency. It must be noted that the section in the SSC Faculty Manual on the ranking of instructors cover those who are still on probationary employment and those who have already attained permanency. It would therefore be erroneous to simply read the section on the ranking of instructors – without taking into consideration the previously quoted section on permanency – in order to determine the academic qualifications for the position

of permanent full–time faculty member with the rank ofinstructor. Thus, to properly arrive at the criteria, the sections on both the permanency and the ranking of an instructor, as provided in the SSC Manual, must be read in conjunction with each another.

At this juncture, we reiterate the rule that mere completion of the three–year probation, even with an above–average performance, does not guarantee that the employee will automatically acquire a permanent employment status.17 It is settled jurisprudence18 that the probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment as a member of the teaching personnel.

Notwithstanding the existence of the SSC Faculty Manual, Manaois still cannot legally acquire a permanent status of employment. Private educational institutions must still supplementarily refer19 to the prevailing standards, qualifications, and conditions set by the appropriate government agencies (presently the Department of Education, the Commission on Higher Education, and the Technical Education and Skills Development Authority). This limitation on the right of private schools, colleges, and universities to select and determine the employment status of their academic personnel has been imposed by the state in view of the public interest nature of educational institutions, so as to ensure the quality and competency of our schools and educators.


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100. TOLOSA VS. NLRC (GR No. 149578. April 10, 2003)

FACTS: Evelyn Tolosa was the widow of Captain Virgilio Tolosa who was hired by Qwana-Kaiun, through its manning agent, Asia Bulk Transport Phils. Inc., to be the master of the Vessel named M/V Lady Dona. The contract officially began when he assumed command of the vessel in Yokohama, Japan. The vessel departed for Long Beach California, passing by Hawaii in the middle of the voyage. At the time of embarkation, he was allegedly shown to be in good health. During ‘channeling activities’ upon the vessel’s departure from Yokohama Capt. Tolosa was drenched with rainwater. The following day, he had slight fever and in the succeeding twelve days, his health rapidly deteriorated resulting in his death on November 18, 1992. Because of his death, his wife filed a Complaint/Position Paper against Qwana-Kaiun, thru its resident-agent, Mr. Fumio Nakagawa, Asia Bulk, Pedro Garate and Mario Asis, as respondents. Petitioner argues that her cause of action is based on the failure of private respondents, as employers of her husband, to provide him timely, adequate and competent medical services under Art. 161 of the Labor Code. Likewise, she contends that Article 217 (a) (4) of the Labor Code vests labor arbiters and the NLRC with jurisdiction to award all kinds of damages in cases arising from employer-employee relations. She also insisted that the “reasonable causal connection” rule should be applied in her favor.

ISSUES:

1.) Whether or not the labor arbiter and the NLRC had jurisdiction over petitioner’s action

2.) Whether or not claim can be anchored on Art. 161 of the Labor Code

HELD: (1) The NLRC and the LA had no jurisdiction over petitioner’s claim for damages. Time and time again, we have held that the allegations in the complaint determine the nature of the action and, consequently, the jurisdiction of the courts. After carefully examining petitioner’s complaint/position paper, we are convinced that the allegations therein are in the nature of an action based on a quasi delict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross negligence. Petitioner’s complaint/position paper refers to and extensively discusses the negligent acts of shipmates Garate and Asis, who had no employer-employee relation with Captain Tolosa. The LA himself classified petitioner’s case as “a complaint for damages, blacklisting and watchlisting for gross negligence resulting in the death of complainant’s husband, Capt. Virgilio Tolosa.” The case does not involve the adjudication of a labor dispute, but the recovery of damages based on a quasi delict. The jurisdiction of labor tribunals is limited to disputes arising from employer-employee relations, as we ruled in Georg Grotjahn GMBH & Co. v. Isnani:

“Not every dispute between an employer and employee involves matters that

only LAs and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of LAs and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes, or their collective bargaining agreement.”

The pivotal question is whether the Labor Code has any relevance to the relief sought by petitioner. From her paper, it is evident that the primary reliefs she seeks are as follows: (a) loss of earning capacity denominated therein as “actual damages” or “lost income” and (b) blacklisting. The loss she claims does not refer to the actual earnings of the deceased, but to his earning capacity based on a life expectancy of 65 years. This amount is recoverable if the action is based on a quasi delict as provided for in Article 2206 of the Civil Code, but not in the Labor Code. While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor laws, but also damages governed by the Civil Code, these reliefs must still be based on an action that has a reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining agreements.

The central issue is determined essentially from the relief sought in the complaint. Where such principal relief is to be granted under labor legislation or a CBA, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even though a claim for damages might be asserted as an incident to such claim.

It must be noted that a worker’s loss of earning capacity and blacklisting are not to be equated with wages, overtime compensation or separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim resulting from a quasi delict or a similar cause within the realm of civil law. “Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employer-employee relations.” In the present case, petitioner’s claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements.

(2) Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a safety and health


LABOR STANDARDS LAW

standard the enforcement of which rests with the labor secretary. Thus, claims for an employer’s violation thereof are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages before the labor arbiter.

It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in which the employer-employee relation is merely incidental, and in which the cause of action proceeds from a different source of obligation such as a tort.Since petitioner’s claim for damages is predicated on a quasi delict or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor statutes, or collective bargaining agreements, jurisdiction over the action lies with the regular courts -- not with the NLRC or the labor arbiters.

NOTES: *Conditions for the application of “reasonable causal connection” rule (Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter.)

1) the dispute arose from an employer-employee relation

2) the dispute can be resolved by reference to the Labor Code

*A worker’s loss of earning capacity and blacklisting are not to be equated with wages, overtime compensation or separation pay, and other labor benefits that are generally cognized in labor disputes. The loss of earning capacity is a relief or claim resulting from a quasi delict or a similar cause within the realm of civil law.

DOCTRINE: As a rule, labor arbiters and the National Labor Relations Commission have no power or authority to grant reliefs from claims that do not arise from employer-employee relations. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code, other labor statutes, or collective bargaining agreements.

101. U-BIX CORP VS BANDIOLA [525 scra 566]

Facts:

Sometime in April 1995, Bandiola was employed by U-BIX to install furniture for its customers. On 13 April 1997, Bandiola and two other U-BIX employees were involved in a vehicular accident on their way to Baguio, where they were assigned by U-BIX to install furniture for an exhibit. As a result of the accident, Bandiola sustained a fracture on his left leg.

Bandiola and his co-employees were initially brought to the Rosario District Hospital. The next day, 14 April 1997, they were transferred to the Philippine Orthopedic Hospital (Orthopedic). After his broken leg was cemented, Bandiola was advised to go back for further medical treatment. U-BIX paid for the medical expenses incurred in both hospitals.

Bandiola claims that he asked U-BIX for financial assistance but that the latter refused. He attached the receipts, issued by Medical Center Parañaque (MCP) and Dr. Celestino Musngi, for medical expenses with a total amount of P7,742.50. He also attached a copy of the Roentgenological Report by a Radiologist in MCP.Bandiola added that he paid for other medical expenses for which no receipts were issued.

On September 1998, Bandiola filed a Complaint before the Labor Arbiter, where he alleged underpayment of salary; non-payment of overtime pay; premium pay for work performed on holidays and rest days; separation pay; service incentive leave pay; 13th month pay; and the payment of actual, moral and exemplary damages. The Labor Arbiter ordered in its Decision that respondent pay the complainant: Salary Differential, Service incentive and 13th

Month pay whie dismissing all other claims.

Bandiola filed an appeal before the NLRC. The NLRC amended the Decision


LABOR STANDARDS LAW

rendered by the Labor Arbiter. It ruled that U-BIX should reimburse Bandiola the amount of P12,742.50 for the medical expenses he incurred in connection with his fractured leg. It further ruled that U-BIX is liable to pay Bandiola P25,000.00 in moral damages and P25,000.00 in exemplary damages for refusing to reimburse Bandiola for the medical expenses he incurred after it failed to report to the Social Security System (SSS) the injuries sustained by Bandiola. Thereafter, U-BIX filed a Motion for Reconsideration, which was denied by the NLRC.

On appeal, the Court of Appeals modified the NLRC Resolution. It affirmed Bandiola's entitlement to reimbursement of his medical expenses, but reduced the amount to P7,742.50, the amount of actual damages he was able to prove. It also affirmed without modification the award of moral and exemplary damages, and the monetary award granted by the Labor Arbiter.

Issue: Whether or not the Honorable Court of Appeals erred in ordering petitioner U-Bix to reimburse respondent Bandiola for the alleged medical expenses when there was no evidence submitted by respondent in support thereof.

SC Ruling:

The petition is without merit. Contrary to the arguments put forward by U-BIX, it is liable to reimburse Bandiola the amount of P7,742.50 for medical expenses because its failure to comply with its duty to record and report Bandiola's injury to the SSS precluded Bandiola from making any claims. Moreover, U-BIX, by its own admission, reimbursed its other employees who were involved in the same accident for their medical expenses.

Clearly, the reimbursement of medical expenses for injuries incurred in the course of employment is part of the benefits enjoyed by U-BIX's employees. The only justification for its refusal to reimburse Bandiola was that he intended to defraud the company by presenting spurious receipts amounting to P7,742.50 that were allegedly issued four months before their presentation.

ART. 205 RECORD OF DEATH OR DISABILITY

(a) All employers shall keep a logbook to record chronologically the sickness, injury or death of their employees, setting forth therein their names, dates and places of the contingency, nature of the contingency and absences. Entries in the logbook shall be made within five days from notice or knowledge of the occurrence of contingency. Within five days after entry in the

logbook, the employer shall report to the System only those contingencies he deems to be work-connected.

(b) All entries in the employers logbook shall be made by the employer or any of his authorized official after verification of the contingencies or the employees absences for a period of a day or more. Upon request by the System, the employer shall furnish the necessary certificate regarding information about any contingency appearing in the logbook, citing the entry number, page number and date. Such logbook shall be made available for inspection to the duly authorized representatives of the System.

ART 206. NOTICE OF SICKNESS, INJURY OR DEATH

Notice of sickness, injury or death shall be given to the employer by the employee or by his dependents or anybody on his behalf within five days from the occurrence of the contingency. No notice to the employer shall be required if the contingency is known to the employer or his agents or representatives.

As a general rule, the injured employee must notify his employer, who is obligated to enter the notice in a logbook within five days after notification. Within five days after making the entry, the employer of a private company reports the work-related sickness or injury to the SSS. The claim is forwarded to the SSS, which decides on the validity of the claim. When the SSS denies the claim, the denial may be appealed to the Employees' Compensation Commission (ECC) within 30 days.

However, the law provides an exception to the rule requiring an employee to notify his or her employer of his injuries. Under Section B of ECC Board Resolution No. 2127, issued on 5 August 1982, notice of injury, sickness or death of the employee need not be given to the employer in any of the following situations: (1) When the employee suffers the contingency within the employer's premises; (2) When the employee officially files an application for leave of absence by reason of the contingency from which he suffers; (3) When the employer provides medical services and/or medical supplies to the employee who suffers from the contingency; and (4) When the employer can be reasonably presumed to have had knowledge of the employee's contingency, in view of the following circumstances:(4.1) The employee was performing an official function for the employer when the contingency occurred; (4.2) The employee's contingency has been publicized through mass media outlets; or (4.3) The specific circumstances of the occurrence of the contingency have been such


LABOR STANDARDS LAW

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

In the present case, there is no dispute that Bandiola's leg injury was sustained in the course of his employment with U-BIX. At the time of the accident, Bandiola was on the way to Baguio, where he was ordered by U-BIX to install furniture for an exhibit. Moreover, U-BIX was aware that Bandiola, as well as his other co-employees, were injured during the accident. U-BIX admitted to providing Bandiola and his co-employees with medical assistance and it even sent its representative, Rey Reynes, to Rosario District Hospital, where they were confined, and had them transferred to the Orthopedic. U-BIX was also aware that the Orthopedic instructed Bandiola to return for further medical treatment. It is implicit that Bandiola needed further treatment for his broken leg and was, thus, incapacitated to work.

Given the foregoing circumstances, U-BIX had the legal obligation to record pertinent information in connection with the injuries sustained by Bandiola in its logbook within five days after it had known about the injuries; and to report the same to the SSS within five days after it was recorded in the logbook, in accordance with Articles 205 and 206 of the Labor Code. Had U-BIX performed its lawful duties, the SSS, or the ECC on appeal, could have properly considered whether or not Bandiola was entitled to reimbursement for his medical expenses, as well as disability benefits while he was unable to work. However, U-BIX did not present any evidence showing that it had complied with these legal requirements. It had not even replied to Bandiola's allegations in his Position Paper, dated 13 April 1998, that its employees were not even members of the SSS.

By failing to report Bandiola's injury to the SSS, U-BIX disregarded the law and its purpose; that is, to provide a proper and prompt settlement of his claims. Instead, U-BIX arrogated upon itself the duty of determining which medical expenses are proper for reimbursement. In doing so, it could unnecessarily delay and unjustifiably refuse to reimburse Bandiola for medical expenses even if they were adequately supported by receipts, as was done in this instance. The expense and delay undergone by Bandiola since 1997 in obtaining reimbursement for his medical expenses of P7,742.50 very clearly defeat the purpose of the law. The instant Petition is denied.

102. OCEAN BUILDERS CONSTRUCTION VS SPS. CUBACUB

GR. 150898, April 13, 2011

On April 13, 2011, the Supreme Court issued its ruling in the case of Ocean Builders Construction Corp. and/or Dennis Hao vs. Spouses Antonio and Anicia Cubacub. Justice Conchita Carpio-Morales penned the majority decision. Although the decision was rendered by the Supreme Court from the cool comforts of its Baguio City summer sanctuary, Justice Lucas Bersamin opted to turn up the heat as sole dissenter.


LABOR STANDARDS LAW

Ocean Builders, of which petitioner Dennis Hao was general manager, employed Bladimir Cubacub as a maintenance man. On April 9, 1995, Bladimir fell ill to chicken pox as a result of which Hao advised him to rest for three days, which Bladimir promptly did at the company’s barracks. Three days later, according to the ponente, Bladimir proceeded with his usual chores of manning the gate of the company premises and even cleaned company vehicles.

Apparently still not feeling well, he asked a co-worker to accompany him to his house in the province of Tarlac. Upon being informed of this request, Hao gave Bladimir P1,000.00 and instructed Bladimir’s co-worker to instead bring Bladimir to the nearest hospital. Thus, on April 12, 1995, Bladimir was taken to the Caybiga Community Hospital, a primary-care hospital around one kilometer away from the office of the company, and in which Bladimir was confined.

At the request and suggestion of the attending physician, Bladimir’s parents, respondent spouses Antonio and Anicia Cubacub, together with a friend, Dr. Hermes Frias, arrived at the hospital the following day and transferred Bladimir to the Quezon City General Hospital (QCGH) where he was placed in the intensive care unit. Bladimir died the following day, April 14, 1995.

The death certificate issued by the QCGH recorded Bladimir’s immediate cause of death as cardio-respiratory arrest and the antecedent cause as pneumonia. On the other hand, the death certificate issued by Dr. Frias recorded the causes of death as cardiac arrest, multiple organ system failure, septicaemia and chicken pox.

Around four months after Bladimir’s death, his parents filed a tort action for damages before the Regional Trial Court of Tarlac alleging that Hao was guilty of negligence which resulted in the deterioration of Bladimir’s condition leading to eventual his death.

The Tarlac RTC dismissed the complaint, holding that Hao was not under any obligation to bring Bladimir to better tertiary hospitals and assuming that Bladimir died of chicken pox aggravated by pneumonia or some other complications due to lack of adequate facilities at the hospital, the same cannot be attributed to Hao.

On appeal, the Court of Appeals, reversed the trial court’s decision, holding that Hao violated Article 161 of the Labor Code by failing to bring Bladimir to a better-equipped hospital. The Court of Appeals further ruled that

Hao should have foreseen that Bladimir, an adult, could suffer complications from chicken pox and, had he been brought to hospitals like St. Luke’s, Capitol Medical Center, Philippine General Hospital and the like, Bladimir could have been saved.

Seeking relief from the Supreme Court, Ocean Builders and Hao asserted that Hao exercised the diligence more than the degree of diligence the law requires and thus are not liable for damages.

Speaking for the majority, Justice Carpio-Morales noted that to successfully prosecute an action anchored on torts, the following elements must be present: (1) duty (2) breach (3) injury and proximate causation. While the Supreme Court noted that the Court of Appeals held that it was the duty of petitioners to provide adequate medical assistance to the employees under Article 161 of the Labor Code:

ART. 161. Assistance of employer. – It shall be the duty of any employer to provide all the necessary assistance to ensure the adequate and immediate medical and dental attendance and treatment to an injured or sick employee in case of emergency.

the Implementing Rules of the Labor Code do not enlighten what the phrase “adequate and immediate” medical attendance means in relation to an “emergency.” Accordingly, Justice Carpio-Morales stated that “it would thus appear that the determination of what it means is left to the employer, except when a full-time registered nurse or physician are available on-site as required, also under Section 157 of the Labor Code.”

In the view of the High Court, Hao’s advice for Bladimir to, as he did, take a three-day rest and to later have him brought to the nearest hospital constituted “adequate and immediate medical” attendance that he is mandated, under Article 161, to provide to a sick employee in an emergency.

Justice Carpio-Morales adds, “[c]hicken pox is self-limiting. Hao does not appear to have a medical background. He may not be thus expected to have known that Bladimir needed to be brought to a hospital with better facilities than the Caybiga Hospital, contrary to appellate court’s ruling.”

In any case, the majority held that Hao cannot be considered as the proximate cause of the death of Bladimir. “Proximate cause is that which, in natural and continuous sequence,


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unbroken by an efficient intervening cause, produces injury, and without which, the result would not have occurred. An injury or damage is proximately caused by an act or failure to act, whenever it appears from the evidence in the case that the act or omission played a substantial part in bringing about or actually causing the injury or damage, and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.”

Therefore, based on the relevant facts, the Supreme Court found Ocean Builders and Hao not to have been negligent and thus reversed the Court of Appeals.

In his dissenting opinion, Justice Lucas Bersamin takes the view that the petitioners should be held liable for damages, as the Court of Appeals ruled, essentially because Bladimir “died from the complications of chicken pox after his employers forced him to continue on the job despite his affliction that, in the first place, he had contracted in the workplace from a co-employee. To [Justice Bersamin], his death was wrongful by reason of the employers’ failure: (a) to isolate the co-worker to prevent the spread of chicken pox; (b) to provide to him the legally mandated first aid treatment; and (c) to extend adequate medical and other assistance for his affliction with chicken pox and the expected complications of the affliction (like letting him off from work in order to have complete rest).”

The dissenter cites the factual records of the case as convincingly establishing that Hao had failed to exercise the degree of care and vigilance required under the circumstances.

For one thing, Justice Bersamin notes that the petitioners had violated Article 157 of the Labor Code for not having the required medical personnel or facilities. [On this point, the majority opinion stated that there is no allegation on the number of employees or state of the company’s premises on which to reach a determination as to that applicability of Article 157 to the petitioners.]

As such, Bladimir received no first aid treatment from the time he contracted chicken pox until the day he was rushed to the community hospital. Moreover, Bladimir was not allowed to have bed rest, considering that Hao instead required him to continue on the job despite his affliction. The dissent also points out that Bladimir was not allowed to rest in his parents’ home in Tarlac because Hao was due to leave for Hongkong for the Holy Week break. In addition, the employee barracks were unsuitable for employees with illnesses.

Concluded Justice Bersamin, “Hao’s utter lack of concern and solicitude for the welfare of Bladimir not only contravened the letter and spirit of the Labor Code but also manifested a callous disregard of Bladimir’s weakened condition.”


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103. JSS INDOCHINA CORPORATION VS. GERARDO R. FERRER, ET AL.

[ G.R. No. 156381 October 14, 2005]

Facts: Petitioner hired the respondents as construction workers for its Taiwan-based principal employer Sr Formosa Plastics Corp. (FPC). Pursuant to the parties’ contracts of employment, each respondent would receive monthly salary of NT$15,360. Their employment covered a period of 1 year of from May 1, 1997 to May 1, 1998.

As scheduled, respondents, along with other Filipino contract workers, were deployed to Taiwan. But upon their arrival, only 20 workers, excluding respondents, were

employed as construction workers at FPC. Aggrieved, they were assisted by the officials of Manila Economic Cultural Office who directed them to sign affidavits alleging that they were assigned, not as construction workers for FPC, but as cable tray I pipe tracts workers at Shin Kwan Enterprises Co., Ltd. They were then repatriated to the Philippines.

Thus, respondents filed a complaint for illegal dismissed, payment of salaries, refund of placement fee, damages and attorney’s fees with the Office of the Labor Arbiter against JSS Indochina Corp.

SC Ruling: The decision to resign from their employment were made by force of circumstances not attributable to their own fault, and it was not their fault that they were left out from among those workers who were considered for employment by the foreign employer. Evidently, petitioner is guilty for breach of contract because upon arrival of respondents at the jobsite, there was no employer on hand, which then made respondents to decide to go home to the Philippines. Therefore, the termination of respondent’s services is, undoubtedly, without just or valid cause. Consequently, the respondents are entitled to an amount representing their 3 months salaries considering that their employment contract has a term of exactly 1 year, plus a full refused of their placement fee with interest at 12% per annum.

Such award is in accordance to Section 10 of RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act, which provides:

“SECTION 10. Money claims.-xxx

xxx

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with 12% interest per annum, plus his salaries for the

unexpired portion of his employment contract or for 3 months for every year of the unexpired term, whichever is less.

104. PEOPLE OF THE PHILIPPINES VS. CAPT. FLORENCIO O. GASACAO

[G.R. No. 168445 November 11, 2005]

Facts: Appellant was the Crewing Manager of Great Eastern Shipping Agency Inc., a licensed local manning agency, while his nephew and co-accused, Jose Gasacao, was the President. As the crewing manager, Capt. Gasacao's duties included receiving job applications, interviewing the applicants and informing them of the agency's requirement of payment of performance or cash bond prior to deployment. On August 4, 2000, Capt. Gasacao and Jose Gasacao were charged with Large Scale Illegal Recruitment defined under Section 6, paragraphs (a), (l) and (m) of Republic Act (RA) No. 8042 or the Migrant Workers and Overseas Filipinos Act of 1995, and penalized under Section 7(b) of the same law, before the RTC of Quezon City. Only Capt. Gasacao was arrested while Jose Gasacao remained at large. When arraigned, appellant pleaded not guilty to the offense charged. Thereafter, trial on the merits ensued. On March 5, 2001, the RTC of Quezon City, rendered its Joint Decision convicting appellant of Large Scale Illegal Recruitment.

Issue:

Whether or not Capt. Gasacao was guilty beyond reasonable doubt of the crime of large scale illegal recruitment

SC Ruling: RA No. 8042 defines illegal recruitment as follows:

II. ILLEGAL RECRUITMENT

Sec. 6.DEFINITIONS. – For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Pd 442, as amended: Provided, that such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any persons, whether a non-licensee, non-holder, licensee or holder of authority.

(a) To charge or accept directly or indirectly any amount greater than the specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance;

xxx xxx xxx


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(l) Failure to actually deploy without valid reason as determined by the Department of Labor and Employment; and

(m) Failure to reimburse expenses incurred by the workers in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered as offense involving economic sabotage. Illegal recruitment is deemed committed by a syndicate carried out by a group of 3 or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against 3 or more persons individually or as a group. A license is a document issued by the DOLE authorizing a person or entity to operate a private employment agency, while an authority is a document issued by the DOLE authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. However, it appears that even licensees or holders of authority can be held liable for illegal recruitment should they commit any of the above-enumerated acts.

Thus, it is inconsequential that appellant committed large scale illegal recruitment while Great Eastern Shipping Agency, Inc. was holding a valid authority. We thus find that the court below committed no reversible error in not appreciating that the manning agency was a holder of a valid authority when appellant recruited the private complainants. There is no merit in appellant's contention that he could not be held liable for illegal recruitment since he was a mere employee of the manning agency, pursuant to Section 6 of RA No. 8042 which provides: The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable.

Contrary to Capt. Gasacao's claim, he is not a mere employee of the manning agency but the crewing manager. As such, he receives job applications, interviews applicants and informs them of the agency's requirement of payment of performance or cash bond prior to the applicant's deployment. As the crewing manager, he was at the forefront of the company's recruitment activities. The foregoing testimonies of the private complainantsclearly established that Gasacao is not a mere employee of Great Eastern Shipping Agency Inc. As the crewing manager, it was appellant who made representations with the private complainants that he can secure overseas employment for them upon payment of the cash bond. It is well settled

that to prove illegal recruitment, it must be shown that appellant gave complainants the distinct impression that he had the power or ability to send complainants abroad for work such that the latter were convinced to part with their money in order to be employed. Appellant's act of promising the private complainants that they will be deployed abroad within three months after they have paid the cash bond clearly shows that he is engaged in illegal recruitment.

Even assuming that Capt. Gasacao was a mere employee, such fact is not a shield against his conviction for large scale illegal recruitment. Clearly, the acts of Capt. Gasacao vis-à-vis the private complainants, either as the crewing manager of Great Eastern Shipping Agency Inc. or as a mere employee of the same, constitute acts of large scale illegal recruitment which should not be countenanced.

Although he informed them that it is optional, he collected cash bonds and promised their deployment notwithstanding the proscription against its collection under Section 60 of the Omnibus Rules and Regulations Implementing R.A. No. 8042 which state that:

SEC. 60.Prohibition on Bonds and Deposits. – In no case shall anemployment agency require any bond or cash deposit from the worker to guarantee performance under the contract or his/her repatriation. Illegal recruitment is deemed committed in large scale if committed against three or more persons individually or as a group.

In this case, five complainants testified against appellant's acts of illegalrecruitment, thereby rendering his acts tantamount to economic sabotage.


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105. MERCEDITA ACUÑA, ET AL. VS. CA AND JOIN INTERNATIONAL CORP. AND/OR ELIZABETH ALAÑON

[G.R. No. 159832 May 05, 2006]

Facts: Petitioners are Filipino overseas workers deployed by private respondent Join International Corporation (JIC), a licensed recruitment agency, to its principal, 3D Pre-Color Plastic, Inc., (3D) in Taiwan, Republic of China, under a uniformly-worded employment contract for a period of two years. Herein private respondent Elizabeth Alañon is the president of Join International Corporation. After their papers were processed, petitioners claimed they signed a uniformly-worded employment contract with private respondents which stipulated that they were to work as machine operators with a monthly salary of NT$15,840.00, exclusive of overtime, for a period of two years.

On December 9, 1999, with 18 other contract workers they left for Taiwan. Upon arriving at the job site, a factory owned by 3D, they were made to sign another contract which stated that their salary was only NT$11,840.00. They were likewise informed that the dormitory which would serve as their living quarters was still under construction. They were requested to temporarily bear with the inconvenience but were assured that their dormitory would be completed in a short time The petitioners averred that on December 16, 1999, due to unbearable working conditions, they were constrained to inform management that they were leaving. They booked a flight home, at their own expense. Before they left, they were made to sign a written waiver. In addition, petitioners were not paid any salary for work rendered on December 11-15, 1999.

Issue: Whether petitioners were illegally dismissed under Rep. Act No. 8042, thus entitling them to benefits plus damages.

SC Ruling: As we have held previously, constructive dismissal covers the involuntary resignation resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee.

In this case, the appellate court found that petitioners did not deny that the accommodations were not as homely as expected. In the petitioners’ memorandum, they admitted that they were told by the principal, upon their arrival, that the dormitory was still under construction and were requested to bear with the temporary inconvenience and the dormitory would soon be finished. We likewise note that petitioners did not refute private respondents’ assertion that they had deployed approximately

sixty other workers to their principal, and to the best of their knowledge, no other worker assigned to the same principal has resigned, much less, filed a case for illegal dismissal.

To our mind these cited circumstances do not reflect malice by private respondents nor do they show the principal’s intention to subject petitioners to unhealthy accommodations. Under these facts, we cannot rule that there was constructive dismissal.


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106. ASIAN INTERNATIONAL MANPOWER SERVICES, INC. (AIMS) VS. CA AND ANICETA LACERNA

[ G.R. No. 169652 October 09, 2006]

Facts: Private respondent Lacerna alleges the facts of the case being: That she was hired by Proxy Maid Services Centre (hereinafter referred to as Proxy) thru petitioner AIMS, a recruitment entity in the Philippines; That on February 10, 2000, she signed an employment contract as a domestic helper of Low See Ting, who later on cancelled the same sometime in March 2000; That subsequent to the cancellation of the contract, Lacerna, with the assurance of a new employer from AIMS, proceeded to Hongkong, and that upon her arrival, she was fetched by Tan Kmin Shwe Lin Charmain, her new employer; That on May 2, 2000, she was dismissed by Charmain on the ground of “difficulty in communication”; That on May 20, 2000, she was transferred by Proxy to Tam Ching-yee, Donna, who later on dismissed her without stating the reason(s) thereof; Proxy neither gave her an explanation regarding this; That on July 1, 2000, she agreed to take a three-day trial period with another employer, Daisy Lee; that before she could sign her contract with Daisy Lee, she was denied of her request for change of employer by the Hongkong government and was advised instead to submit a fresh application with her country of domicile. That upon her return to the Philippines, she was informed by AIMS that Daisy Lee was no longer interested in hiring her; and, That upon knowing this, she demanded the return of her placement fee but was denied; Hence, this instant case of illegal dismissal.

Petitioner AIMS on the other hand, alleges the facts to be: That Lacerna resigned after working for 5 days as a domestic worker for Low See Ting, as evidenced by her resignation letter; That Proxy paid her wages and return ticket to the Philippines, but respondent refused to be repatriated; That thereafter, Proxy assisted her to be employed by Charmain, who subsequently dismissed her for difficulty in communication; and,

That the Hongkong government permitted her an extension of her stay in Hongkong, but that this was her last chance.

Respondent argued that her first employer was Chairman, and not Low See Ting, as she never got the chance to work for the latter. She also contend that the signature on the resignation and on the receipt of payment was not hers, nor was the handwriting. On June 28, 2001, the Labor Arbiter ruled in favor of petitioner AIMS, stating that Lacerna was not illegally dismissed as shown by her resignation letter. However, this decision was later on reversed by the Court of Appeals due to the lack of just or authorized cause to justify Lacerna’s dismissal. The court also ruled that AIMS is

solidarily liable with Proxy, as provided by Sec. 10 of RA 8042, stating that the liability of the principal employer and the recruitment agency shall not be affected by any substitution, amendment or modification of the contract of employment.

Issue:

Was Lacerna illegally dismissed? If yes, may AIMS be held liable for the monetary claims of Lacerna?

SC Ruling:

The High Court rules in the affirmative for both questions.

(1) There is no dispute that the last employer of Lacerna was Donna and not Daisy Lee because the Hong Kong government directed her repatriation before she could sign her contract with the latter. In dismissing her, Donna gave no reason for her termination. Neither did Proxy explain the ground for her dismissal. And where there is no showing of a clear, valid, and legal cause for the termination, the law considers the matter, a case of illegal dismissal.9 In termination cases involving Filipino workers recruited for overseas employment, the burden of proving just or authorized cause for termination rests with the foreign based employer/principal and the local based entity which recruited the worker both being solidarily liable for liabilities arising from the illegal dismissal of the worker. In this case, the Court of Appeals correctly declared Lacerna s termination illegal since no reason was given to� justify her termination

The employment contract signed by Lacerna, as approved by the POEA, reveals that Proxy was her designated principal employer. Since AIMS was the local agency responsible for the recruitment of domestic helpers, such as Lacerna, for Proxy, it is solidarily liable with the latter for liabilities arising from her illegal dismissal. To absolve AIMS from liability would run in contravention to the avowed policy of the state to protect the labor sector. The Court says that “the joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him.”

(2) As for the monetary claims, the Supreme Court cited Section 10 of R.A. No. 8042, which provides that: The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by


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law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less.

As such, Lacerna is entitled to the full reimbursement of her placement fee with interest ate 12% per annum, plus salaries for the unexpired portion of her employment contract, or for 3 months for every year of the unexpired term, whichever is less. But the award for moral and exemplary damages cannot be credited in as much as Lacerna failed to prove that AIMS and Proxy are guilty of bad faith.

107. CORAZON C. SIM VS. NLRC AND EQUITABLE PCI-BANK

[ G.R. NO. 157376 October 02, 2007]

Facts:

Corazon Sim (petitioner) filed a case for illegal dismissal with the Labor Arbiter, alleging that she was initially employed by Equitable PCI-Bank (respondent) in 1990 as Italian Remittance Marketing Consultant to the Frankfurt Representative Office. Eventually, she was promoted to Manager position, until September 1999, when she received a letter from Remegio David -- the Senior Officer, European Head of PCIBank, and Managing Director of PCIB- Europe -- informing her that she was being dismissed due to loss of trust and confidence based on alleged mismanagement and misappropriation of funds.

Issue:

Whether or not the Labor Arbiter has jurisdiction over the case.

SC Ruling:

The rule is that the Court is bound by the findings of facts of the Labor Arbiter or the NLRC, unless it is shown that grave abuse of discretion or lack or excess of jurisdiction has been committed by said quasi-judicial bodies. The Court will not deviate from said doctrine without any clear showing that the findings of the Labor Arbiter, as affirmed by the NLRC, are bereft of sufficient substantiation.

The Court notes palpable error in the Labor Arbiter's disposition of the case, which was affirmed by the NLRC, with regard to the issue on jurisdiction. It was wrong for the Labor Arbiter to rule that “labor relations system in the Philippines has no extra-territorial jurisdiction.

Article 217 of the Labor Code provides for the jurisdiction of the Labor Arbiter and the


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National Labor Relations Commission, viz.:

ART. 217. Jurisdiction of Labor Arbiters and the Commission. – (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: (1) Unfair labor practice cases; (2) Termination disputes; (3) If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of employment; (4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations; (5) Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and (6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

Moreover, Section 10 of Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipinos Act of 1995, provides:

SECTION 10.Money Claims. — Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages.

Also, Section 62 of the Omnibus Rules and Regulations Implementing R.A. No. 8042 provides that the Labor Arbiters of the NLRC shall have the original and exclusive jurisdiction to hear and decide all claims arising out of employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms of damages, subject to the rules and procedures of the NLRC.

Under these provisions, it is clear that labor arbiters have original and exclusive jurisdiction over claims arising from employer-employee relations, including termination disputes involving all workers, among whom are overseas Filipino workers. In Philippine National Bank v. Cabansag, the Court pronounced: x x x Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3, Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws “which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country.”


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108. BAHIA SHIPPING SERVICES, INC. VS. REYNALDO CHUA

[G.R. No. 162195 April 08, 2008]Facts:

Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services, Inc., as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine Overseas Employment Administration (POEA) approved employment contract dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow, England to board the said sea vessel where he will be assigned to work.

On February 15, 1997, the private respondent reported for his working station one and one-half hours late. On February 17, 1997, the master of the vessel served to the private respondent an official warning-termination form pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain Thor Fleten conducted an inquisitorial hearing to investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed from the service on the strength of an unsigned and undated notice of dismissal. An alleged record or minutes of the said investigation was attached to the said dismissal notice.

On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary claims, which case was assigned to Labor Arbiter Manuel M. Manansala.

Issues:1. Whether or not respondent is entitled to overtime

pay which was incorporated in his award for the unexpired portion of the contract despite the fact that he did not render overtime work; and

2. Whether or not it is proper for the NLRC to award money claims despite the fact that the NLRC decision, and affirmed by the Court of Appeals, did not state clearly the facts and the evidence upon which such conclusions are based.

SC Ruling:It being settled that the dismissal of

respondent was illegal, it follows that the latter is entitled to payment of his salary for the unexpired portion of his contract, as provided under Republic Act (R.A.) No. 8042, considering that his employment was pre-terminated on March 9, 1997 or four months prior to the expiration of his employment contract on July 17, 1997.

However, the LA limited the award to an amount equivalent to respondent's salary for three months. The NLRC affirmed said award but deducted therefrom his salary for one day as penalty for the tardiness incurred. The CA affirmed the one-day salary deduction imposed by the NLRC but removed the three months - salary cap imposed by the LA. In effect, as this

particular monetary award now stands, it is to be computed based on the salary of respondent covering the period March 9, 1997 to July 17, 1997, less his salary for one day.

Petitioner questions the CA for lifting the three-month salary cap, pointing out that the LA and NLRC decisions which imposed the cap can no longer be altered as said decisions were not questioned by respondent.

Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and can no longer obtain from the appellate court any affirmative relief other that what was already granted under said judgment.However, when strict adherence to such technical rule will impair a substantive right, such as that of an illegally dismissed employee to monetary compensation as provided by law, then equity dictates that the Court set aside the rule to pave the way for a full and just adjudication of the case.

The Court has consistently applied the foregoing exception to the general rule. It does so yet again in the present case.

Section 10 of R.A. No. 8042, entitles an overseas worker who has been illegally dismissed to "his salaries for the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whichever is less."

The CA correctly applied the interpretation of the Court in Marsaman Manning Agency, Inc. v. National Labor Relations Commission that the second option which imposes a three months � salary cap applies only when the term of the overseas contract is fixed at one year or longer; otherwise, the first option applies in that the overseas worker shall be entitled payment of all his salaries for the entire unexpired period of his contract.

In Skippers Pacific, Inc. v. Mira,wherein the overseas contract involved was only for six months, the Court held that it is the first option provided under Section 10 of R.A. No. 8042 which is applicable in that the overseas worker who was illegally dismissed is entitled to payment of all his salaries covering the entire unexpired period of his contract. The CA committed no error in adhering to the prevailing interpretation of Section 10 of R.A. No. 8042.

Finally, the Court comes to the last issue on whether in the computation of the foregoing award, respondent's "guaranteed overtime" pay amounting to US$197.00 per month should be included as part of his salary. Petitioner contends that there is no factual or legal basis for the inclusion of said amount because, after respondent's repatriation, he could not have rendered any overtime work.

This time, petitioner's contention is well-taken.


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The Court had occasion to rule on a similar issue in Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission,where the NLRC was questioned for awarding to an illegally dismissed overseas worker fixed overtime pay equivalent to the unexpired portion of the latter's contract. In resolving the question, the Court, citing Cagampan v. National Labor Relations Commission,held that although an overseas employment contract may guarantee the right to overtime pay, entitlement to such benefit must first be established, otherwise the same cannot be allowed.

Hence, it being improbable that respondent rendered overtime work during the unexpired term of his contract, the inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the computation of his salaries for the entire unexpired period of his contract has no factual or legal basis and the same should have been disallowed.

109. MARCIANO L. MASANGCAY VS. TRANS-GLOBAL MARITIME AGENCY, INC. AND VENTNOR NAVIGATION, INC.

[G. R. No. 172800 October 17, 2008]Facts:

On September 2, 2002, Marciano Masangcay was hired by Ventnor (a foreign company based in Liberia and engaged in maritime commerce), through its manning agent, Trans-Global (a corporation organized and existing under Philippine laws), as an oiler on M/T Eastern Jewel, an oil tanker. His employment was to run for a period of seven (7) months. He was to receive, inter alia, a basic monthly salary of US$445.00. While on board M/T Eastern Jewel, Marciano Masangcay noticed a “reddish discoloration of his urine upon micturation (urination). Masangcay was brought to the Fujairah Hospital, Fujairah, United Arab Emirates, because of lower abdominal pain and left loin pain of ten (10) days duration with difficulty in urinating. He was advised surgery but opted to be repatriated back to the Philippines. On repatriation, he was confined at Makati Medical Center on October 8, 2002 where he underwent ESWL, left. On December 17-23, 2003, he was confined at National Kidney Institute and he underwent right ureterolithotomy

Dr. dela Cruz pronounced Masangcay fit to resume work as all his laboratory examinations showed normal results. Accordingly, on 30 January 2003, Trans-Global’s designated physician, Dr. Barrientos of the Associated Medical & Clinical Services, Inc., declared Masangcay fit to go back to work after a regular medical examination and pegged the disability period of the latter to be from 3 October 2002 until 3 February 2003.

Trans-Global, in behalf of Ventnor, paid Masangcay his full 120 days Sick Leave pay of Ninety Five Thousand Five Hundred Sixty Four and 52/100 (P95,564.52) Pesos representing One Thousand Seven Hundred Seventy Nine Dollars and 60/100 (US$1,779.60) U.S. Dollars, as well as all his medical and hospital expenses, professional fees of his attending physicians, the total amount of which reached One Hundred Seventy Four Thousand Seventy Five and 10/100 (P174,075.10) Pesos.

Masangcay was asked to report back to the office of Trans-Global for deployment line-up. He was also asked to undergo medical examination in view of his impending deployment. He was informed by the Port Captain that he can no longer be deployed due to negative reports about him coming from its principal, Ventnor.


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More than six months later, armed with a Medical Certificate issued by one Dr. Efren R. Vicaldo (Dr. Vicaldo), a cardiologist, Masangcay instituted a complaint against Trans-Global and Ventnor, including Trans-Global’s President, Michael Estaniel, before the National Labor Relations Commission (NLRC) for the payment of disability benefit, damages and attorney’s fees.

Dr. Vicaldo justified the finding of Impediment Grade III (78.36%) in this wise: Masangcay is now unfit to resume work as seaman in any capacity. His illness is considered work aggravated. He needs regular monitoring of his renal function for deterioration and possible recurrence of kidney stones. His right kidney is non-functioning and his left kidney has impaired function. There’s a likelihood that he would need dialysis in the future. He cannot land a gainful employment given his medical background.

Masangcay is claiming that his disability was contracted during the term of his Contract of Employment , therefore claiming benefit under Section 20(b), paragraph 5 of the Philippine Overseas Employment Administration (POEA) Revised Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, as amended by Memorandum Circular No. 55, Series of 1996, which is deemed integrated in every contract of employment of Filipino seafarers on ocean-going vessels.

Trans-Global, Ventnor, and Estaniel, countered that Masangcay had fully recovered and was pronounced fit for employment, his claim for disability benefits has no basis” ;the right to compensation for disability arises only when it is shown that the seafarer is disabled on account of an illness or injury suffered while in the employ of his employer”.

15 April 2004, Labor Arbiter Daisy G. Cauton-Barcelona found Masangcay’s complaint meritorious and ordered Trans-Global, Ventnor, and Estaniel to pay Masangcay the amount of Thirty Nine Thousand One Hundred Eighty U.S. Dollars (US$39,180.00) representing the latter’s disability benefit at Impediment Grade III (78.36%). Labor arbiter opined that the compensability of an ailment does not depend on whether or not the injury or disease was pre-existing at the time of employment, but rather, if the injury or disease was related to or was aggravated by Masangcay’s work. The labor arbiter gave great weight to the medical opinion of Dr. Vicaldo rather than that of Trans-Global’s designated physicians considering that “respondents’ accredited doctors’ opinion has

(sic) more than meets the eye and should not be taken at face value. For most often than not, they are palpably self-serving and bias (sic) in favor of the employer and certainly cannot be considered independent.”

Trans-Global and Ventnor filed an original action for certiorari before the Court of Appeals imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the NLRC for affirming the decision of the labor arbiter.

On 10 February 2006, the appellate court granted the petition for certiorari of Trans-Global and Ventnor. It nullified and set aside the challenged Resolutions of the NLRC for having been issued in grave abuse of discretion amounting to lack or excess of jurisdiction, considering that the claimant was already full (sic) paid the benefits to which he was lawfully entitled to.

The Court of Appeals reasoned in its decision that, the Labor Arbiter, the NLRC arbitrarily set aside the fact that Masangcay was precluded from any entitlement to disability benefits after he was already fully recovered and declared to be fit for employment by the company-designated physician. The right to compensation for disability arises only when the seafarer has been disabled on account of his illness or injury that he suffered while in the employ of his employer; otherwise, gross injustice would result to the petitioners.

The NLRC could not simply sweep away the opinions of Dr. Barrientos and Dr. Agustin, as well s that of Dr. dela Cruz, by generalizing that company-designated or company-referred physicians were often biased in favor of the company and that their opinions were self-serving without specifically indicating how their specific findings were biased and why such opinions were self-serving. The generalization was, at the very least, most unfair to Dr. Agustin and Dr. dela Cruz, specialists in urology that covered the ailment of Masangcay. The arbitrariness and capriciousness became even more blatant in the face of the fact that such company-designated or company-referred physicians had themselves personally attended to, examined and treated Masangcay in a professional capacity. Thereby, their findings and conclusions were far from speculation and conjecture.

Issue:

Whether or not Marciano Masangcay can legally demand and claim disability benefits from Trans - Global and Ventnor for an illness


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that became apparent during his contract of employment with the shipping company.

SC Ruling:

As set forth in Sec. 20(b) of the POEA Standard Employment Contract, the employer-vessel owner/principal shall be liable for disability benefits to the seafarer only in case the latter was declared disabled by the company designated physician in view of a work-related illness or injury that he suffered onboard the vessel. Since petitioner-seafarer was declared FIT TO WORK by the company designated physician, clearly then he is not entitled to disability benefits under the POEA Standard Employment Contract.” As with all other kinds of worker, the terms and conditions of a seafarer’s employment is governed by the provisions of the contract he signs at the time he is hired.

Considering that Masangcay was employed on 3 September 2002, it is the 2000 POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels that is considered appended in his contract of employment and is controlling for purposes of resolving the issue at hand and not the 1996 POEA Revised Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels as alluded to by Masangcay.

Under Sec. 20(b), paragraph 6, of the 2000 POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, viz:

SECTION 20. COMPENSATION AND BENEFITS

Seafarer , to be entitled to compensation and benefits under said provision, it is not sufficient to establish that the seafarer’s illness or injury has rendered him permanently or partially disabled, but it must also be shown that there is a causal connection between the seafarer’s illness or injury and the work for which he had been contracted for.

Masangcay must prove that he is suffering from permanent total or partial disability due to a work-related illness occurring during the term of his contract. Proof that he not only acquired or contracted his illness during the term of his employment contract is clearly not enough; must also present evidence that such infirmity was work-related, or at the very least aggravated by the conditions of the work for which he was contracted for. There is no substantiation that the progression of his ailment was brought about largely by the conditions of his job as an oiler. His medical history and/or

records prior to his deployment as an oiler in M/T Eastern Jewel were neither presented nor alluded to in order to demonstrate that the working conditions on board said vessel increased the risk of contracting renal failure, chronic or otherwise. It is, therefore, highly improbable that Masangcay’s chronic renal failure developed in just a month’s time, the length of time he was on board M/T Eastern Jewel before the symptoms became

Moreover, chronic renal failure, is neither listed as a disability under Sec. 32 of the 2000 POEA Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels; nor an occupational disease under Sec. 32-A thereof, which provides for the schedule of disability or impediment for injuries suffered and diseases including occupational diseases or illness.

The only similarity between the two cases, Crystal Shipping and the present petition, is the fact that the seafarers in both have the same personal physician, Dr. Efren R. Vicaldo, a cardiologist, who declared them permanently disabled to return to work. The factual circumstances of the Crystal Shipping case are poles apart from that attendant to the case at bar. The seafarer in said case had been employed as a Chief Mate of an ocean-going vessel when he complained of coughing and hoarseness and was later diagnosed with thyroid cancer.

The company-designated physician and seafarer’s physician were both in agreement that the seafarer had been rendered disabled by his illness; they only differed in their assessments of the degree and the impediment grade of such disability in accordance with the schedule of disability or impediment for injuries suffered and diseases including occupational diseases or illness contracted under Sec. 32 of the 1996 POEA Revised Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels.

In contrast, Trans-Global and Ventnor are contesting the right of Masangcay to claim disability benefits as the company-designated physicians have certified the latter fit to return to work, not to mention the fact that he was not suffering from a work-related and/or work-aggravated illness.

All told, except for the bare assertion that he is no longer fit to work due to the illness that became manifest during his contract of employment with Trans-Global and Ventnor, Masangcay makes no allegation, much less


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presents no proof, that the illness was caused or aggravated by his employment.

The evidence on record is totally bare of essential facts on how he contracted or developed such disease and on how and why his working conditions increased the risk of contracting the same. Consequently, the labor arbiter and the NLRC had no basis at all to rule that Masangcay is deserving of other disability benefits espoused by Sec. 20(b), paragraph 6 of the 2000 POEA Amended Standard Terms and Conditions other than that already extended to him by Trans-Global and Ventnor.

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit. The assailed Decision dated 10 February 2006 and Resolution dated 30 May 2006 both of the Court of Appeals in CA-G.R. SP No. 91393 are hereby AFFIRMED. Costs against petitioner Marciano L. Masangcay.

110. MAGSAYSAY MARITIME CORP., ET AL. VS. JAIME M. VELASQUEZ

[ G.R. No. 179802 November 14, 2008]

FACTS: Jaime M. Velasquez (respondent) was hired by Magsaysay Maritime Corporation(petitioner) as second cook for its foreign principal, co-petitioner ODF Jell ASA.

The parties had a considerably long employment history covered by about ten (10) employment contracts wherein Velasquez engaged respondent’s services on board vessels owned by ODF Jell ASA.

On July 28, 2003, on board the vessel M/T Bow Favour, Jaime M. Velasquez suffered high fever and was unable to work. By the fourth day, his body temperature reached 40.9°C. His extremities were swollen and he could not walk. He also had edema in the abdominal area. Respondent was brought to a hospital in Singapore where he was confined from August 12 to October 13, 2003. Thereafter, he was repatriated to the Philippines.

It is from this point onwards that the allegations of the parties differ. Jaime M. Velasquez alleged that upon his repatriation, he was not confined to St. Luke’s Medical Center as he expected. He claimed that he was compelled to seek medical treatment from an independent doctor. On November 13, 2003, he consulted a certain Dr. Efren Vicaldo (Dr. Vicaldo) who diagnosed him to be suffering from staphylococcal bacteremia, multiple metastatic abcesses, pleural effusion and hypertension and declared his disability as Impediment Grade 1 (120%). Dr. Vicaldo further concluded that respondent was “unfit to resume work as seaman in any capacity.”

Respondent filed a claim for disability benefits, illness allowance/ reimbursement of medical expenses, damages and attorney’s fees but petitioners refused to pay.

Petitioners, on the other hand, maintained that upon respondent’s repatriation on October 13, 2003, he was immediately referred to a company designated physician for further medical care and treatment; that the initial impression was Systemic Staphylococcal Infections; Resolving; that he was under the care of said physician for three (3) months during which he underwent extensive medications and treatment; that he was admitted and confined at St. Luke’s Medical Center from October 13, 2003 to November 11, 2003; that progress reports on his recovery have been issued; that by January 5, 2004, respondent was declared as “cleared to work resumption as seafarer”; and that petitioners were the ones who shouldered respondent’s hospitalization expenses.

On March 29, 2005, the Labor Arbiter rendered a decision in favor of Jaime M. Velasquez, ordering Magsaysay Maritime Corporation and/or Conrado N. Dela Cruz and ODF Jell ASA to pay complainant Jaime M. Velasquez the amount of SIXTY TWO THOUSAND TWO HUNDRED SIXTY US


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DOLLARS (US$62,260.00) or its equivalent in Philippine Peso at the prevailing rate of exchange at the time of actual payment representing his disability benefits and sickness allowance and 10% of the total monetary award by way of attorney’s fees.

Magsaysay Maritime Corporation and/or Conrado N. Dela Cruz and ODF Jell ASA filed an appeal with the NLRC, alleging serious errors in the factual findings of the Labor Arbiter.

NLRC made the following findings:

By way of a contrary medical finding, assail the diagnosis arrived at by the company designated physician, Dr. Natalio G. Alegre II. As noted, the findings of Dr. Efren Vicaldo, complainant’s private physician, and those of Dr. Alegre, bear consistency with each other save for his hypertensive condition. Above all these, complainant’s credibility suffered a serious setback when he declared that he was seen by Dr. Alegre only twice and that there was no treatment given to him since repatriation (Records, pp. 88-89). Records belie such assertion. Copies of the medical reports accomplished by the company accredited physician would show that he was examined and treated by the latter for no less than eight (8) times (Records, pp. 128-135).

ISSUE: Whether or not it is the company designated physician or a private physician who should determine the disability grading or fitness of a seafarer.

SC RULING: As gleaned therefrom, complainant was placed under the care and supervision of Dr. Alegre for about ninety (90) days, his admission at St. Luke’s Medical Center being on 13 October 2003 and with his discharge being had only on 11 November 2003.

NLRC rendered a decision reversing that of the Labor Arbiter and dismissed respondent’s complaint for lack of merit. Under the POEA Standard Employment Contract (Article 1159, Civil Code of the Philippines).

Court of Appeals rendered the herein challenged Decision setting aside the decision of the NLRC and reinstating that of the labor arbiter. That the company-designated physician did declare that petitioner is fit to sea duty should not prejudice petitioner’s claim for disability benefits. In the first instance, it is well to note that there is doubt and question as to the accuracy of the declaration of the Dr. Alegre’s “cleared to work resumption as seafarer.” Such certification should not be taken as the only primary consideration, especially when there is contra finding by another doctor giving doubt to the findings of the company-designated physician.

As held in the case of Wallem Maritime Services, Inc. vs. NLRC, “opinions of petitioner’s doctor to this effect should not be given evidentiary weight as they are palpably self-serving and biased in favor of petitioners, and certainly could not be considered independent.”

Petitioner having substantially established that he could not able to perform the same work as he used to before his repatriation, and was found both by his independent physician and Gleneagles Hospital in Singapore suffering from severe hypertension as well as other diagnosed illnesses which were contracted as a result of his exposure to the risks involved in the performance of his job, we find the NLRC to have acted in grave abuse of discretion in reversing and setting aside the decision of the Labor Arbiter awarding disability claims to petitioner.

The POEA Contract is clear in its provisions when it provided who should determine the disability grading or fitness to work of seafarers. The POEA contract recognizes only the disability grading provided by the company-designated physicians. Section 20 B.3 of the POEA contract provides:

Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall exceed one hundred twenty (120) days.

For this purpose the seafarer shall submit himself to a post-employment medical examination by a company designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall resort in his forfeiture of the right to claim the above benefits.

Moreover, Section 20 (B), no. 2, paragraph 2 of the POEA Contract provides:

However, if after the repatriation the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree of his disability has been established by the company-designated physician.

These provisions clearly illustrate that respondent’s disability can only be assessed by the company-designated physician. If the


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company-designated physician declares him fit to work, then the seaman is bound by such declaration.

Further, it should be noted that the claim for sickness and permanent disability benefits arose from the stipulations in the standard format contract of employment pursuant to a circular of the POEA. Such circular was intended for all parties involved in the employment of Filipino seamen on board any ocean-going vessel.[6] The POEA Contract, of which the parties are both signatories, is the law between them and as such, its provisions bind both of them.[7] Thus, the parties are both bound by the provisions of the POEA Contract which declares that the degree of disability or fitness to work of a seafarer should be assessed by the company-designated physician.

In German Marine Agencies v. NLRC, [8] the Court explicitly laid that it is the company-designated physician who should determine the degree of disability of the seaman or his fitness to work, thus: In order to claim disability benefits under the Standard Employment Contract, it is the “company-designated” physician who must proclaim that the seaman suffered a permanent disability, whether total or partial, due to either injury or illness, during the term of the latter’s employment. It is a cardinal rule in the interpretation of contracts that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control. There is no ambiguity in the wording of the Standard Employment Contract – the only qualification prescribed for the physician entrusted with the task of assessing the seaman’s disability is that he be “company-designated.

Again, in Benjamin L. Sarocam v. Interorient Maritime Ent., Inc., and Demaco United Ltd, [9] the Court ruled that the opinion of the company-designated physician should be upheld over that of the doctors appointed by the seafarer considering that the basis of the findings of the seafarer’s doctor are the medical findings of the company physician.

Undoubtedly, jurisprudence is replete with pronouncements that it is the company-designated physician’s findings which should form the basis of any disability claim of the seafarer. In this particular case, respondent refused to accept the assessment made by the company-designated physician that he is fit to work.

Under the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On-Board Ocean-Going Vessel or the POEA Contract issued pursuant to DOLE Department Order No. 4 and POEA Memorandum Circular No. 9, both Series of 2000, respondent could not disregard the findings of the company-designated physician. Section 20-B, paragraph 3 of the POEA Contract provides.

It is beyond cavil that it is the company-designated physician who is entrusted with the task of assessing the seaman’s disability. But under the aforecited provision, when the seaman’s private physician disagrees with the assessment of the company-designated physician, as here, a third doctor’s opinion may be availed of in determining his disability. This however was not resorted to by the parties. As such, the credibility of the findings of their respective doctors was properly evaluated by the NLRC.

The Court has applied the Labor Code concept of permanent total disability to the case of seafarers. In a catena of cases,[10] the Court declared that disability should not be understood more on its medical significance but on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in the same kind of work, or work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment could do. In addition, the Court in GSIS v. Cadiz[11] and Ijares v. CA[12] held that permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body.

The company-designated physician cleared respondent for work resumption upon finding that his infection has subsided after successful medication. We agree with the NLRC that the doctor more qualified to assess the disability grade of the respondent seaman is the doctor who regularly monitored and treated him. The company-designated physician possessed personal knowledge of the actual condition of respondent. Since the company-designated physician in this case deemed the respondent as fit to work, then such declaration should be given credence, considering the amount of time and effort the company doctor gave to monitoring and treating respondent’s condition. It is undisputed that the recommendation of Dr. Vicaldo was based on a single medical report which outlined the alleged findings and medical history of respondent despite the fact that Dr. Vicaldo treated or examined respondent only once.

On the other hand, the company-designated physician outlined the progress of respondent’s successful treatment over a period of several months in several reports, as can be gleaned from the record. As between the findings of the company-designated physician (Dr. Alegre) and the physician appointed by respondent (Dr. Vicaldo), the former deserves to be given greater evidentiary weight.

All told, the Court finds and so rules that the CA committed reversible error in


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ignoring the medical assessment of the company-designated physician that respondent was cleared for work resumption as a seafarer and granting respondent’s claim for disability on the basis of a single medical examination report of respondent’s appointed physician contrary to the clear, unambiguous provisions regarding disability benefit claims contained in the POEA Contract between the parties.

WHEREFORE, the instant petition is GRANTED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 97098 is REVERSED and SET ASIDE. The decision of the NLRC, 2nd Division, is hereby REINSTATED. SO ORDERED.

111. ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. AND MARLOW NAVIGATION CO., INC.

[GR No. 167614 March 24, 2009]

Facts :

Sailor Antonio Serrano entered into a 12-month overseas employment contract with respondents Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd., initially signing up for the position of Chief Officer. Sailor Serrano, however, was persuaded to submit to a “downgraded” contract as Second Officer, on the assurance of eventual promotion to Chief Officer by the end of the following month. Having wandered around respondents’ ship for more than two months without being granted any promotion whatsoever, “he refused to stay on as Second Officer and was repatriated back to the Philippines,” with still nine (9) months and twenty- three (23) days left unserved. Sailor Serrano afterwards filed a complaint with the Labor Arbiter, charging respondents with constructive dismissal and demanding that he be paid the salary as corresponds to the remaining term of his contract. The

Arbiter ruled for him, concluding that there was illegal dismissal; however, Sailor Serrano was only awarded with salary equivalent to 3 months. The Arbiter relied on Section 10, parag. 5 of R.A. 8042 (the Migrant Workers and Overseas Filipino Act of 1995), which puts forth that—

“In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less”.

Gritty, our man now condemns the provision as unconstitutional, wailing how it “impairs the terms of their contract, deprives them of equal protection and denies them due process.”

SC Ruling:

Though it scoffed at the argument that the law unduly impairs their contract—enacted in 1995, the law is thus deemed read into the agreement forged between the parties in 1998— the Court, with straitlaced hesitation, declared the assailed clause “for three (3) months for every year of the unexpired term, whichever is less”unconstitutional, in that it did deny workers in similar situations (particularly OFWs) the right to equal protection and due process.

“…the subject clause creates a sub-layer of discrimination among OFWs** …those who are illegally dismissed with less than one year left in their contracts shall be entitled to their salaries for the entire unexpired portion thereof, while those who are illegally dismissed with one year or more remaining in their contracts shall be covered by the subject clause, and their monetary benefits limited to their salaries for three months only.”

Further magnifying the clause’s incompatibility with the right to equal protection of laws is the fact that it deprives overseas workers of a benefit granted without exception to domestic workers (the right to recover in cases of illegal dismissal the salary for the entire unexpired portion of the contract), with the government not being able to prove any compelling state interest warranting such damaging discrimination. As a matter of fact, before the law’s enactment, both domestic and overseas workers enjoyed the same right.

“...the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject


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clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.”

Bravo, sailor.

112. BECMEN SERVICE EXPORTER AND PROMOTION INC., VS SPOUSES CUARESMA,

GR Nos. 182978-79 & 184298-99 April 7, 2009

FACTS:

On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter and Promotion, Inc. (Becmen) to serve as assistant nurse in Al-Birk Hospital in the Kingdom of Saudi Arabia (KSA), for a contract duration of three years, with a corresponding salary of US$247.00 per month. Over a year later, she died allegedly of poisoning. Jessie Fajardo, a co-worker of Jasmin, narrated that on June 21, 1998, Jasmin was found dead by a female cleaner lying on the floor inside her dormitory room with her mouth foaming and smelling of poison.

Based on the police report and the medical report of the examining physician of the Al-Birk Hospital, who conducted an autopsy of Jasmin’s body, the likely cause of her death was poisoning.

Jasmin’s body was repatriated to Manila on September 3, 1998. The following day, the City Health Officer of Cabanatuan City conducted an autopsy and the resulting medical report indicated that Jasmin died under violent circumstances, and not poisoning as originally found by the KSA examining physician. The toxicology report of the NBI, however, tested negative for non-volatile, metallic poison and insecticides.

Simplicio and Mila Cuaresma (the Cuaresmas), Jasmin’s parents and her surviving heirs, received from the Overseas Workers Welfare Administration (OWWA) the following amounts: P50,000.00 for death benefits; P50,000.00 for loss of life; P20,000.00 for funeral expenses; and P10,000.00 for medical reimbursement.

On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its principal in the KSA, Rajab & Silsilah Company (Rajab), claiming death and insurance benefits, as well as moral and exemplary damages for Jasmin’s death, Jasmin’s death was work-related, having occurred at the employer’s premises; that under Jasmin’s contract with Becmen, she is entitled to “iqama insurance” coverage; that Jasmin is entitled to compensatory damages in the amount of US$103,740.00, which is the sum total of her monthly salary of US$247.00 per month under her employment contract, multiplied by 35 years (or the remaining years of her productive life had death not supervened at age 25, assuming that she lived and would have retired at age 60).

In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a prior unsuccessful suicide attempt sometime in March or April 1998 and relying on the medical report of the examining physician of the Al-Birk Hospital. They likewise deny liability because the Cuaresmas already recovered death and other benefits totaling P130,000.00 from the OWWA. They insist that the Cuaresmas are not entitled to “iqama insurance” because this refers to the “issuance” – not insurance – of iqama, or residency/work permit required in the KSA. On the issue of moral and exemplary damages, they claim that the Cuaresmas are not entitled to the same because they have not acted with fraud, nor have they been in bad faith in handling Jasmin’s case.


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While the case was pending, Becmen filed a manifestation and motion for substitution alleging that Rajab terminated their agency relationship and had appointed White Falcon Services, Inc. (White Falcon) as its new recruitment agent in the Philippines. Thus, White Falcon was impleaded as respondent as well, and it adopted and reiterated Becmen’s arguments in the position paper it subsequently filed.

ISSUES:

(1.) whether the Cuaresmas are entitled to monetary claims, by way of benefits and damages, for the death of their daughter Jasmin.

(2) whether or not Jasmin’s death be considered as work-connected and thus compensable even while she was not on duty;

HELD:

Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Article 21 of the Code states that any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. And, lastly, Article 24 requires that in all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.

Clearly, Rajab, Becmen and White Falcon’s acts and omissions are against public policy because they undermine and subvert the interest and general welfare of our OFWs abroad, who are entitled to full protection under the law. They set an awful example of how foreign employers and recruitment agencies should treat and act with respect to their distressed employees and workers abroad. Their shabby and callous treatment of Jasmin’s case; their uncaring attitude; their unjustified failure and refusal to assist in the determination of the true circumstances surrounding her mysterious death, and instead finding satisfaction in the unreasonable insistence that she committed suicide just so they can conveniently avoid pecuniary liability; placing their own corporate interests above of the welfare of their employee’s – all these are contrary to morals, good customs and public policy, and constitute taking advantage of the poor employee and her family’s ignorance, helplessness, indigence and lack of power and resources to seek the truth and obtain justice for the death of a loved one.

Giving in handily to the idea that Jasmin committed suicide, and adamantly insisting on it just to protect Rajab and Becmen’s material interest – despite evidence to the

contrary – is against the moral law and runs contrary to the good custom of not denouncing one’s fellowmen for alleged grave wrongdoings that undermine their good name and honor.

Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country.

The relations between capital and labor are so impressed with public interest,and neither shall act oppressively against the other, or impair the interest or convenience of the public. In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer.

The grant of moral damages to the employee by reason of misconduct on the part of the employer is sanctioned by Article 2219 (10) of the Civil Code, which allows recovery of such damages in actions referred to in Article 21.

Thus, in view of the foregoing, the Court holds that the Cuaresmas are entitled to moral damages, which Becmen and White Falcon are jointly and solidarily liable to pay, together with exemplary damages for wanton and oppressive behavior, and by way of example for the public good.

On the second issue:

While the “employer’s premises” may be defined very broadly not only to include premises owned by it, but also premises it leases, hires, supplies or uses, we are not prepared to rule that the dormitory wherein Jasmin stayed should constitute employer’s premises as would allow a finding that death or injury therein is considered to have been incurred or sustained in the course of or arose out of her employment. There are certainly exceptions, but they do not appear to apply here. Moreover, a complete determination would have to depend on the unique circumstances obtaining and the overall factual environment of the case, which are here lacking.

WHEREFORE, Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and Promotion, Inc., and their corporate directors and officers are found jointly and solidarily liable and ORDERED to indemnify


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the heirs of Jasmin Cuaresma, spouses Simplicio and Mila Cuaresma, the following amounts: (1) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as moral damages; (2) TWO MILLION FIVE HUNDRED THOUSAND PESOS (P2,500,000.00) as exemplary damages; (3)Attorney’s fees equivalent to ten percent (10%) of the total monetary award.

113. PEOPLE OF THE PHILIPPINES VS. LARRY “LAURO” DOMINGO

[GR No. 181475 April 07, 2009]

FACTS:Larry "Lauro" Domingo was accused of the

crime of illegal recruitment for recruiting and/or placing several workers under local or overseas employment despite being a non-licensee or non-holder of authority from the Department of Labor and Employment. This offense involved economic sabotage, as it was committed in large scale.

Informations for 23 counts of Estafa were also filed, all of which were similarly worded but varying with

respect to the name of each complainant and the amount which each purportedly gave to appellant.

Of the 23 complainants, only five testified. One complainant later recanted his testimony. The substance of their respective testimonies state that Domingo deceived the complainants by assuring them of employment abroad provided that they submit certain documents and pay the required placement fee and that complainants paid appellant the amount he asked on account of appellant’s representations which turned out to be false.

By Joint Decision dated October 19, 2004, the trial court found appellant guilty beyond reasonable doubt of Illegal Recruitment (Large Scale) and of 2 counts of Estafa

The appellate court affirmed the trial court’s decision holding that the straightforward and consistent testimonies of the complaining witnesses sufficiently supported the trial court’s conclusion that appellant undertook recruitment activities beginning September up to December 1999 in Malolos, Bulacan without the license therefor, and failed to deploy those he recruited.

As for the estafa cases, the appellate court held that the elements constituting the crime were sufficiently established.

Hence, the present appeal.

SC RULING:The appeal is bereft of merit. The term "recruitment and placement" is defined under Article 13(b) of the Labor Code of the Philippines as follows:(b) "Recruitment and placement" refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. (Emphasis supplied)On the other hand, Article 38, paragraph (a) of the Labor Code, as amended, under which the accused stands charged, provides: Art. 38. Illegal Recruitment. - (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Ministry of Labor and Employment or any law enforcement officer may initiate complaints under this Article.(b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof.Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. (Emphasis supplied)


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From the foregoing provisions, it is clear that any recruitment activities to be undertaken by non-licensee or non-holder of authority shall be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.To prove illegal recruitment in large scale, the prosecution must prove three essential elements, to wit: (1) the person charged undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) he/she did not have the license or the authority to lawfully engage in the recruitment and placement of workers; and (3) he/she committed the prohibited practice against three or more persons individually or as a group.7The Court finds that the prosecution ably discharged its onus of proving the guilt beyond reasonable doubt of appellant of the crimes charged.That no receipt or document in which appellant acknowledged receipt of money for the promised jobs was adduced in evidence does not free him of liability. For even if at the time appellant was promising employment no cash was given to him, he is still considered as having been engaged in recruitment activities, since Article 13(b) of the Labor Code states that the act of recruitment may be for profit or not. It suffices that appellant promised or offered employment for a fee to the complaining witnesses to warrant his conviction for illegal recruitment.That one of the original complaining witnesses, Cabigao, later recanted, via an affidavit and his testimony in open court, does not necessarily cancel an earlier declaration. Like any other testimony, the same is subject to the test of credibility and should be received with caution.8 For a testimony solemnly given in court should not be set aside lightly, least of all by a mere affidavit executed after the lapse of considerable time. In the case at bar, the Affidavit of Recantation was executed three years after the complaint was filed. It is thus not unreasonable to consider his retraction an afterthought to deny its probative value. AT ALL EVENTS, the Court finds that the prosecution evidence consisting of the testimonies of the four complainants, whose credibility has not been impaired, has not been overcome.

WHEREFORE, the petition is DENIED.

114. ATCI OVERSEAS CORP. ET. AL., VS ECHIN

GR No. 178551, Oct. 11, 2010

Foreign law; burden of proof; processual presumption.As to petitioners’ contentions that Philippine labor laws on probationary employment are not applicable since it was expressly provided in respondent’s employment contract, which she voluntarily entered into, that the terms of her engagement shall be governed by prevailing Kuwaiti Civil Service Laws and Regulations as in fact POEA Rules accord respect to such rules, customs and practices of the host country, the same was not substantiated. Indeed, a contract freely entered into is considered the law between the parties who can establish stipulations, clauses, terms and conditions as they may deem convenient, including the laws which they wish to govern their respective obligations, as long as they are not contrary to law, morals, good customs, public order or public policy. It is hornbook principle, however, that the party invoking the application of a foreign law has the burden of proving the law, under the doctrine of processual presumption which, in this case, petitioners failed to discharge. The Court’s ruling in EDI-Staffbuilders Int’l., v. NLRC illuminates:

In the present case, the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract (e.g. specific causes for termination, termination procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply to the contract, Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran.


http://www.lawphil.net/judjuris/juri2009/apr2009/gr_181475_2009.html#fnt8%23fnt8

http://www.lawphil.net/judjuris/juri2009/apr2009/gr_181475_2009.html#fnt7%23fnt7

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In international law, the party who wants to have a foreign law applied to a dispute or case has the burden of proving the foreign law. The foreign law is treated as a question of fact to be properly pleaded and proved as the judge or labor arbiter cannot take judicial notice of a foreign law. He is presumed to know only domestic or forum law.

Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the International Law doctrine of presumed-identity approach or processual presumption comes into play. Where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours. Thus, we apply Philippine labor laws in determining the issues presented before us. (emphasis and underscoring supplied)

Foreign law; no judicial notice of foreign law. The Philippines does not take judicial notice of foreign laws, hence, they must not only be alleged; they must be proven. To prove a foreign law, the party invoking it must present a copy thereof and comply with Sections 24 and 25 of Rule 132 of the Revised Rules of Court which reads:

SEC. 24.Proof of official record. — The record of public documents referred to in paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office. (emphasis supplied)

SEC. 25. What attestation of copy must state. — Whenever a copy of a document or record is attested for the purpose of the evidence, the attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be. The attestation must be under the official seal of the attesting officer, if there be any, or if he be the clerk of a court having a seal, under the seal of such court.

To prove the Kuwaiti law, petitioners submitted the following: MOA between respondent and the Ministry, as represented by ATCI, which provides that the employee is subject to a probationary period of one (1) year and that the host country’s Civil Service Laws and Regulations apply; a translated copy (Arabic to English) of the termination letter to respondent stating that she did not pass the probation terms, without specifying the grounds therefor, and a translated copy of the certificate of termination, both of which documents were certified by Mr. Mustapha Alawi, Head of the Department of Foreign Affairs-Office of Consular Affairs Inslamic Certification and Translation Unit; and respondent’s letter of reconsideration to the Ministry, wherein she noted that in her first eight (8) months of employment, she was given a rating of

“Excellent” albeit it changed due to changes in her shift of work schedule.

These documents, whether taken singly or as a whole, do not sufficiently prove that respondent was validly terminated as a probationary employee under Kuwaiti civil service laws. Instead of submitting a copy of the pertinent Kuwaiti labor laws duly authenticated and translated by Embassy officials thereat, as required under the Rules, what petitioners submitted were mere certifications attesting only to the correctness of the translations of the MOA and the termination letter which does not prove at all that Kuwaiti civil service laws differ from Philippine laws and that under such Kuwaiti laws, respondent was validly terminated. Thus the subject certifications read:

x x x x

This is to certify that the herein attached translation/s from Arabic to English/Tagalog and or vice versa was/were presented to this Office for review and certification and the same was/were found to be in order. This Office, however, assumes no responsibility as to the contents of the document/s.

This certification is being issued upon request of the interested party for whatever legal purpose it may serve. (emphasis supplied)


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115. YAP VS. THENAMARIS SHIP MANAGEMENT ET AL., G.R. NO. 179532, MAY 30, 2011

FACTS: [Petitioner] Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. The contract of employment entered into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. The Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December 2001 in a letter signed by Capt. Adviento. Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold and will be scrapped. They were also informed about the Advisory sent by Capt. Constatinou.

Thus, Claudio S. Yap (petitioner) filed a complaint for Illegal Dismissal with Damages and Attorney's Fees before the Labor Arbiter (LA). Petitioner claimed that he was entitled to the salaries corresponding to the unexpired portion of his contract. Subsequently, he filed an amended complaint, impleading Captain Francisco Adviento of respondents Intermare Maritime Agencies, Inc. (Intermare) and Thenamaris Ship's Management (respondents), together with C.J. Martionos, Interseas Trading and Financing Corporation, and Vulture Shipping Limited/Stejo Shipping Limited.

ISSUE: Whether the tanker allowance of US$130.00 should be included in the computation of the lump-sum salary to be awarded to petitioner.

RULING: Yes. First. It is only at this late stage, more particularly in their Memorandum, that respondents are raising this issue. It was not raised before the LA, the NLRC, and the CA. They did not even assail the award accorded by the CA, which computed the lump-sum salary of petitioner at the basic salary of US$1,430.00, and which clearly included the US$130.00 tanker allowance. Hence, fair play, justice, and due process dictate that this Court cannot now, for the first time on appeal, pass upon this question. Matters not taken up below cannot be raised for the first time on appeal. They must be raised seasonably in the proceedings before the lower tribunals. Questions raised on appeal must be within the issues framed by the parties; consequently, issues not raised before the lower tribunals cannot be raised for the first time on appeal.

Second. Respondents' invocation of Serrano is unavailing. Indeed, we made the following pronouncements in Serrano, to wit:

The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a

Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work "performed" in excess of the regular eight hours, and holiday pay is compensation for any work "performed" on designated rest days and holidays.[32]

A close perusal of the contract reveals that the tanker allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming part of the basic salary of petitioner. Respondents themselves in their petition for certiorari before the CA averred that petitioner's basic salary, pursuant to the contract, was "US$1,300.00 + US$130.00 tanker allowance."[33] If respondents intended it differently, the contract per se should have indicated that said allowance does not form part of the basic salary or, simply, the contract should have separated it from the basic salary clause.


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116. SKIPPERS UNITED PACIFIC VS DOZA ET AL

GR No. 175558

Facts:

Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia, Lata, and Aprosta to work on board the vessel MV Wisdom Star, under the terms and conditions.Paragraph 2 of all the employment contracts stated that: "The terms and conditions of the Revised Employment Contract Governing the Employment of All Seafarers approved per Department Order No. 33 and Memorandum Circular No. 55, both series of 1996 shall be strictly and faithfully observed." No employment contract was submitted for Nathaniel Doza.De Gracia, et al., claimed that Skippers failed to remit their respective allotments for almost five months, compelling them to air their grievances with the Romanian Seafarers Free Union. On 16 December 1998, ITF Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax letter, relaying the complaints of his crew, namely: home allotment delay, unpaid salaries (only advances), late provisions, lack of laundry services (only one washing machine), and lack of maintenance of the vessel (perforated and unrepaired deck). To date, however, Skippers only failed to remit the home allotment for the month of December 1998. On 28 January 1999, De Gracia, et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated. Upon arrival in the Philippines, De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter on 4 April 1999 and prayed for payment of their home allotment for the month of December 1998, salaries for the unexpired portion of their contracts, moral damages, exemplary damages, and attorney's fees.

Skippers, on the other hand, claims that at around 2:00 a.m. on 3 December 1998, De Gracia, smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, Master of MV Wisdom Stars, and was rude, shouting noisily to the master. De Gracia left the master's cabin after a few minutes and was heard shouting very loudly somewhere down the corridors. This incident was evidenced by the Captain's Report sent via telex to Skippers on said date.

Issues:

Skippers, in its Petition for Review on Certiorari, assigned the following errors in the CA Decision:

a)The Court of Appeals seriously erred in not giving due credence to the master's telex message showing that the respondents voluntarily requested to be repatriated.

b)The Court of Appeals seriously erred in finding petitioners liable to pay backwages and the alleged unremitted home allotment pay

despite the finding of the Labor Arbiter and the NLRC that the claims are baseless.

c)The Court of Appeals seriously erred in awarding attorney's fees in favor of respondents despite its findings that the facts attending in this case do not support the claim for moral and exemplary damages.

Ruling:

As admitted by Skippers in its Position Paper, the home allotment pay for December 1998 due to De Gracia, Lata and Aprosta is:

SeafarerHome Allotment PayDe GraciaUS$900.00AprostaUS$600.00LataUS$600.00

The monthly salary of De Gracia, according to his employment contract, is only US$800.00. However, since Skippers admitted in its Position Paper a higher home allotment pay for De Gracia, we award the higher amount of home allotment pay for De Gracia in the amount of US$900.00. Since the home allotment pay can be considered as unpaid salaries, the peso equivalent of the dollar amount should be computed using the prevailing rate at the time of termination since it was due and demandable to De Gracia, et al., on 28 January 1999.Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co., Inc., the Court, in an En Banc Decision, declared unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" and awarded the entire unexpired portion of the employment contract to the overseas Filipino worker.On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once again reiterated the provision of awarding the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less.


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Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA 10022, we shall apply RA 8042, as unamended, without touching on the constitutionality of Section 7 of RA 10022.The declaration in March 2009 of the unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is less" in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional provision is inoperative, as if it was not passed into law at all. In this case, we agree with the CA in not awarding moral and exemplary damages for lack of factual basis.

117. INTERNATIONAL MANAGEMENT SERVICES VS LOGARTA

GR No. 163657 April 18, 2012

Facts:

Sometime in 1997, the petitioner recruitment agency, International Management Services (IMS), a single proprietorship owned and operated by Marilyn C. Pascual, deployed respondent Roel P. Logarta to work for Petrocon Arabia Limited (Petrocon) in Alkhobar, Kingdom of Saudi Arabia, in connection with general engineering services of

Petrocon for the Saudi Arabian Oil Company (Saudi Aramco). Respondent was employed for a period of two (2) years, commencing on October 2, 1997, with a monthly salary of eight hundred US Dollars (US$800.00). In October 1997, respondent started to work for Petrocon as Piping Designer for works on the projects of Saudi Aramco.

However, in a letter dated April 29, 1998, Saudi Aramco notified Petrocon that due to changes in the general engineering services work forecast for 1998, the man-hours that were formerly allotted to Petrocon is going to be reduced by 40%. DTAcIaConsequently, due to the considerable decrease in the work requirements of Saudi Aramco, Petrocon was constrained to reduce its personnel that were employed as piping designers, instrument engineers, inside plant engineers, etc., which totaled to some 73 personnel, one of whom was respondent.Thus, on June 1, 1998, Petrocon gave respondent a written notice informing the latter that due to the lack of project works related to his expertise, he is given a 30-day notice of termination, and that his last day of work with Petrocon will be on July 1, 1998. Petrocon also informed respondent that all due benefits in accordance with the terms and conditions of his employment contract will be paid to respondent, including his ticket back to the Philippines.On June 23, 1998, respondent, together with his co-employees, requested Petrocon to issue them a letter of Intent stating that the latter will issue them a No Objection Certificate once they find another employer before they leave Saudi Arabia. On June 27, 1998, Petrocon granted the request and issued a letter of intent to respondent. Before his departure from Saudi Arabia, respondent received his final paycheck from Petrocon amounting SR7,488.57.Upon his return, respondent filed a complaint with the Regional Arbitration Branch VII, National Labor Relations Commission (NLRC), Cebu City, against petitioner as the recruitment agency which employed him for employment abroad. In filing the complaint, respondent sought to recover his unearned salaries covering the unexpired portion of his employment contract with Petrocon on the ground that he was illegally dismissed.

In ruling in favor of the respondent, the CA agreed with the findings of the NLRC that retrenchment could be a valid cause to terminate respondent's employment with Petrocon. Considering that there was a considerable reduction in Petrocon's work allocation from Saudi Aramco, the reduction of its work personnel was a valid exercise of management prerogative to reduce the number of its personnel, particularly in those fields affected by the reduced work allocation from Saudi Aramco. However, although there was a valid ground for retrenchment, the same was implemented without complying with the requisites of a valid retrenchment. Also, the CA concluded that although the respondent was given a 30-day notice of his termination, there was no showing that the Department of Labor and Employment (DOLE) was also sent a copy of the said notice as required by law. Moreover, the CA found


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that a perusal of the check payroll details would readily show that respondent was not paid his separation pay.

Issue:

Whether or not the court of appeals committed reversible error in ruling that the 30-day notice to dole prior to retrenchment is not applicable in this case.

Ruling:

Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages. It is one of the economic grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize business losses. Retrenchment programs are purely business decisions within the purview of a valid and reasonable exercise of management prerogative. It is one way of downsizing an employer's workforce and is often resorted to by the employer during periods of business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient machinery or automation. It is a valid management prerogative, provided it is done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence. In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW in Saudi Arabia, still both he and his employer are subject to the provisions of the Labor Code when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations. In the case of Royal Crown Internationale v. NLRC, this Court has made the policy pronouncement, thus: SEHaDI

. . . . Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. . . .

Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or overseas Filipino worker under Article 283 of the Labor Code, which provides:

Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor-saving

devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.

Thus, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence, to wit: DHSCTI

(1)That the retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;(2)That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;(3)That the employer pays the retrenched employees separation pay equivalent to one month pay or at least 1/2 month pay for every year of service, whichever is higher;(4)That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure; and(5)That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who


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would be retained among the employees, such as status, . . . efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

Applying the above-stated requisites for a valid retrenchment in the case at bar, it is apparent that the first, fourth and fifth requirements were complied with by respondent's employer. However, the second and third requisites were absent when Petrocon terminated the services of respondent.As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to retrench its employees in good faith and the considerable reduction of work allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the number of its personnel, thus:

Moreover, from the standard form of employment contract relied upon by the Labor Arbiter, it is clear that unilateral cancellation (sic) may be effected for "legal, just and valid cause or causes." Clearly, contrary to the Labor Arbiter's perception, the enumerated causes for employment termination by the employer in the standard form of employment contract is not exclusive in the same manner that the listed grounds for termination by the employer is not exclusive. As pointed out above, under Sec. 10 of RA 8042, it is clear that termination of employment may be for just, valid or authorized cause as defined by law or contract. Retrenchment being indubitably a legal and authorized cause may be availed of by the respondent. THESADFrom the records, it is clearly shown that there was a drastic reduction in Petrocon's 1998 work allocation from 250,000 man-hours to only 80,000 man-hours. Under these circumstances over which respondent's principal, Petrocon had no control, it was clearly a valid exercise of management prerogative to reduce personnel particularly those without projects to work on. To force Petrocon to continue maintaining all its workers even those without projects is tantamount to oppression. "The determination to cease operation is a prerogative of management which the state does not usually interfere with as no business or undertaking must be required to continue at a loss simply because it has to maintain its employees in employment. Such an act would be tantamount to a taking of property

without due process of law. (Industrial Timber Corp. vs. NLRC, 273 SCRA 200)

As to complying with the fifth requirement, the CA was correct when it ruled that:

As to the fifth requirement, the NLRC considered the following criteria fair and reasonable in ascertaining who would be dismissed and who would be retained among the employees; (i) less preferred status; (ii) efficiency rating; (iii) seniority; and (iv) proof of claimed financial losses.The primary reason for respondent's termination is lack of work project specifically related to his expertise as piping designer. Due to the highly specialized nature of Logarta's job, we find that the availability of work and number of allocated man-hours for pipeline projects are sufficient and reasonable criteria in determining who would be dismissed and who would be retained among the employees. Consequently, we find the criterion of less preferred status and efficiency rating not applicable.The list of terminated employees submitted by Petrocon, shows that other employees, with the same designation as Logarta's (Piping Designer II), were also dismissed. Terminated, too, were employees designated as Piping Designer I and Piping Designer. Hence, employees whose job designation involves pipeline works were without bias terminated.As to seniority, at the time the notice of termination was given to him, Logarta's employment was eight (8) months, clearly, he has not accumulated sufficient years to claim seniority. THIcCAAs to proof of claimed financial losses, the NLRC itself has recognized the drastic reduction of Petrocon's work allocation, thereby necessitating the retrenchment of some of its employees.

As for the notice requirement, however, contrary to petitioner's contention, proper notice to the DOLE within 30 days prior to the intended date of retrenchment is necessary and must be complied with despite the fact that respondent is an overseas Filipino worker. In the present case, although respondent was duly notified of his termination by Petrocon 30 days before its effectivity, no allegation or proof was advanced by petitioner to establish that Petrocon ever sent a notice to the DOLE 30 days


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before the respondent was terminated. Thus, this requirement of the law was not complied with.

118. PERT/CPM MANPOWER EXPONENT CO VS VINUYA

GR No. 197528 September 8, 2012

Facts: On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito S. Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc.(agency), and its President Romeo P. Nacino.

The respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to work as aluminum fabricator/installer for the agency's principal, Modern Metal Solution LLC/MMS Modern Metal Solution LLC (Modern Metal) in Dubai, United Arab Emirates.

The respondents claimed that they were shocked to find out what their working and living conditions were in Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half hours. When they rendered overtime work, they were most of the time either underpaid or not paid at all. Their housing accommodations were cramped and were shared with 27 other occupants. The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving them only three to four hours of sleep a day because of the long hours of

travel to and from their place of work; there was no potable water and the air was polluted.

On August 5, 2007, despondent over their unbearable living and working conditions and by the agency's inaction, the respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, that Modern Metal would not give them their salaries and release papers, the respondents, except Era, cited personal/family problems for their resignation. Era mentioned the real reason — "because I dont (sic) want the company policy" — for his resignationFor its part, the agency countered that the respondents were not illegally dismissed; they voluntarily resigned from their employment to seek a better paying job. It claimed that the respondents, while still working for Modern Metal, applied with another company which offered them a higher pay. Unfortunately, their supposed employment failed to materialize and they had to go home because they had already resigned from Modern Metal.The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim and release after they resigned. It thus argued that their claim for benefits, under Section 10 of Republic Act No. (R.A.) 8042, damages and attorney's fees is unfounded.

Issue:

Whether or not the respondents are entitled to the benefits that they sought to claim.

Ruling:

We find no merit in the petition. The CA committed no reversible error and neither did it commit grave abuse of discretion in affirming the NLRC's illegal dismissal ruling.The agency and its principal, Modern Metal, committed flagrant violations of the law on overseas employment, as well as basic norms of decency and fair play in an employment relationship, pushing the respondents to look for a better employment and, ultimately, to resign from their jobs.First. The agency and Modern Metal are guilty of contract substitution. The respondents entered into a POEA-approved two-year employment contract, with Modern Metal providing among others, as earlier discussed, for a monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them appointment letters whereby the respondents were hired for a longer three-year period and a reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were required to sign new employment contracts reflecting the same terms contained in their appointment letters, except that this time, they were hired as "ordinary laborer," no longer aluminum fabricator/installer. The respondents complained with the agency about the contract substitution, but the agency refused or failed to act on the matter.The fact that the respondents' contracts were altered or substituted at the workplace had never been denied by the agency. On the contrary, it admitted that the contract substitution did happen when it argued, "[a]s to their claim


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for [underpayment] of salary, their original contract mentioned 1350 AED monthly salary, which includes allowance while in their Appointment Letters, they were supposed to receive 1,300 AED. While there was [a] difference of 50 AED monthly, the same could no longer be claimed by virtue of their Affidavits of Quitclaims and Desistance[.]"Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal recruitment under the law. Article 34 of the Labor Code provides:

Art. 34.Prohibited Practices. — It shall be unlawful for any individual, entity, licensee, or holder of authority: cAaETSxxx xxx xxx(i)To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor[.]

Further, Article 38 of the Labor Code, as amended by R.A. 8042, defined "illegal recruitment" to include the following act:

(i)To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment[.]

Second. The agency and Modern Metal committed breach of contract. Aggravating the contract substitution imposed upon them by their employer, the respondents were made to suffer substandard (shocking, as they put it) working and living arrangements. Both the original contracts the respondents signed in the Philippines and the appointment letters issued to them by Modern Metal in Dubai provided for free housing and transportation to and from the jobsite. The original contract mentioned free and suitable housing. Although no description of the housing was made in the letters of appointment except: "Accommodation: Provided by the company," it is but reasonable to think that the housing or accommodation would be "suitable."As earlier pointed out, the respondents were made to work from 6:30 a.m. to 6:30 p.m., with a meal break of one to one and a half hours, and their overtime work was mostly not paid or underpaid. Their living quarters were cramped as they shared them with 27 other workers. The lodging house was in Sharjah, far from the jobsite in Dubai, leaving them only three to four hours of sleep every workday because of the long hours of travel to and from their place of work, not to mention that there was no potable water in the lodging house which was located in an area where the air was polluted. The respondents complained with the agency about the hardships that they were suffering, but the agency failed to act on their reports. Significantly, the

agency failed to refute their claim, anchored on the ordeal that they went through while in Modern Metal's employ.Third. With their original contracts substituted and their oppressive working and living conditions unmitigated or unresolved, the respondents' decision to resign is not surprising. They were compelled by the dismal state of their employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or discharge is "a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay." Without doubt, the respondents' continued employment with Modern Metal had become unreasonable. A reasonable mind would not approve of a substituted contract that pays a diminished salary — from 1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms, or a "free and suitable" housing which is hours away from the job site, cramped and crowded, without potable water and exposed to air pollution.cSEaTHWe thus cannot accept the agency's insistence that the respondents voluntarily resigned since they personally prepared their resignation letters in their own handwriting, citing family problems as their common ground for resigning. As the CA did, we find the resignation letters "dubious," not only for having been lopsidedly worded to ensure that the employer is rendered free from any liability, but also for the odd coincidence that all the respondents had, at the same time, been confronted with urgent family problems so that they had to give up their employment and go home. The truth, as the respondents maintain, is that they cited family problems as reason out of fear that Modern Metal would not give them their salaries and their release papers. Only Era was bold enough to say the real reason for his resignation — to protest company policy.We likewise find the affidavits of quitclaim and release which the respondents executed suspect. Obviously, the affidavits were prepared as a follow through of the respondents' supposed voluntary resignation. Unlike the resignation letters, the respondents had no hand in the preparation of the affidavits. They must have been prepared by a representative of Modern Metal as they appear to come from a standard form and were apparently introduced for only one purpose — to lend credence to the resignation letters. In Modern Metal's haste, however, to secure the respondents' affidavits, they did not check on the model they used. Thus, Lumanta's affidavit mentioned a G &A International Manpower as his recruiting agency, an entity totally unknown to the respondents; the same thing is true for Era's affidavit. This confusion is an indication of the employer's hurried attempt to avoid liability to the respondents.The respondents' position is well-founded. The NLRC itself had the same impression, which we find in order and hereunder quote:

The acts of respondents of requiring the signing of new contracts upon reaching the place of work and requiring employees to sign quitclaims before they are


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paid and repatriated to the Philippines are all too familiar stories of despicable labor practices which our employees are subjected to abroad. While it is true that quitclaims are generally given weight, however, given the facts of the case, We are of the opinion that the complainants-appellants executed the same under duress and fear that they will not be allowed to return to the Philippines.

The agency's objection to the application of the Serrano ruling in the present case is of no moment. Its argument that the ruling cannot be given retroactive effect, because it is curative and remedial, is untenable. It points out, in this respect, that the respondents filed the complaint in 2007, while the Serrano ruling was handed down in March 2009. The issue, as the respondents correctly argue, has been resolved in Yap v. Thenamaris Ship's Management, where the Court sustained the retroactive application of the Serrano ruling which declared unconstitutional the subject clause in Section 10, paragraph 5 of R.A. 8042, limiting to three months the payment of salaries to illegally dismissed Overseas Filipino Workers.Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022, entitled "An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, As Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress, and for Other Purposes." It argues that R.A. 10022, which lapsed into law (without the Signature of the President) on March 8, 2010, restored the subject clause in the 5th paragraph, Section 10 of R.A. 8042. The amendment, contained in Section 7 of R.A. 10022, reads as follows:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled to the full reimbursement "of" his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. (emphasis ours) HcACTE

This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is provided. By its very nature, the amendment introduced by R.A. 10022 — restoring a provision of R.A. 8042 declared unconstitutional — cannot be given retroactive effect, not only because there is no express declaration of retroactivity in the law, but because retroactive application will result in

an impairment of a right that had accrued to the respondents by virtue of the Serrano ruling — entitlement to their salaries for the unexpired portion of their employment contracts.WHEREFORE, premises considered, the petition is DENIED.


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119. HON. STO. TOMAS ET AL VS SALAC ET AL

GR Nos. 152642 & 152710 November 13, 2012

G.R. 167590(Constitutionality of Sections 6, 7, and 9 of R.A. 8042)

On August 21, 1995 respondent Philippine Association of Service Exporters, Inc. (PASEI) filed a petition for declaratory relief and prohibition with prayer for issuance of TRO and writ of preliminary injunction before the RTC of Manila, seeking to annul Sections 6, 7, and 9 of R.A. 8042 for being unconstitutional. (PASEI also sought to annul a portion of Section 10 but the Court will take up this point later together with a related case.)Section 6 defines the crime of "illegal recruitment" and enumerates the acts constituting the same. Section 7 provides the penalties for prohibited acts. Thus:

SEC. 6.Definition. — For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-license or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That such non-license or non-holder, who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority:xxx xxx xxxSEC. 7.Penalties. —(a)Any person found guilty of illegal recruitment shall suffer the penalty of imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years and a fine not less than two hundred thousand pesos (P200,000.00) nor more than five hundred thousand pesos (P500,000.00).(b)The penalty of life imprisonment and a fine of not less than five hundred thousand pesos (P500,000.00) nor more than one million pesos (P1,000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein.

Provided, however, That the maximum penalty shall be imposed if the person illegally recruited is less than eighteen (18) years of age or committed by a non-licensee or non-holder of authority.

Finally, Section 9 of R.A. 8042 allowed the filing of criminal actions arising from "illegal recruitment" before the RTC of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense.The RTC of Manila declared Section 6 unconstitutional after hearing on the ground that its definition of "illegal recruitment" is vague as it fails to distinguish between licensed and non-licensed recruiters and for that reason gives undue advantage to the non-licensed recruiters in violation of the right to equal protection of those that operate with government licenses or authorities.But "illegal recruitment" as defined in Section 6 is clear and unambiguous and, contrary to the RTC's finding, actually makes a distinction between licensed and non-licensed recruiters. By its terms, persons who engage in "canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers" without the appropriate government license or authority are guilty of illegal recruitment whether or not they commit the wrongful acts enumerated in that section. On the other hand, recruiters who engage in the canvassing, enlisting, etc. of OFWs, although with the appropriate government license or authority, are guilty of illegal recruitment only if they commit any of the wrongful acts enumerated in Section 6.The Manila RTC also declared Section 7 unconstitutional on the ground that its sweeping application of the penalties failed to make any distinction as to the seriousness of the act committed for the application of the penalty imposed on such violation. As an example, said the trial court, the mere failure to render a report under Section 6 (h) or obstructing the inspection by the Labor Department under Section 6 (g) are penalized by imprisonment for six years and one day and a minimum fine of P200,000.00 but which could unreasonably go even as high as life imprisonment if committed by at least three persons.Apparently, the Manila RTC did not agree that the law can impose such grave penalties upon what it believed were specific acts that were not as condemnable as the others in the lists. But, in fixing uniform penalties for each of the enumerated acts under Section 6, Congress was within its prerogative to determine what individual acts are equally reprehensible, consistent with the State policy of according full protection to labor, and deserving of the same penalties. It is not within the power of the Court to question the wisdom of this kind of choice. Notably, this legislative policy has been further stressed in July 2010 with the enactment of R.A. 10022 which increased even more the duration of the penalties of imprisonment and the amounts of fine for the commission of the acts listed under Section 7.Obviously, in fixing such tough penalties, the law considered the unsettling fact that OFWs must work outside the country's borders and beyond its immediate protection. The law must, therefore, make an effort to somehow protect them from conscienceless individuals within its


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jurisdiction who, fueled by greed, are willing to ship them out without clear assurance that their contracted principals would treat such OFWs fairly and humanely.As the Court held in People v. Ventura, the State under its police power "may prescribe such regulations as in its judgment will secure or tend to secure the general welfare of the people, to protect them against the consequence of ignorance and incapacity as well as of deception and fraud." Police power is "that inherent and plenary power of the State which enables it to prohibit all things hurtful to the comfort, safety, and welfare of society."The Manila RTC also invalidated Section 9 of R.A. 8042 on the ground that allowing the offended parties to file the criminal case in their place of residence would negate the general rule on venue of criminal cases which is the place where the crime or any of its essential elements were committed. Venue, said the RTC, is jurisdictional in penal laws and, allowing the filing of criminal actions at the place of residence of the offended parties violates their right to due process. Section 9 provides:

SEC. 9.Venue. — A criminal action arising from illegal recruitment as defined herein shall be filed with the Regional Trial Court of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense: Provided, That the court where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts: Provided, however, That the aforestated provisions shall also apply to those criminal actions that have already been filed in court at the time of the effectivity of this Act.

But there is nothing arbitrary or unconstitutional in Congress fixing an alternative venue for violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed, Section 15 (a), Rule 110 of the latter Rules allows exceptions provided by laws. Thus:

SEC. 15.Place where action is to be instituted. — (a) Subject to existing laws, the criminal action shall be instituted and tried in the court of the municipality or territory where the offense was committed or where any of its essential ingredients occurred. (Emphasis supplied)xxx xxx xxx

Section 9 of R.A. 8042, as an exception to the rule on venue of criminal actions is, consistent with that law's declared policy 15 of providing a criminal justice system that protects and serves the best interests of the victims of illegal recruitment.

G.R. 167590, G.R. 182978-79, and G.R. 184298-99 (Constitutionality of Section 10, last sentence of 2nd paragraph)

G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent spouses Simplicio and Mila Cuaresma

(the Cuaresmas) filed a claim for death and insurance benefits and damages against petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services, Inc. (White Falcon) for the death of their daughter Jasmin Cuaresma while working as staff nurse in Riyadh, Saudi Arabia.The Labor Arbiter (LA) dismissed the claim on the ground that the Cuaresmas had already received insurance benefits arising from their daughter's death from the Overseas Workers Welfare Administration (OWWA). The LA also gave due credence to the findings of the Saudi Arabian authorities that Jasmin committed suicide.On appeal, however, the National Labor Relations Commission (NLRC) found Becmen and White Falcon jointly and severally liable for Jasmin's death and ordered them to pay the Cuaresmas the amount of US$113,000.00 as actual damages. The NLRC relied on the Cabanatuan City Health Office's autopsy finding that Jasmin died of criminal violence and rape.Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals (CA). 18 On June 28, 2006 the CA held Becmen and White Falcon jointly and severally liable with their Saudi Arabian employer for actual damages, with Becmen having a right of reimbursement from White Falcon. Becmen and White Falcon appealed the CA Decision to this Court.On April 7, 2009 the Court found Jasmin's death not work-related or work-connected since her rape and death did not occur while she was on duty at the hospital or doing acts incidental to her employment. The Court deleted the award of actual damages but ruled that Becmen's corporate directors and officers are solidarily liable with their company for its failure to investigate the true nature of her death. Becmen and White Falcon abandoned their legal, moral, and social duty to assist the Cuaresmas in obtaining justice for their daughter. Consequently, the Court held the foreign employer Rajab and Silsilah, White Falcon, Becmen, and the latter's corporate directors and officers jointly and severally liable to the Cuaresmas for: 1) P2,500,000.00 as moral damages; 2) P2,500,000.00 as exemplary damages; 3) attorney's fees of 10% of the total monetary award; and 4) cost of suit.On July 16, 2009 the corporate directors and officers of Becmen, namely, Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio and Eddie De Guzman (Gumabay, et al.) filed a motion for leave to Intervene. They questioned the constitutionality of the last sentence of the second paragraph of Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and solidarily liable with their company for money claims filed by OFWs against their employers and the recruitment firms. On September 9, 2009 the Court allowed the intervention and admitted Gumabay, et al.'s motion for reconsideration.The key issue that Gumabay, et al. present is whether or not the 2nd paragraph of Section 10, R.A. 8042, which holds the corporate directors, officers, and partners of recruitment and placement agencies jointly and solidarily liable for money claims and damages that may be adjudged against the latter agencies, is unconstitutional.In G.R. 167590 (the PASEI case), the Quezon City RTC held as unconstitutional the last sentence of the 2nd


http://cdasiaonline.com/search/show_article/56383?search=gr%3A+(152642*)#footnotes

http://cdasiaonline.com/search/show_article/56383?search=gr%3A+(152642*)#footnotes

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paragraph of Section 10 of R.A. 8042. It pointed out that, absent sufficient proof that the corporate officers and directors of the erring company had knowledge of and allowed the illegal recruitment, making them automatically liable would violate their right to due process of law.The pertinent portion of Section 10 provides:

SEC. 10.Money Claims. — . . .The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the workers. If the recruitment/placement ag

ency is a juridical being, the corporate officers and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid claims and damages. (Emphasis supplied)

But the Court has already held, pending adjudication of this case, that the liability of corporate directors and officers is not automatic. To make them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of that company, such as sponsoring or tolerating the conduct of illegal activities. In the case of Becmen and White Falcon, while there is evidence that these companies were at fault in not investigating the cause of Jasmin's death, there is no mention of any evidence in the case against them that intervenors Gumabay, et al., Becmen's corporate officers and directors, were personally involved in their company's particular actions or omissions in Jasmin's case.As a final note, R.A. 8042 is a police power measure intended to regulate the recruitment and deployment of OFWs. It aims to curb, if not eliminate, the injustices and abuses suffered by numerous OFWs seeking to work abroad. The rule is settled that every statute has in its favor the presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws enacted by the Legislative Department. Hence, in the absence of a clear and unmistakable case that the statute is unconstitutional, the Court must uphold its validity.

120. SAMEER OVERSEAS PLACEMENT AGENCY INC., VS CABILES, GR. NO. 170139, AUGUST 5, 2014, EN BANC

FACTS: Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment and placement agency.5Responding to an ad it published, respondent, Joy C. Cabiles, submitted her application for a quality control job in Taiwan.6cralawred

Joy’s application was accepted.7 Joy was later asked to sign a one-year employment contract for a monthly salary of NT$15,360.00.8 She alleged that Sameer Overseas Agency required her to pay a placement fee of P70,000.00 when she signed the employment contract.9cralawred

Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on June 26, 1997.10 She alleged that in her employment contract, she agreed to work as quality control for one year.11 In Taiwan, she was asked to work as a cutter.12cralawred

Sameer Overseas Placement Agency claims that on July 14, 1997, a certain Mr. Huwang from Wacoal informed Joy, without prior notice, that she was terminated and that “she should immediately report to their office to get her salary and passport.”13 She was asked to “prepare for immediate repatriation.”14cralawred

Joy claims that she was told that from June 26 to July 14, 1997, she only earned a total of NT$9,000.15According to her, Wacoal deducted NT$3,000 to cover her plane ticket to Manila.16cralawred

On October 15, 1997, Joy filed a complaint17 with the National Labor Relations Commission against petitioner and Wacoal. She claimed that she was illegally dismissed.18 She asked for the return of her placement fee, the withheld amount for repatriation costs, payment of her salary for 23 months as well as moral and exemplary damages.19 She identified Wacoal as Sameer Overseas Placement Agency’s foreign principal.


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ISSUE: Whether the Court of Appeals erred when it affirmed the ruling of the National Labor Relations Commission finding respondent illegally dismissed and awarding her three months’ worth of salary, the reimbursement of the cost of her repatriation, and attorney’s fees despite the alleged existence of just causes of termination.

RULING: No. We uphold the finding that respondent is entitled to all of these awards. The award of the three-month equivalent of respondent’s salary should, however, be increased to the amount equivalent to the unexpired term of the employment contract.

In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc.,82 this court ruled that the clause “or for three (3) months for every year of the unexpired term, whichever is less”83 is unconstitutional for violating the equal protection clause and substantive due process.84cralawred

A statute or provision which was declared unconstitutional is not a law. It “confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all.”

We are aware that the clause “or for three (3) months for every year of the unexpired term, whichever is less” was reinstated in Republic Act No. 8042 upon promulgation of Republic Act No. 10022 in 2010.

We reiterate our finding in Serrano v. Gallant Maritime that limiting wages that should be recovered by an illegally dismissed overseas worker to three months is both a violation of due process and the equal protection clauses of the Constitution.

121. RACELIS VS UNITED PHILIPPINE LINES INC GR NO. 198408, NOVEMBER 12, 2014

FACTS: On January 15, 2008, Rodolfo L. Racelis (Rodolfo) was recruited and hired by respondent United Philippine Lines, Inc. (UPL) for its principal, respondent Holland America Lines, Inc. (HAL) to serve as “Demi Chef De Partie” on board the vessel MS Prinsendam, with a basic monthly salary of US$799.55.5The Contract of Employment6 was for a term of four (4) months, extendible for another two (2) months upon mutual consent. After complying with the required pre-employment medical examination where he was declared fit to work, Rodolfo joined the vessel on January 25, 2008.7 Prior thereto, Rodolfo was repeatedly contracted by said respondents and was deployed under various contracts since December 17, 1985.8chanroblesvirtuallawlibrary

In the course of his last employment contract, Rodolfo experienced severe pain in his ears and high blood pressure causing him to collapse while in the performance of his duties. He consulted a doctor in Argentina and was medically repatriated on February 20, 2008 for further medical treatment.9 Upon arrival in Manila, he was immediately brought to Medical City, Pasig City, where he was seen by a company-designated physician, Dr. Gerardo Legaspi, M.D. (Dr. Legaspi), and was diagnosed to be suffering from Brainstem (pontine) Cavernous10 Malformation.11 He underwent surgery twice for the said ailment but developed complications12 and died on March 2, 2008.13 Through an electronic mail14 (e-mail) dated July 22, 2008, a certain Dr. Antonio “Toby” Abaya (Dr. Abaya) informed Atty. Florencio L. Aquino, Managing Associate of the law firm of Del Rosario and Del Rosario,15 counsel for UPL, HAL, and its officer, Fernando T. Lising (respondents),16 that Rodolfo’s illness was congenital and that there may be familial strains in his case, hence, his death was not work-related.17chanroblesvirtuallawlibrary

Rodolfo’s surviving spouse, herein petitioner, sought to claim death benefits pursuant to the International Transport Workers’ Federation-Collective Bargaining Agreement (ITWF-CBA),18 of which her husband was a member, but to no avail. Consequently, she filed a Complaint19 for death benefits, burial assistance, moral and exemplary damages, and attorney’s fees against herein respondents before the


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NLRC, docketed as NLRC OFW Case No. (M) NCR-06-08452-08. ISSUE: Whether or not the CA erred in annulling the NLRC’s grant of death benefits to petitioner on certiorari.RULING: Yes. Deemed incorporated in every seafarer’s employment contract, denominated as the POEA-SEC or the Philippine Overseas Employment Administration-Standard Employment Contract, is a set of standard provisions determined and implemented by the POEA, called the “Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels,” which are considered to be the minimum requirements acceptable to the government for the employment of Filipino seafarers on board foreign ocean-going vessels.47chanroblesvirtuallawlibrary

Among other basic provisions, the POEA-SEC – specifically, its 2000 version – stipulates that the beneficiaries of a deceased seafarer may be able to claim death benefits for as long as they are able to establish that (a) the seafarer’s death is work-related, and (b) such death had occurred during the term of his employment contract. The Death of the Seafarer is Work-Related.The Court clarified that the term “work-related death” refers to the seafarer’s death resulting from a work-related injury or illness. Records show that respondents’ sole evidence to disprove that Rodolfo’s illness is work-related was the medical opinion of Dr. Abaya, wherein it was explained that Rodolfo’s ailment is a congenital malformation of blood

vessels in the brain that may be due to familial strains.60 However, as correctly observed by the LA, the document presented cannot be given probative value as it was a mere print out of an e-mail that was not signed or certified to by the doctor.


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