labor finals case digests this is it

13. OTHER IMPORTANT LABOR PROVISIONS

A. CONTRACTING AGREEMENT

1. Philippine Bank of Communications vs. National Labor Relations CommissionGR No. L-66598 December 19, 1986

Facts:Petitioner Philippine Bank of Communications and the Corporate Executive Search, Inc. (CESI) entered into an agreement under which CESI would provide “Temporary Services” to petitioner consisting of eleven (11) messengers, one of them was Orpiada. The contract period was described as “from January 1976 – although it appeared that Orpiada had been assigned to the bank since June 1975.

He rendered messengerial services to the bank, within its promises, together with other the others doing a similar job. In or about October 1976, the bank requested CESI to withdraw Orpiada’s assignment because Orpiada’s services “were no longer needed.”

Orpiada filed a complaint against the bank for illegal dismissal and failure to pay the 13th- month pay. The bank impleaded CESI as an additional respondent. The Labor Arbiter ruled in favor of Orpiada. Hence, this petition for certiorari filed by the bank.

Issue: Whether or not an employer-employee relationship existed between the bank and private respondent Orpiada.

Ruling:Yes. There is an employer-employee relationship that existed between the bank and Orpiada. The fact that Orpiada worked or rendered services to the bank for a period of about sixteen (16) months made him an employee of the bank. Under the Labor Code, any employee who has rendered at least one (1) year of service, whether such service is continuous or not, shall be considered a regular employee. Thus, Orpiada’s services may not be terminated by the bank except for a just cause or when authorized under the Labor Code. CESI was engaged in labor-only contracting. Therefore, the petitioner bank is liable to Orpiada as if Orpiada had been directly employed, not only by CESI but also by the bank.

2. VIRGINIA G. NERI and JOSE CABELIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION FAR EAST BANK & TRUST COMPANY (FEBTC) and BUILDING CARE CORPORATION, respondents. G.R. Nos. 97008-09 July 23, 1993

Petitioners instituted complaints against FEBTC and BCC to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service. They contended that BCC in engaged in labor-only contracting because it failed to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of its business. Moreover, petitioners argue that they perform duties which are directly related to the principal business or operation of FEBTC.

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.

The Supreme Court ruled that 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. This fact was both determined by the Labor Arbiter and the NLRC as 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.

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. 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"

Rommel A. Tio of 90 Labor Standards

instead of “and”. 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.

On the other hand, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. These services range from janitorial, security and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, nevertheless, they are not necessary in the conduct of the principal business of the employer.

Petition dismissed.

3. FILIPINAS SYNTHETIC FIBER CORPORATION (FILSYN), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER VOLTAIRE A. BALITAAN, FELIPE LOTERTE and DE LIMA TRADING & GENERAL SERVICES, respondents. [G.R. No. 113347. June 14, 1996

De Lima Trading was found to be engaged in an independent job contracting since it is a highly capitalized venture and the janitorial services performed by Loterte although may be considered directly related to the business of FILSYN is nevertheless necessary in its operation, without which production and company sales will not suffer.

However, with respect to liability, notwithstanding the lack of a direct employer-employee relationship between FILSYN and Felipe Loterte, the FILSYN is still jointly and severally liable with respondent DE LIMA for Loterte’s monetary claims under Art. 109 of the Labor Code without prejudice to the right of FILSYN to seek reimbursement from DE LIMA for whatever amount it will have to pay Loterte.

4. ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FILMS, respondents. [G.R. No. 120969. January 22, 1998]

Petitioners are considered employers of Viva. They cannot be said to be employees of an independent contractor “producer” since evidences show that the producers have no substantial capital or investment in the form of tools, machines, etc and works directly related to the business of the principal. Hence, with this regard, petitioners are employees of the private respondent. In addition, petitioners have gained the status of a regular employee. Once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained the status of regular employees by the employer’s conduct.

5. SMC vs. MAERC INTEGRATED SERVICES; G.R. No. 144672. October 22, 2003

Maerc is a labor-only contractor. The whole arrangement of contracting the bottle washing and segregation activities to MAERC was only devised apparently to avoid labor problems. SMC’s attempt to distance itself from the workers after requiring MAERC to establish the conditions to satisfy the requirements for a status of a legitimate job contractor cannot prosper inasmuch as there is enough evidence to substantiate the existence of an employer-employee relationship between petitioner and complainants. This Court has held that it will only recognize a company’s prerogatives so long as they are exercised in good faith and for the advancement of the employer’s interest, and not for the purpose of defeating or circumventing the rights of the employees.

6. MANILA WATER COMPANY, INC., petitioner, vs. HERMINIO D. PENA, et. al., respondents. [G.R. No. 158255. July 8, 2004]


Petitioner Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila. Under the Concession Agreement, petitioner undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter, while the employment of those not in the list was terminated on the day petitioner took over the operation of the East Zone, which was on August 1, 1997. Private respondents, being contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless, petitioner engaged their services without written contract from August 1, 1997 to August 31, 1997. Thereafter, on September 1, 1997, they signed a three-month contract to perform collection services for eight branches of petitioner in the East Zone.Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by petitioner to collect charges for the Balara Branch. Subsequently, most of the 121 collectors were asked by the petitioner to transfer to the First Classic Courier Services, a newly registered corporation. Only private respondents remained with ACGI. Petitioner continued to transact with ACGI to do its collection needs until February 8, 1999, when petitioner terminated its contract with ACGI.

Private respondents filed a complaint for illegal dismissal and money claims against petitioner, contending that they were petitioner’s employees as all the methods and procedures of their collections were controlled by the latter.

ACGI is considered merely an agent of the petitioner. 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. Since ACGI is only a labor-only contractor, the workers it supplied should be considered as employees of the petitioner.

7. NATIONAL FOOD AUTHORITY (NFA), AND JUANITO M. DAVID, IN HIS CAPACITY AS REGIONAL DIRECTOR, NFA REGIONAL OFFICE NO. 1, SAN JUAN, LA UNION, PETITIONERS, VS. MASADA SECURITY AGENCY, INC., REPRESENTED BY ITS ACTING PRESIDENT & GENERAL MANAGER, COL. EDWIN S. ESPEJO (RET.), RESPONDENTS. [G.R. No. 163448, March 08, 2005]

NFA had a 1-year contract with the services of MASADA in providing security services in their various offices in the region. Subsequently, the RTWPB issued several wage orders increasing the daily wage rate. In accord with this, NFA made adjustments in the daily wage but denied the adjustments with respect to other benefits and remunerations computed on the basis of the daily wage. This caused the filing of the complaint. SC held the petition meritorious.

The term “wage” as used in Section 6 of RA 6727 pertains to no other than the “statutory minimum wage” which is defined under the Rules Implementing RA 6727 as the lowest wage rate fixed by law that an employer can pay his worker. The basis thereof under Section 7 of the same Rules is the normal working hours, which shall not exceed eight hours a day. 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. 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. While basis of said remuneration and benefits is the statutory minimum wage, the law cannot be unduly expanded as to include those not stated in the subject provision. If the lawmaker’s 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.

At any rate, the interest of the employees will not be adversely affected if the obligation of principals under the subject provision will be limited to the increase in the statutory minimum wage. This is so because all remuneration and benefits other than the increased statutory minimum wage would be shouldered and paid by the employer or service contractor to the workers concerned. Thus, in the


end, all allowances and benefits as computed under the increased rate mandated by RA 6727 and the wage orders will be received by the workers.

Based on the foregoing interpretation of Section 6 of RA 6727, the parties may enter into stipulations increasing the liability of the principal. 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. The parties therefore acknowledged the application to their contract of the wage orders issued by the RTWPB pursuant to RA 6727. There being no assumption by NFA of a greater liability than that mandated by Section 6 of the Act, its obligation is limited to the payment of the increased statutory minimum wage rates which, as admitted by respondent, had already been satisfied by NFA. Under Article 1231 of the Civil Code, one of the modes of extinguishing an obligation is by payment. Having discharged its obligation to respondent, NFA no longer have a duty that will give rise to a correlative legal right of respondent. The latter’s complaint for collection of remuneration and benefits other than the increased minimum wage rate, should therefore be dismissed for lack of cause of action.

8. ZALDY G. ABELLA AND THE MEMBERS OF THE PLDT SECURITY PERSONNEL UNION LISTED IN ANNEX “D” OF THIS PETITION, PETITIONERS, VS. PHILIPPINE LONG DISTANCE TELEPHONE COMPANY (PLDT CO.) AND PEOPLE’S SECURITY INC. (PSI), RESPONDENTS, [G.R. No. 159469, June 08, 2005]

The Security Guards are employees of PSI and not of the PLDT. From the facts adduced in the trial courts, sufficient evidences established that PLDT is not the employer of the petitioners. First, it was the PSI, the security provider of the PLDT, which selected, engaged or hired and discharged the security guards. The referral to PLDT 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. The employer-employee relationship is deemed perfected even before the posting of the complainants with the PLDT, as assignment only comes after employment. Second, 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. Third, it is PSI that determined and paid the petitioners’ wages, salaries, and compensation.

Moreover, as a case in point, manufacturing companies usually hold suppliers’ conferences to integrate their suppliers’ corporate goals and visions with their own so that the manufacturing companies are ensured of the quality and timing of their supplies of materials or services, as the case may be. It is therefore not surprising that PLDT would demand that security guards assigned to its premises undergo seminars and trainings on certain areas of concern which are unique to PLDT.

Further, it is in the ordinary course of things for big companies such as PLDT to assign their own security personnel and supervisors to monitor the performance of the security guards as part of the company’s internal check, monitoring and control system in order to rate whether the security agency it hired is performing at par with PLDT’s set standards.

9. SAN MIGUEL CORPORATION, petitioner, vs. PROSPERO A. ABALLA, et. Al., and the COURT OF APPEALS, respondents. [G.R. No. 149011. June 28, 2005]

Petitioner SMC entered into a one-year contract with the Sunflower Multi-Purpose Cooperative. Sunflower engaged private respondents to render services at SMC’s Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. A complaint was filed by private respondents before the NLRC, Regional Arbitration Branch No. VI, Bacolod City, praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. SMC alleged that Sunflower is engaged in a legitimate labor contracting and hence the private respondents cannot be considered their employees.

Supreme Court ruled otherwise. Sunflower is a labor-only contractor for the following reasons: 1. although Sunflower was issued a Certificate of Registration by the Cooperative Development Authority, it merely shows it had P2,000 in paid-up share capital which amount cannot be considered substantial capitalization; 2. its lot, building, machineries and all other working tools utilized by private respondents in carrying out their tasks were owned and provided by SMC and the alleged office is


found within the confines of a small “carinderia” or “refreshment” (sic) owned by the mother of the Cooperative Chairman Roy Asong and the only equipment used and owned by Sunflower was a typewriter; 3. from the job description provided by SMC itself, the work- shrimp harvesting, receiving and packing- assigned to private respondents, formed an integral part of the shrimp processing operations of SMC; 4. it 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 SMC, as it is apparent that its role was merely to recruit persons to work for SMC- their daily time records were signed by SMC supervisors, the control of the premises in which private respondents worked was by SMC and private respondents had been working in the aqua processing plant inside the SMC compound alongside regular SMC shrimp processing workers performing identical jobs under the same SMC supervisors; 5. Sunflower did not cater to clients other than SMC, and with the closure of SMC’s Bacolod Shrimp Processing Plant, Sunflower likewise ceased to exist.

Since private respondents who were engaged in shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed regular employees of the latter and as such are entitled to all the benefits and rights appurtenant to regular employment. Absent any evidence showing that Sunflower has been dissolved in accordance with law, it is held solidarily liable with SMC for all the rightful claims of private respondents.

10. MANILA ELECTRIC COMPANY, PETITIONER, VS. ROGELIO BENAMIRA, et. Al.; ARMED SECURITY & DETECTIVE AGENCY, INC., (ASDAI) AND ADVANCE FORCES SECURITY & INVESTIGATION SERVICES, INC., (AFSISI),

The individual respondents are licensed security guards formerly employed by People’s Security, Inc. and deployed as such at MERALCO’s head office in Ortigas Avenue, Pasig, Metro Manila. On Nov. 30, 1990, the security service agreement between PSI and MERALCO was terminated.

Immediately 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 on Dec. 1, 1990. Subsequently, the individual respondents were absorbed by ASDAI and retained at MERALCO’s head office.

On June 29, 1992, the labor arbiter rendered a decision in favor of the former PSI security guards, including the individual respondents. Less than a month later, the individual respondents filed another complaint for unpaid monetary benefits, this time against ASDAI and MERALCO. On July 25, 1992, 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. Except as to the number of security guards, the amount to be paid the agency, and the effectivity of the agreement, the terms and conditions were substantially identical with the security service agreement with ASDAI.

The individual respondents amended their complaint to implead AFSISI as party respondent. They then again amended their complaint to allege that AFSISI terminated their services on August 6, 1992 without notice and just cause and therefore guilty of illegal dismissal.

The individual respondents alleged that MERALCO and ASDAI never paid their overtime pay, service incentive leave pay, premium pay for Sundays and holidays, P50.00 monthly uniform allowance and underpaid their 13th month pay; on July 24, 1992, when the security service agreement of ASDAI was terminated and AFSISI took over the security functions of the former on July 25, 1992, respondent security guard Benamira, was no longer given any work assignment when AFSISI learned that the former has a pending case against PSI, in effect, dismissing him from the service without just cause; and, the rest of the individual respondents were absorbed by AFSISI but were not given any assignments, thereby dismissing them from the service without just cause.

ASDAI denied in general terms any liability for the claims of the individual respondents, claiming that there is nothing due them in connection with their services.

On the other hand, MERALCO denied liability on the ground of lack of employer-employee relationship with individual respondents. It averred that the individual respondents are the employees of the security agencies it contracted for security services; and that it has no existing liability for the


individual respondents’ claims since said security agencies have been fully paid for their services per their respective security service agreement.

For its part, AFSISI asserted that: it is not liable for illegal dismissal since it did not absorb or hire the individual respondents, the latter were merely hold-over guards from ASDAI; it is not obliged to employ or absorb the security guards of the agency it replaced since there is no provision in its security service agreement with MERALCO or in law requiring it to absorb and hire the guards of ASDAI as it has its own guards duly trained to service its various clients.

On January 3, 1994, after the submission of their respective evidence and position papers, the labor arbiter rendered a Decision holding ASDAI and MERALCO jointly and solidarily liable to the monetary claims of individual respondents and dismissing the complaint against AFSISI. All the parties, except AFSISI, appealed to the NLRC. NLRC affirmed in toto the decision of the Labor Arbiter. The individual respondents filed a motion for partial reconsideration but it was denied by the NLRC.

The individual respondents filed a petition for certiorari before the SC. They insisted that they were absorbed by AFSISI and the latter effected their termination without notice and just cause. After the submission of the responsive pleadings and memoranda, SC referred the petition to the CA which modified the decision of the NLRC by declaring MERALCO as the direct employer of the individual respondents.

The CA held that MERALCO changed the security agency manning its premises three times while engaging the services of the same people, the individual respondents; MERALCO employed a scheme of hiring guards through an agency and periodically entering into service contract with one agency after another in order to evade the security of tenure of individual respondents; individual respondents are regular employees of MERALCO since their services as security guards are usually necessary or desirable in the usual business or trade of MERALCO and they have been in the service of MERALCO for no less than six years; an employer-employee relationship exists between MERALCO and the individual respondents because: (a) MERALCO had the final say in the selection and hiring of the guards, as when its advice was proved to have carried weight in AFSISI’s decision not to absorb the individual respondents into its workforce; (b) MERALCO paid the wages of individual respondents through ASDAI and AFSISI; (c) MERALCO’s discretion on matters of dismissal of guards was given great weight and even finality since the record shows that the individual respondents were replaced upon the advice of MERALCO; and, (d) MERALCO has the right, at any time, to inspect the guards, to require without explanation the replacement of any guard whose behavior, conduct or appearance is not satisfactory and ASDAI and AFSISI cannot pull out any security guard from MERALCO without the latter’s consent; and, a labor-only contract existed between ASDAI and AFSISI and MERALCO, such that MERALCO is guilty of illegal dismissal without just cause and liable for reinstatement of individual respondents to its workforce.

Issue:Whether or not MERALCO is jointly and severally liable with AFSISI to the respondents.

Decision:At the outset, it is noted that the individual respondents never alleged in their complaint in the Labor Arbiter, in their appeal in the NLRC and even in their petition for certiorari in the CA that MERALCO was their employer. They have always advanced the theory that AFSISI is their employer. The individual respondents are bound by their submissions that AFSISI is their employer and they should not be permitted to change their theory. Such a change of theory cannot be tolerated on appeal, not due to the strict application of procedural rules but as a matter of fairness. A change of theory on appeal is objectionable because it is contrary to the rules of fair play, justice and due process.

Thus, the CA should not have considered the new theory offered by the individual respondents in their memorandum.

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.

As to the provision in the agreement that MERALCO reserved the right to seek replacement of any guard whose behavior, conduct or appearance is not satisfactory, such merely confirms that the power to discipline lies with the agency. It is a standard stipulation in security service agreements that the client may request the replacement of the guards to it. Service-oriented enterprises, such as the business of providing security services, generally adhere to the business adage that “the customer or client is always right” and, thus, must satisfy the interests, conform to the needs, and cater to the reasonable impositions of its clients.

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.

Needless to stress, for the power of control to be present, the person for whom the services are rendered must reserve the right to direct not only the end to be achieved but also the means for reaching such end. Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control.

Verily, the security service agreements in the present case provided that all specific instructions by MERALCO relating to the discharge by the security guards of their duties shall be directed to the agency and not directly to the individual respondents. The individual respondents failed to show that the rules of MERALCO controlled their performance.

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.

We cannot give credence to individual respondents’ insistence that they were absorbed by AFSISI when MERALCO’s security service agreement with ASDAI was terminated. The individual respondents failed to present any evidence to confirm that AFSISI absorbed them into its workforce. Thus,


respondent Benamira was not retained in his post at MERALCO since July 25, 1992 due to the termination of the security service agreement of MERALCO with ASDAI. As for the rest of the individual respondents, they retained their post only as “hold-over” guards until the security guards of AFSISI took over their post on August 6, 1992.

In the present case, respondent Benamira has been “off-detail” for seventeen days while the rest of the individual respondents have only been ”off-detail” for five days when they amended their complaint on August 11, 1992 to include the charge of illegal dismissal. The inclusion of the charge of illegal dismissal then was premature. Nonetheless, bearing in mind that ASDAI simply stopped giving the individual respondents any assignment and their inactivity clearly persisted beyond the six-month period allowed by Article 286 of the Labor Code, the individual respondents were, in effect, constructively dismissed by ASDAI from employment, hence, they should be reinstated.

The fact that there is no actual and direct employer-employee relationship between MERALCO and the individual respondents does not exonerate MERALCO from liability as to the monetary claims of the individual respondents. When MERALCO contracted for security services with ASDAI as the security agency that hired individual respondents to work as guards for it, MERALCO became an indirect employer of individual respondents pursuant to Article 107 of the Labor Code.

When ASDAI as contractor failed to pay the individual respondents, MERALCO as principal becomes jointly and severally liable for the individual respondents’ wages, under Articles 106 and 109 of the Labor Code.

ASDAI is held liable by virtue of its status as direct employer, while MERALCO is deemed the indirect employer of the individual respondents for the purpose of paying their wages in the event of failure of ASDAI to pay them. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution.

However, as held in Mariveles Shipyard Corp. vs. Court of Appeals, the solidary liability of MERALCO with that of ASDAI does not preclude the application of Article 1217 of the Civil Code on the right of reimbursement from his co-debtor by the one who paid, which provides:

ART. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors only the share which corresponds to each, with the interest for the payment already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded.When one of the solidary debtors cannot, because of his insolvency, reimburse his share to the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion to the debt of each.

ASDAI may not seek exculpation by claiming that MERALCO’s payments to it were inadequate for the individual respondent’ lawful compensation. As an employer, ASDAI is charged with knowledge of labor laws and the adequacy of the compensation that it demands for contractual services is its principal concern and not any other’s.

WHEREFORE, the present petition is GRANTED. The assailed Decision of the CA is REVERSED and SET ASIDE. The Decision of the Labor Arbiter and the Resolution of the NLRC are AFFIRMED with the MODIFICATION that the joint and solidary liability of ASDAI and MERALCO to pay individual respondents’ monetary claims for underpayment of actual regular hours and overtime hours rendered, and premium pay for holiday and rest day, as well as attorney”s fees, shall be without prejudice to MERALCO’s right of reimbursement from ASDAI.

11. DOLE Phils. vs. Esteva, G.R. No. 161115, November 30, 2006

FACTS:

Petitioner is a corporation duly recognized and existing in accordance with Philippine laws, engaged principally in the production and processing of pineapple for the export market. Its plantation is located in Polomolok, South Cotabato .


Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with R.A. No. 6938, otherwise known as the Cooperative Code of the Philippines , and duly –registered with the Cooperative Development Authority (CDA) on 6 January 1993. Members of CAMPCO live in communities surrounding petitioner’s plantation and are relatives of petitioner’s employees.

On 17 August 1993, petitioner and CAMPCO entered into a Service Contract. The Service Contract referred to petitioner as “the Company,” while CAMPCO was “the Contractor.” The said contract was good for six months.

Pursuant to the contract, CAMPCO members rendered services to petitioner. The parties apparently extended or renewed the same for the succeeding years without executing another written contract.

However, due to investigations and reliable information, the Regional Director of DOLE exercised his visitorial and enforcement power and found out that CAMPCO is engaged in labor-only contracting together with two other “cooperatives”.

The Law cited was Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code. –(pertaining to Labor-only contracting… 1. no substantial capital; 2. work is directly related to the principal business of the principal b. in such case, the one who alleges as contractor is deemed an agent of the principal while the latter will latter is considered the indirect employer for purposes of enforcement of the labor rights.)

Before the NLRC, respondents contended that they have been working more than one year too 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. They, then, filed a case before the NLRC for illegal dismissal, regularization, wage differentials, damages and attorney’s fees.

Respondents argued that they should be considered regular employees of petitioner given that: 1. they were performing jobs that were usually necessary and desirable in the usual business of petitioner; 2. petitioner exercised control over respondents, not only as to the results, but also as to the manner by which they performed their assigned tasks; and 3. CAMPCO, a labor-only contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents asserted that they were entitled to security of tenure and those placed on “stay home status” for more than six months had been constructively and illegally dismissed. Respondents further claimed entitlement to wage differential, moral damages, and attorney’s fees.

NLRC affirmed the Labor Arbiter’s decision. CA also affirmed.

ISSUES: Whether the lower courts were correct in ruling that Petitioner is the employer of respondents and that CAMPCO be considered merely as agent of the company

HELD: In summary, this Court finds that CAMPCO was a labor-only contractor and, thus, petitioner is the real employer of the respondents, with CAMPCO acting only as the agent or intermediary of petitioner. Due to the nature of their work and length of their service, respondents should be considered as regular employees of petitioner. Petitioner constructively dismissed a number of the respondents by placing them on "stay home status" for over six months, and was therefore guilty of illegal dismissal. Petitioner must accord respondents the status of regular employees, and reinstate the respondents who it constructively and illegally dismissed, to their previous positions, without loss of seniority rights and other benefits, and pay these respondents’ backwages from the date of filing of the Complaint with the NLRC on 19 December 1996 up to actual reinstatement.

CRITERIA TO ESTABLISH THE EXISTENCE OF AN INDEPENDENT AND PERMISSIBLE CONTRACTOR RELATIONSHIP generally established by the following criteria: 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 a specified piece 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 the premises tools, appliances, materials and labor; and the mode, manner and terms of payment

SEVERAL FACTORS ARE PRESENT IN THE CASE TO ESTABLISH A LABOR- ONLY CONTRACTING ARRANGEMENT BY BETWEEN THE MANAGEMENT AND CAMPCO

While there is present in the relationship of petitioner and CAMPCO some factors suggestive of an independent contractor relationship (i.e., CAMPCO chose who among its members should be sent to work for petitioner; petitioner paid CAMPCO the wages of the members, plus a percentage thereof as administrative charge; CAMPCO paid the wages of the members who rendered service to petitioner), many other factors are present which would indicate a labor-only contracting arrangement between petitioner and CAMPCO.

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 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 findings enumerated in the preceding paragraphs only support what DOLE Regional Director Parel and DOLE Undersecretary Trajano had long before conclusively established, that CAMPCO was a mere labor-only contractor


EMPLOYER- EMPLOYEE RELATIONSHIP EXIST BETWEEN THE PETITIONER AND THE RESPONDENT WITH THE DECLARATION THAT CAMPCO WAS ENGAGED IN THE PROHIBITED ACTS OF LABOR-ONLY CONTRACTING

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

RESPONDENTS ARE CONSIDERED REGULAR EMPLOYEES FOR THEY PERFORMED ACTIVITIES THAT ARE NECESSARY OR DESIRABLE TO THE USUAL BUSINESS OF THE 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.

In the instant Petition, petitioner is engaged in the manufacture and production of pineapple products for export. Respondents rendered services as processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions they performed alongside regular employees of the petitioner. There is no doubt that the activities performed by respondents are necessary or desirable to the usual business of petitioner.

Petitioner likewise want this Court to believe that respondents’ employment was dependent on the peaks in operation, work backlogs, absenteeism, and excessive leaves. However, bearing in mind that respondents all claimed to have worked for petitioner for over a year, a claim which petitioner failed to rebut, then respondent’s continued employment clearly demonstrates the continuing necessity and indispensability of respondents’ employment to the business of petitioner.

THE COMPANY’S ACT 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

Respondents, as regular employees of petitioner, 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

12. SAN MIGUEL CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION and RAFAEL MALIKSI, December 6, 2006, G.R. No. 147566

Maliksi filed a complaint against SMC to compel the latter to recognize him as a regular employee of the company. He was first under the Lipercon, then the Skill power then the last in in PHILSSEC. SMC denied allegation by stating that Maliksi is an employee of PHILSSEC, an independent contractor.

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 giving due deference to the factual findings of both the NLRC and the CA that an employer-employee relationship existed between SMC (or its subsidiaries) and Maliksi is valid. 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.

With respect to PHILSSEC, SMC itself admits that Maliksi’s work under the computerization program did “not require the operation of a computer system, such as the software program being developed by PHILSSEC.” By this admission, not being a computer expert, Maliksi’s inclusion in the project was uncalled for. Presumptuously, his placement in the project was for the purpose of circumventing labor laws.

The act of hiring and re-hiring workers over a period of time without considering them as regular employees evidences bad faith on the part of the employer. Where, from the circumstances, it is


apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, the policy, agreement or practice should be struck down as contrary to public policy, morals, good customs or public order. In this manner, the mother company avoids the employer-employee relations, and is thus shielded from liability from employee claims in case of illegal dismissal, closure, unfair labor practices and the like. In San Miguel Corporation v. MAERC Integrated Services, Inc., SC took note of the practice of hiring employees through labor contractors that catered exclusively to the employment needs of SMC or its divisions or other specific business interests, such that after the specific SMC business or division ceases to do business, the labor contractor likewise ceases its operations.

Petition denied. SMC is liable for damages and payment of claimed wages and benefits.

13. EPARWA SECURITY AND JANITORIAL SERVICES, INC., vs. LICEO DE CAGAYAN UNIVERSITY, G.R. No. 150402, November 28, 2006

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 liability does not mean that, as between themselves, two solidary debtors are liable for only half of the payment.

LDCU’s ultimate liability comes into play because of the expiration of the Contract for Security Services. There is no privity of contract between the security guards and LDCU, but LDCU’s liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code (solidary liable). Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwa’s liability to the security guards remains because of their employer-employee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any reimbursement from Eparwa for any payment it may make to the security guards (because the contract has expired).

14. ROLANDO E. ESCARIO, et. Al; petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, CALIFORNIA MANUFACTURING CO. INC. AND DONNA LOUISE ADVERTISING AND MARKETING ASSOCIATES INCORPORATED, respondents. G.R. No. 124055. June 8, 2000

Private respondents California Marketing Co., Inc. is a domestic corporation principally engaged in the manufacturing of food products and distribution of such products to wholesalers and retailers. Private respondent Donna Louis Advertising and Marketing Associates, Inc. is a duly registered promotional firm.Petitioners alleged that they were employed by CMC as merchandisers. They alleged that the hiring, control and supervision of workers and the payment of the salaries were all covered by CMC through its agent D.L Admark in order CMC to avoid its liability under the law. Petitioners filed a case against CMC before the labor arbiter for regularization of their employment status.

During the pendency of the case, D.L Admark terminated the services of the petitioners. The complaint was amended to include alleged dismissal. CMC filed a motion to implead as party-defendant D.L Admark, the latter filed a motion to intervene. Both motions were granted. CMC denied being petitioners employer while D.L Admark asserted it is the employer of the petitioners.

The labor arbiter found petitioners as employees of CMC as they were engaged in activities that are necessary and desirable in the usual business/trade of CMC. On appeal, the NLRC set aside the labor arbiters decision. But ordered the reinstatement of the petitioners in D.L Admark petitioners filed a motion for consideration before the NLRC which was denied for lack of merit. Hence the petition.

Issue:Whether or not D.L Admark is a labor-only contractor or as independent contractor.

Decision:The Supreme Court denied the petition.


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 principa. In labor only contracting, the following elements are present:The person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipments, machineries, wok premise, among other tools.

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

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

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

The contractor has substantial capital / investment which are necessary in the conduct of his business.

The court reiterated that it is not enough to show substantial capitalization on investment. In addition the following factors need be consideredwhether the contractor is carrying on an independent businessthe nature and extent of the workthe skill requiredthe term and duration of the relationshipthe right to assign the performance of specified pieces of work the control and supervision of the workersthe power of the employer with respect to the hiring, firing and payment of workers of the contractorthe control of the premises the duty to supply premises, tools, appliances, materials and labormode, manner and terms of payment

Based on the foregoing criteria, the court found that D.L Admark is a legitimate independent contractor. Applying the four-fold test, D.L Admark was found to be the employer of the petitioners. The Supreme Court affirmed the NLRC’s ruling.

15. ABOITIZ HAULERS, INC., Petitioner v. MONAORAI DIMAPATOI, CECILIA AGAWIN, EMMANUEL GUERRERO, RAUL MAMATE, and GEMENIANO BIGAW, Respondents, G. R. No. 148619; September 19, 2006AHI is the employer of the respondents. Grigio is engaged in labor contracting and not job- contracting. The elements of labor-contracting exist in this case: 1. The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed; it was not established or proven by substantial evidence that Grigio has substantial capital or investment; 2. 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; considering the fact that the respondents are mere employees of AHI on 1992, prior to the contract made with Grigio, and continued/ renewed its services until 1996 proves that the respondents’ task as “checkers” is clearly necessary for the petitioner’s business of forwarding and distributing of cargoes; or 3. the contractor does not exercise the right to control over the performance of the work of the contractual employee; on the contract, all duties and obligations of the respondents are stipulated in it. 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 and schedules at its own convenience. Such being the case, Grigio cannot be considered as an independent job contractor.

16. GSIS vs. NLRC


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. 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.

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.

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.

On August 27, 1996, Labor Arbiter Renato Bugarin rendered a Decision in favor of complainants.

The Labor Arbiter held LSWA and GSIS jointly and severally liable for the payment of complainants' money claims, pursuant to Articles 106 and 107 of the Labor Code.

LSWA appealed to the NLRC. The NLRC held the GSIS solely liable for payment of complainants' money claims.

On November 6, 2000, the GSIS filed a Petition for Certiorari with the CA arguing that the NLRC gravely abused its discretion in holding GSIS solely liable for complainants' money claims.While finding that the GSIS complied with its obligations under Wage Order Nos. 1 and 2 by incorporating the mandated increase in the Security Service Contract, the CA held the GSIS jointly and severally liable with LSWA for complainants' money claims pursuant to Articles 106 and 107 of the Labor Code.

The GSIS avers that it cannot twice be held liable for complainants' salary differentials since it fully paid complainants' salaries by incorporating in the Security Service Contract the salary rate increases mandated by Wage Order Nos. 1 and 2; otherwise, it would be unjust enrichment on the part of complainants and/or LSWA at its expense. It submits that Articles 106 and 107 of the Labor Code were not contemplated by its framers to cover principals or clients of service contractors who had already paid for the wages of the contractor or subcontractor.


In its Comment, LSWA maintains that the GSIS is jointly and severally liable with LSWA because Articles 106 and 107 of the Labor Code provide so and these provisions were intended to ensure that employees are paid the wages due them in case of violation of the Labor Code of either the contractor or the principal; that the GSIS cannot claim that holding it jointly and severally liable with LSWA would result in grave injustice since the law did not leave it without recourse as the GSIS has the right of reimbursement from its co-debtor under Article 1217 of the Civil Code. In their Comment, complainants argue that the GSIS is jointly and severally liable with LSWA for complainants' money claims since LSWA actually paid only the sum of P3,100.00 a month, even though the GSIS incorporated in the Security Service Contract the mandated wage increases in Wage Order Nos. 1 and 2; that although the Security Service Contract provided that there shall be employer-employer relationship between LSWA and/or its security guards and the GSIS, Article 106 of the Labor Code establishes an employer-employee relationship between the employer and the job contractor's employees for a limited purpose, that is, in order to ensure that the latter get paid the wages due them.

Issue: Whether or not GSIS is jointly and severally liable with LSWA.

Held:

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. x x x 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. (Emphasis supplied.) 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.

In Rosewood Processing, Inc. v. National Labor Relations Commission, 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 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.

Petition is denied, CA’s decision are affirmed with modification that the joint and solidary liability of LSWA and the GSIS to pay complainants' salary differentials shall be without prejudice to the GSIS's right of reimbursement from LSWA.

17. Republic of the Philippines/SSc/SSS vs. Asiapro Cooperative

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. Its primary objectives are to provide savings and credit facilities and to develop other livelihood services for its owners-members. 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 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. On 26 September 2002, however, petitioner SSS through its Vice-President for Mindanao Division, Atty. Eddie A. Jara, sent a letter to the respondent cooperative, addressed to its Chief Executive Officer (CEO) and General Manager Leo G. Parma, informing the latter that based on the Service Contracts it executed with Stanfilco, respondent cooperative is actually a manpower contractor supplying employees to Stanfilco and for that reason, it is an employer of its owners-members working with Stanfilco. Thus, respondent cooperative should register itself with petitioner SSS as an employer and make the corresponding report and remittance of premium contributions in accordance with the Social Security Law of 1997. On 9 October 2002, respondent cooperative, through its counsel, sent a reply to petitioner SSS’s letter asserting that it is not an employer because its owners-members are the cooperative itself; hence, it cannot be its own employer. Again, on 21 October 2002, petitioner SSS sent a letter to respondent cooperative ordering the latter to register as an employer and report its owners-members as employees for compulsory coverage with the petitioner SSS. Respondent cooperative continuously ignored the demand of petitioner SSS. Accordingly, 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. The same was docketed as SSC Case No. 6-15507-03. 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.

Issues:

Whether the petitioner SSC has jurisdiction over the petition-complaint filed before it by petitioner SSS against the respondent cooperative.


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

Held:

Petitioner SSC’s jurisdiction is clearly stated in Section 5 of Republic Act No. 8282 as well as in Section 1, Rule III of the 1997 SSS Revised Rules of Procedure. Section 5 of Republic Act No. 8282 provides: SEC. 5. Settlement of Disputes. – (a) Any dispute arising under this Act with respect to coverage, benefits, contributions and penalties thereon or any other matter related thereto, shall be cognizable by the Commission, x x x. Similarly, Section 1, Rule III of the 1997 SSS Revised Rules of Procedure states: Section 1. Jurisdiction. – Any dispute arising under the Social Security Act with respect to coverage, entitlement of benefits, collection and settlement of contributions and penalties thereon, or any other matter related thereto, shall be cognizable by the Commission after the SSS through its President, Manager or Officer-in-charge of the Department/Branch/Representative Office concerned had first taken action thereon in writing. It is clear then from the aforesaid provisions that any issue regarding the compulsory coverage of the SSS is well within the exclusive domain of the petitioner SSC. It is important to note, though, that the mandatory coverage under the SSS Law is premised on the existence of an employer-employee relationship except in cases of compulsory coverage of the self-employed.

In this case, the petition-complaint filed by the petitioner SSS before the petitioner SSC against the respondent cooperative and Stanfilco alleges that the owners-members of the respondent cooperative are subject to the compulsory coverage of the SSS because they are employees of the respondent cooperative. Consequently, the respondent cooperative being the employer of its owners-members must register as employer and report its owners-members as covered members of the SSS and remit the necessary premium contributions in accordance with the Social Security Law of 1997. Accordingly, based on the aforesaid allegations in the petition-complaint filed before the petitioner SSC, the case clearly falls within its jurisdiction. As previously pointed out by this Court, an employee-employer relationship actually exists between the respondent cooperative and its owners-members. The four elements in the four-fold test for the existence of an employment relationship have been complied with. The respondent cooperative must not be allowed to deny its employment relationship with its owners-members by invoking the questionable Service Contracts provision, when in actuality, it does exist. 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.

The question involved here is whether an employer-employee relationship can exist between the cooperative and an owner-member. In fact, a closer look at Cooperative Rural Bank of Davao City, Inc. will show that it actually recognized that an owner-member of a cooperative can be its own employee.

It is settled that the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them. However, the agreed terms and conditions must not be contrary to law, morals, customs, public policy or public order. The Service Contract provision in question must be struck down for being contrary to law and public policy since it is apparently being used by the respondent cooperative merely to circumvent the compulsory coverage of its employees, who are also its owners-members, by the Social Security Law.

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. In sum, having declared that there is an employer-employee relationship between the respondent cooperative and its owners-member, we conclude that the petitioner SSC has jurisdiction over the petition-complaint filed before it by the petitioner SSS.

18. Jaguar Security and Investigation Agency vs. Sales

Facts:

Petitioner Jaguar Security and Investigation Agency ("Jaguar") is a private corporation engaged in the business of providing security services to its clients, one of whom is Delta Milling Industries, Inc. ("Delta").

Private respondents Rodolfo Sales, Melvin Tamayo, Dionisio Caranyagan, Jesus Silva, Jr., Jaime Moron and Daneth Fetalvero were hired as security guards by Jaguar. They were assigned at the premises of Delta in Libis, Quezon City. Caranyagan and Tamayo were terminated by Jaguar on May 26, 1998 and August 21, 1998, respectively. Allegedly their dismissals were arbitrary and illegal. Sales, Moron, Fetalvero and Silva remained with Jaguar. All the guard-employees, claim for monetary benefits such as underpayment, overtime pay, rest day and holiday premium pay, underpaid 13th month pay, night shift differential, five days service and incentive leave pay. In addition to these money claims, Caranyagan and Tamayo argue that they were entitled to separation pay and back wages, for the time they were illegally dismissed until finality of the decision. Furthermore, all respondents claim for moral and exemplary damages.

On September 18, 1998, respondent security guards instituted the instant labor case before the labor arbiter.

On May 25, 1999, the labor arbiter rendered a decision in favor of private respondents Sales, et al., the dispositive portion of which provides:

"WHEREFORE, judgment is hereby rendered dismissing the charges of illegal dismissal on the part of the complainants MELVIN R. TAMAYO and DIONISIO C. CARANYAGAN for lack of merit but ordering respondents JAGUAR SECURITY AND INVESTIGATION AGENCY and DELTA MILLING INDUSTRIES, INC., to jointly and severally pay all the six complainants, namely: RODOLFO A. SALES, MELVIN R. TAMAYO, JAIME MORON and DANETH FETALVERO the following money claims for their services rendered from April 24, 1995 to April 24, 1998:

a) wage differentialsb) overtime pay differentials (4 hours a day)c) rest day payd) holiday paye) holiday premium payf) 13th month pay differentialsg) five days service incentive leave pay per year subject to the exception earlier cited.

The Research and Information Unit of this Commission is hereby directed to compute and quantify the above awards and submit a report thereon within 15 days from receipt of this decision.

For purposes of any appeal, the appeal bond is tentatively set at P100,000.00. All other claims are DISMISSED for lack of merit.SO ORDERED."


On July 1, 1999, petitioner Jaguar filed a partial appeal questioning the failure of public respondent NLRC to resolve its cross-claim against Delta as the party ultimately liable for payment of the monetary award to the security guards.

In its Resolution dated September 19, 2000, the NLRC dismissed the appeal, holding that it was not the proper forum to raise the issue. It went on to say that Jaguar, being the direct employer of the security guards, is the one principally liable to the employees. Thus, it directed petitioner to file a separate civil action for recovery of the amount before the regular court having jurisdiction over the subject matter, for the purpose of proving the liability of Delta.

Jaguar sought reconsideration of the dismissal, but the Commission denied the same in its Resolution dated November 9, 2001. Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated October 21, 2002 and Resolution dated February 13, 2004, dismissed the petition for lack of merit.

Issue: Whether or not petitioner may claim reimbursement from Delta Milling through a cross-claim filed with the labor court?

Held:

The Court ruled in the negative.

The jurisdiction of labor courts extends only to cases where an employer-employee relationship exists.

In the present case, there exists no employer-employee relationship between petitioner and Delta Milling. In its cross-claim, petitioner is not seeking any relief under the Labor Code but merely reimbursement of the monetary benefits claims awarded and to be paid to the guard employees. There is no labor dispute involved in the cross-claim against Delta Milling. Rather, the cross-claim involves a civil dispute between petitioner and Delta Milling. Petitioner's cross-claim is within the realm of civil law, and jurisdiction over it belongs to the regular courts.

Moreover, the liability of Delta Milling to reimburse petitioner will only arise if and when petitioner actually pays its employees the adjudged liabilities. 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. In this case, it appears that petitioner has yet to pay the guard employees.

The petition is DENIED.

19. Almeda vs. Asahi Glass

Facts:

The present Petition arose from a complaint for illegal dismissal with claims for moral and exemplary damages and attorney's fees filed by petitioners against respondent and San Sebastian Allied Services, Inc. (SSASI).

In their Complaint filed before the Labor Arbiter, petitioners alleged that respondent (a domestic corporation engaged in the business of glass manufacturing) and SSASI (a labor-only contractor) entered into a service contract on 5 March 2002 whereby the latter undertook to provide the former with the necessary manpower for its operations. Pursuant to such a contract, SSASI employed petitioners Randy Almeda, Edwin Audencial, Nolie Ramirez and Ernesto Calicagan as glass cutters, and petitioner Reynaldo Calicagan as Quality Controller, all assigned to work for respondent. Petitioners worked for respondent for periods ranging from three to 11 years. On 1 December 2002, respondent terminated its service contract with SSASI, which in turn, terminated the employment of petitioners on the same date. Believing that SSASI was a labor-only contractor, and having continuously worked as glass cutters and quality controllers for the respondent — functions which are directly related to its main line of business as glass manufacturer — for three to 11 years, petitioners asserted that they should be considered regular employees of the respondent; and that their dismissal from employment without the benefit of due process of law was unlawful. In support of their complaint, petitioners


submitted a copy of their work schedule to show that they were under the direct control of the respondent which dictated the time and manner of performing their jobs.

Respondent, on the other hand, refuted petitioners' allegations that they were its regular employees. Instead, respondent claimed that petitioners were employees of SSASI and were merely assigned by SSASI to work for respondent to perform intermittent services pursuant to an Accreditation Agreement, dated 5 March 2002, the validity of which was never assailed by the petitioners. Respondent contested petitioners' contention that they were performing functions that were directly related to respondent's main business since petitioners were simply tasked to do mirror cutting, an activity occasionally performed upon a customer's order. Respondent likewise denied exercising control over petitioners and asserted that such was wielded by SSASI. Finally, respondent maintained that SSASI was engaged in legitimate job contracting and was licensed by the Department of Labor and Employment (DOLE) to engage in such activity as shown in its Certificate of Registration. 6 Respondent presented before the Labor Arbiter copies of the Opinion dated 18 February 2003 of DOLE Secretary Patricia Sto. Tomas authorizing respondent to contract out certain activities not necessary or desirable to the business of the company; and the Opinion dated 10 July 2003 of DOLE Bureau of Labor Relations (DOLE-BLR) Director Hans Leo Cacdac allowing respondent to contract out even services that were not directly related to its main line of business.

SSASI, for its part, claimed that it was a duly registered independent contractor as evidenced by the Certificate of Registration issued by the DOLE on 3 January 2003. SSASI averred that it was the one who hired petitioners and assigned them to work for respondent on occasions that the latter's work force could not meet the demands of its customers. Eventually, however, respondent ceased to give job orders to SSASI, constraining the latter to terminate petitioners' employment.

On 18 February 2004, the Labor Arbiter promulgated his Decision finding that respondent submitted overwhelming documentary evidence to refute the bare allegations of the petitioners and accordingly dismissing the complaint for lack of merit. However, he also ordered the payment of separation benefits to petitioners.

On appeal, the NLRC reversed the Decision of the Labor Arbiter, giving more evidentiary weight to petitioners' testimonies. It appeared to the NLRC that SSASI was engaged in labor-only contracting since it did not have substantial capital and investment in the form of tools, equipment and machineries. The petitioners were recruited and assigned by SSASI to respondent as glass cutters, positions which were directly related to respondent's principal business of glass manufacturing. In light of the factual circumstances of the case, the NLRC declared that petitioners were employees of respondent and not of SSASI. Hence, the NLRC ruled in its Decision dated 29 June 2005:

WHEREFORE, the decision appealed from is hereby VACATED and SET ASIDE. [Herein respondent] and [SSASI] are hereby ordered to: (1) reinstate the [herein petitioners] to their former position as glass cutters; and (2) pay [petitioners'] full backwages from December 2, 2002 up to the date of their actual reinstatement. The liability of [respondent] and [SSASI] for [petitioners'] backwages is further declared to be joint and several.

Only respondent moved for the reconsideration of the foregoing NLRC Decision. Respondent prayed that the NLRC vacate its previous finding that SSASI was a labor-only contractor and that it was guilty of the illegal dismissal of petitioners. In a Resolution dated 24 November 2005, the NLRC denied the Motion for Reconsideration of respondent for lack of compelling justification to modify, alter or reverse its earlier Decision.

This prompted respondent to elevate its case to the Court of Appeals by the filing of a Petition for Certiorari with Application for the Issuance of Temporary Restraining Order (TRO), alleging that the NLRC abused its discretion in ignoring the established facts and legal principles fully substantiated by the documentary evidence on record and legal opinions of labor officials, and in giving more credence to the empty allegations advanced by petitioners.

To prevent the execution of the Decision dated 25 June 2005 and Resolution dated 24 November 2005 of the NLRC, respondent included in its Petition a prayer for the issuance of a TRO, which it reiterated in a motion filed on 29 August 2006. Acting on respondent's motion, the Court of Appeals issued a TRO on 11 September 2006 enjoining the NLRC from enforcing its 25 June 2005 Decision and 24 November 2005 Resolution.


On 10 November 2006, the Court of Appeals rendered a Decision granting respondent's Petition for Certiorari and reversing the NLRC Decision dated 25 June 2005.

The Court of Appeals denied petitioners' Motion for Reconsideration in a Resolution dated 27 April 2007.

Hence this petition.

Issues:(1) Whether or not petitioners were employees of respondent?(2) If they were, Whether or not they were illegally dismissed?

Held:

PETITIONERS WERE EMPLOYEES OF RESPONDENT

In the instant case, petitioners worked at the respondent's premises, and nowhere else. Petitioners followed the work schedule prepared by respondent. They were required to observe all rules and regulations of the respondent pertaining to, among other things, the quality of job performance, regularity of job output, and the manner and method of accomplishing the jobs. Obscurity hounds respondent's argument that even if petitioners were working under its roof, it was still SSASI which exercised control over the manner in which they accomplished their work. There was no showing that it was SSASI who established petitioners' working procedure and methods, or who supervised petitioners in their work, or who evaluated the same. Other than being the one who hired petitioners, there was absolute lack of evidence that SSASI exercised control over them or their work.

PETITIONERS ILLEGALLY DISMISSED

With regards to the second issue, the court ruled in affirmative.

Article 280 of the Labor Code, as amended, reads —

ART. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

This Court expounded on the afore-quoted provision, thus —

The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. . . . The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.

In the instant Petition, the Court has already declared that petitioners' employment as quality controllers and glass cutters are directly related to the usual business or trade of respondent as a glass manufacturer. Respondent would have wanted this Court to believe that petitioners' employment was


dependent on the increased market demand. However, bearing in mind that petitioners have worked for respondent for not less than three years and as much as 11 years, which respondent did not refute, then petitioners' continued employment clearly demonstrates its continuing necessity and indispensability to the business of respondent, raising their employment to regular status. Thus, having gained regular status, petitioners were entitled to security of tenure and could only be dismissed on just or authorized causes and after they had been accorded due process.

As petitioners' employer, respondent has the burden of proving that the dismissal was for a cause allowed under the law, and that they were afforded procedural due process. However, respondent failed to discharge this burden with substantial evidence as it noticeably narrowed its defense to the denial of any employer-employee relationship between it and petitioners.

The sole reason given for the dismissal of petitioners by SSASI was the termination of its service contract with respondent. But since SSASI was a labor-only contractor, and petitioners were to be deemed the employees of respondent, then the said reason would not constitute a just or authorized cause for petitioners' dismissal. It would then appear that petitioners were summarily dismissed based on the afore-cited reason, without compliance with the procedural due process for notice and hearing.

Herein petitioners, having been unjustly dismissed from work, are entitled to reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances, and to other benefits or their monetary equivalents computed from the time compensation was withheld up to the time of actual reinstatement. Their earnings elsewhere during the periods of their illegal dismissal shall not be deducted therefrom.

The petition is GRANTED.

20. Sasan, Sr. vs. NLRC and EPCIB

FACTS: 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. Pursuant to their contract, HI shall hire and assign workers to E-PCIBank to perform janitorial/messengerial and maintenance services. The contract was impliedly renewed year after year.

Petitioners Rolando Sasan, Sr., Leonilo Dayday, Modesto Aguirre, Alejandro Ardimer, Eleuterio Sacil, Wilfredo Juegos, Petronilo Carcedo, and Cesar Peciencia were among those employed and assigned to E-PCIBank at its branch along Gorordo Avenue, Lahug, Cebu City, as well as to its other branches in the Visayas. Petitioners filed with the Arbitration Branch of the NLRC in Cebu City separate complaints against E-PCIBank and HI for illegal dismissal, with claims for separation pay, service incentive leave pay, allowances, damages, attorney’s fees and costs. Subsequently, petitioners amended their complaints to include a claim for 13th month-pay. Several conciliation hearings were scheduled by Labor Arbiter Gutierrez but the parties still failed to arrive at a mutually beneficial settlement; hence, Labor Arbiter Gutierrez ordered that they submit their respective position papers.

Contention of the petitioner:

They had become regular employees of E-PCIBank with respect to the activities for which they were employed, having continuously rendered janitorial and messengerial services to the bank for more than one year; that E-PCIBank had direct control and supervision over the means and methods by which they were to perform their jobs; and that their dismissal by HI was null and void because the latter had no power to do so since they had become regular employees of E-PCIBank.Contention of the respondent:


E-PCIBank averred 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. 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, it promulgated its Decision on modifying the ruling of Labor Arbiter Gutierrez. The charge of illegal dismissal was prematurely filed. The record shows that barely eight (8) days from 15 July 2001 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.” The NLRC deleted Labor Arbiter Gutierrez’s award of backwages and separation pay, but affirmed his award for 13th month pay and attorney’s fees equivalent to ten percent (10%) of the 13th month pay, to the petitioners.

Petitioners’ Motion for Reconsideration was denied by the NLRC in its Resolution dated 1 July 2003. The Court of Appeals affirmed the findings of the NLRC that HI was a legitimate job contractor and that it did not illegally dismiss petitioners: ISSUE: Whether HI is a labor-only contactor and E-PCIBank should be deemed petitioners’ principal employer; and whether petitioners were illegally dismissed from their employment.

HELD: Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; (b) The contractor or subcontractor has substantial capital or investment; and


(c) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits. In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only contracting, the following elements are present: (a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job, work or service under its own account and responsibility; and (b) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. In distinguishing between permissible job contracting and prohibited labor-only contracting, we elucidated 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. Simply put, the totality of the facts and the surrounding circumstances of the case are to be considered. Each case must be determined by its own facts and all the features of the relationship are to be considered. In the case at bar, we find substantial evidence to support the finding of the NLRC, affirmed by the Court of Appeals, that HI is a legitimate job contractor. We further rule that petitioners were not illegally dismissed by HI. Upon the termination of the Contract of Service between HI and E-PCIBank, petitioners cannot insist to continue to work for the latter.

21. Purefoods Corp. vs. NLRC

The antecedents follow:

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).

However, Neri was dismissed from her work as a Deli-Attendant. Subsequently, eleven (11) other complainants joined 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. Labor Arbiter Arthur L. Amansec 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 Felipe P. Pati, 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; however, it was only Neri who verified the same.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. It thus ordered Neri's


reinstatement and the payment of backwages or of separation pay if reinstatement is not possible. Purefoods moved for the reconsideration of the decision but its motion was denied for lack of merit.

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.

Purefoods sought reconsideration2 of the decision but its motion was denied.

Argument of petitioner:

Purefoods argues that the affidavits it attached to its motion for reconsideration before the Court of Appeals are not evidence presented for the first time, but rather just corroboration, clarification, and/or explanation of what it had advanced in the proceedings below. It likewise claims that the other complainants in this case are not entitled to the avails of the suit because they failed to verify the position paper and the memorandum on appeal.

Purefoods maintains that Neri and the complainants are not employees of Purefoods, but of D.L. Admark, an independent job contractor. Thus, it cannot be held liable for illegal dismissal.

Finally, it claims that Article 280 of the Labor Code is not applicable in a trilateral relationship involving a principal, an independent job contractor, and the latter's employees.

ISSUE: WHETHER OR NOT THERE EXIST AND EMPLOYEE-EMPLYER RELATIONSHIP.

HELD:

The Court agrees with Purefoods' argument that Art. 280 of the Labor Code finds 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.

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.

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. 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 Sinumpaang Salaysay 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.

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.

22. Maranaw Hotels and Resort vs. Court of Appeals

Facts:

Private respondent Oabel was initially hired by petitioner as an extra beverage attendant on April 24, 1995. This lasted until February 7, 1997.1 Respondent worked in Century Park Hotel, an establishment owned by the petitioner. On September 16, 1996,the petitioner contracted with Manila Resource Development Corporation. Subsequently, private respondent Oabel was transferred to MANRED, with the latter deporting itself as her employer. MANRED has intervened at all stages of these proceedings and has consistently claimed to be the employer of private respondent Oabel.

After which private respondent Oabel was dismissed from employment and the same filed a case of illegal dismissal against the petitioner. Labor Arbiter dismissed private respondent's complaint considering that complainant job with the respondent hotel was on a per function basis or on a "need basis", complainant could not even be considered as casual employee or provisional employee but project employee which does not ripened into regular employee.

NLRC reversed the ruling of the Labor Arbiter and held that: (1) MANRED is a labor-only contractor, and (2) private respondent was illegally dismissed. Ruling that MANRED had insufficient capitalization and was not sufficiently equipped to provide specific jobs and operations of the former is directly related to and usually necessary or desirable in the business of the petitioner.The CA affirmed lower court's decision. Hence this petition.

Issue: Whether or Not MANRED was a labor-only contractor thereby making the petitioner liable in the case herein for illegal dismissal


Ruling:

SC affirmed the decision of CA; on account of the failure of the petitioner to append the board resolution authorizing the counsel for petitioner to file the petition before the Court of Appeals. Furthermore, it was dismissed on the ground of non-compliance with the rule on certification against forum shopping taking into account that the aforesaid certification was subscribed and verified by the Personnel Director of petitioner corporation without attaching thereto his authority to do so for and in behalf of petitioner corporation per board resolution or special power of attorney executed by the latter.

As decided in the case of BPI Leasing Corp. v. Court of Appeals where this Court emphasized that the lawyer acting for the corporation must be specifically authorized to sign pleadings for the corporation. 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.However, even if this grave procedural infirmity is set aside, the petition must still fail. It appears further that private respondent has already rendered more than one year of service to the petitioner, for the period 1995-1998, for which she must already be considered a regular employee, pursuant to Article 280 of the Labor Code:

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.

23. Coca-Cola Bottler’s Philippines vs. Agito

FACTS:

Petitioner (Coke) 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 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 labor-only contractor;


2. Whether or not an employer-employee relationship exists between petitioner Coca-Cola Bottlers Phils. Inc. and respondents.

RULING:

At the outset, the Court clarifies that although Interserve has an authorized capital stock amounting to P2,000,000.00, only P625,000.00 thereof was paid up as of 31 December 2001. The Court does not set an absolute figure for what it considers substantial capital for an independent job contractor, but it measures the same against the type of work which the contractor is obligated to perform for the principal. However, this is rendered impossible in this case since the Contract between petitioner and Interserve does not even specify the work or the project that needs to be performed or completed by the latter’s employees, and uses the dubious phrase “tasks and activities that are considered contractible under existing laws and regulations.” Even in its pleadings, petitioner carefully sidesteps identifying or describing the exact nature of the services that Interserve was obligated to render to petitioner. The importance of identifying with particularity the work or task which Interserve was supposed to accomplish for petitioner becomes even more evident, considering that the Articles of Incorporation of Interserve states that its primary purpose is to operate, conduct, and maintain the business of janitorial and allied services. But respondents were hired as salesmen and leadman for petitioner. The Court cannot, under such ambiguous circumstances, make a reasonable determination if Interserve had substantial capital or investment to undertake the job it was contracting with petitioner.

[In] Vinoya v. NLRC, we clarified that it was not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises, etc., to be considered an independent contractor. In fact, jurisprudential holdings were 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 the contractor was 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 workers; the power of the employer with respect to the hiring, firing and payment of the workers of the contractor; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.

In sum, Interserve did not have substantial capital or investment in the form of tools, equipment, machineries, and work premises; and respondents, its 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.

24. South Davao Development Company vs. Gamo

Facts:

Petitioner South Davao Development Company, operator of a coconut and mango farm in San Isidro, Davao Oriental and Inawayan/Baracatan, Davao del Sur, hired on August 1963 petitioner respondent Sergio L. Gamo (Gamo) as a foreman. Sometime in 1987, petitioner appointed Gamo as a copra maker contractor. All of the abovenamed respondents (copra workers - all employees in petitioner’s coconut and mango farm) were later transferred (except Eleonor Cosep who has a different case) 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.

On 2 October 1999, petitioner proposed a new payment scheme to Gamo. Gamo and petitioner failed to agree on a payment scheme, thus, petitioner did not renew the "contract" of Gamo.

Respondents filed a complaint for illegal dismissal against petitioner. They alleged that sometime in December 1999, petitioner verbally terminated them en masse. The labor arbiter dismissed the complaint.

Respondents filed a petition for certiorari under Rule 65 with the Court of Appeals. The Court of Appeals ruled that there existed an employer-employee relationship.

Issue:

Whether or not Gamo is an independent contractor.

Ruling:

Gamo is not an independent contractor. Employer-employee relationship exists.

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.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.

25. Jethro Intelligence and Security Group vs. Sec./DOLE

Facts:

Petitioner Jethro is a security service contractor with a security service contract agreement with co-petitioner Yakult. On the basis of a complaint filed by respondent Garcia , one of the security guards deployed by Jethro, for underpayment of wages, legal/special holiday pay, premium pay for rest day, 13th month pay, and night shift differential, the Department of Labor and Employment (DOLE)-Regional Office No. IV conducted an inspection at Yakult's premises in Laguna in the course of which several labor standards violations were noted, including keeping of payrolls and daily time records in the main office, underpayment of wages, overtime pay and other benefits, and non-registration with the DOLE as required under Department Order.

By order of the DOLE Regional Director, noting petitioners' failure to rectify the violations noted during the above-stated inspection within the period given for the purpose, found them jointly and severally liable to herein respondents for the aggregate amount of P809,210.16 representing their wage differentials, regular holiday pay, special day premium pay, 13th month pay, overtime pay, service incentive leave pay, night shift differential premium and rest day premium.

Jethro appealed to SOLE and having been denied by SOLE and CA, petitioner comes to SC under Rule 45.

Issue: Whether or not Jethro is liable.

Ruling:

In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the case as it does not come under the exception clause in Art. 128 (b) of the Labor Code. While petitioner Jethro appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary course of inspection. While the employment records of the employees could not be expected to be found in Yakult's premises in Calamba, as Jethro's offices are in Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits mandated by law.

Jethro's failure to keep payrolls and daily time records in Yakult's premises was not the only labor standard violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE, pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with the rates prescribed by law.


WHEREFORE, the petition is DENIED.

26. Traveño vs. Bobongon Banana Growers Multi-purpose Cooperative

Facts:

By the account of petitioner Traveño and his 16 co-petitioners, in 1992, respondent Timog Agricultural Corporation (TACOR) and respondent Diamond Farms, Inc. (DFI) hired them to work at a banana plantation at Bobongon, Davao Del Norte which covered lands previously planted with rice and corn but whose owners had agreed to convert into a banana plantation upon being convinced that TACOR and DFI could provide the needed capital, expertise, and equipment. Petitioners helped prepare the lands for the planting of banana suckers and eventually carried out the planting as well.

Petitioners asseverated that while they worked under the direct control of supervisors assigned by TACOR and DFI, these companies used different schemes to make it appear that petitioners were hired through independent contractors, including individuals, unregistered associations, and cooperatives; that the successive changes in the names of their employers notwithstanding, they continued to perform the same work under the direct control of TACOR and DFI supervisors; and that under the last scheme adopted by these companies, the nominal individual contractors were required to, as they did, join a cooperative and thus became members of respondent Bobongon Banana Growers Multi-purpose Cooperative.(Cooperative)

Three separate complaints for illegal dismissal were filed by petitioners, individually and collectively, with the NLRC against said respondents including respondent Dole Asia Philippines as it then supposedly owned TACOR, 4 for unpaid salaries, overtime pay, 13th month pay, service incentive leave pay, damages, and attorney's fees.

The Labor Arbiter, found respondent Cooperative guilty of illegal dismissal.

The NLRC sustained the Labor Arbiter's ruling that the employer of petitioners is the Cooperative. It partially granted petitioners' appeal, however, by ordering the Cooperative to pay them their unpaid wages, wage differentials, service incentive leave pay, and 13th month pay. It thus remanded the case to the Labor Arbiter for computation of those awards.

By Resolution dated February 20, 2004, 12 the appellate court dismissed petitioners' petition for certiorari on the ground that the accompanying verification and certification against forum shopping was defective, it having been signed by only 19 of the 22 therein named petitioners. Petitioners posit that the appellate court erred in dismissing their petition on a mere technicality.

Issue: Whether DFI (with which TACOR had been merged) and DPI should be held solidarily liable with the Cooperative for petitioners' illegal dismissal and money claims.

Ruling:

The matter of whether the Cooperative is an independent contractor or a labor-only contractor may not be used to predicate a ruling in this case. 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.

WHEREFORE, the petition is DISMISSED.

DFI did not farm out to the Cooperative the performance of a specific job, work, or service. Instead, it entered into a Banana Production and Purchase Agreement 25 (Contract) with the Cooperative, under which the Cooperative would handle and fund the production of bananas and operation of the plantation covering lands owned by its members in consideration of DFI's commitment to provide financial and technical assistance as needed, including the supply of information and equipment in growing, packing, and shipping bananas. The Cooperative would hire its own workers and pay their


wages and benefits, and sell exclusively to DFI all export quality bananas produced that meet the specifications agreed upon.

To the Court, the Contract between the Cooperative and DFI, far from being a job contracting arrangement, is in essence a business partnership that partakes of the nature of a joint venture. The rules on job contracting are, therefore, inapposite. The Court may not alter the intention of the contracting parties as gleaned from their stipulations without violating the autonomy of contracts principle under Article 1306 of the Civil Code which gives the contracting parties the utmost liberality and freedom to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good custom, public order or public policy.

Petitioners' claim of employment relationship with the Cooperative's herein co-respondents must be assessed on the basis of four standards, viz.: (a) the manner of their selection and engagement; (b) the mode of payment of their wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of control over their conduct. Most determinative among these factors is the so-called "control test".

There is nothing in the records which indicates the presence of any of the foregoing elements of an employer-employee relationship.

The absence of the first requisite, which refers to selection and engagement, is shown by DFI's total lack of knowledge on who actually were engaged by the Cooperative to work in the banana plantation. This is borne out by the Contract between the Cooperative and DFI, under which the Cooperative was to hire its own workers. As TACOR had been merged with DFI, and DPI is merely alleged to have previously owned TACOR, this applies to them as well. Petitioners failed to prove the contrary. No employment contract whatsoever was submitted to substantiate how petitioners were hired and by whom.

On the second requisite, which refers to the payment of wages, it was likewise the Cooperative that paid the same. As reflected earlier, under the Contract, the Cooperative was to handle and fund the production of bananas and operation of the plantation. The Cooperative was also to be responsible for the proper conduct, safety, benefits, and general welfare of its members and workers in the plantation.

As to the third requisite, which refers to the power of dismissal, and the fourth requisite, which refers to the power of control, both were retained by the Cooperative. Again, 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.

The crucial element of control refers to the authority of the employer to control the employee not only with regard to the result of the work to be done, but also to the means and methods by which the work is to be accomplished. 30 While it suffices that the power of control exists, albeit not actually exercised, there must be some evidence of such power. In the present case, petitioners did not present any.

There being no employer-employee relationship between petitioners and the Cooperative's co-respondents, the latter are not solidarily liable with the Cooperative for petitioners' illegal dismissal and money claims.

27. Aliviado vs. Procter and Gamble Philippines

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.5 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 complaint10 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.

Petitioners filed an appeal to NLRC which affirmed the decision of the labor Arbiter and also denied their motion for reconsideration.

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. Issues:(1) Whether P&G is the employer of petitioner(2) Whether petitioners were illegally dismissed(3) Whether petitioners are entitled for payment of actual, moral and exemplary damages as well as litigation costs and attorney’s fees. Arguments: Petitioner

Petitioners further assert that Promm-Gem and SAPS are labor-only contractors providing services of manpower to their client. They claim that the contractors have neither substantial capital nor tools and equipment to undertake independent labor contracting. Petitioners insist that since they had been engaged to perform activities which are necessary or desirable in the usual business or trade of P&G, then they are its regular employees.20 Respondents: P&G further argues that there is no employment relationship between it and petitioners. It was Promm-Gem or SAPS that (1) selected petitioners and engaged their services; (2) paid their salaries; (3) wielded the power of dismissal; and (4) had the power of control over their conduct of work.

P&G also contends that the Labor Code neither defines nor limits which services or activities may be validly outsourced. Thus, an employer can farm out any of its activities to an independent contractor, regardless of whether such activity is peripheral or core in nature. It insists that the determination of whether to engage the services of a job contractor or to engage in direct hiring is within the ambit of management prerogative. Ruling: The petition has merit. In order to resolve the issue of whether P&G is the employer of petitioners, it is necessary to first determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors.

The pertinent Labor Code provision on the matter states:

ART. 106. Contractor or subcontractor. – XXX 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. 18-02,24 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 performing activities which are directly related to the main business of the principal; or ii) [T]he contractor does not exercise the right to control over the performance of the work of the contractual employee. In the instant case, the financial statements26 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 1990.27 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.28 It also had under its name three registered vehicles which were used for its promotional/merchandising business.29 Promm-Gem also has other clients30 aside from P&G.31 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.

Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor.

We find that it is a legitimate independent contractor 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,38 which is 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."39 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.40 Consequently, the following petitioners, having been recruited and supplied by SAPS41 -- which engaged in labor-only contracting -- are considered as the employees of P&G: Parenthetically, unlike Promm-Gem which dismissed its employees for grave misconduct and breach of trust due to disloyalty, SAPS dismissed its employees upon the initiation of P&G. It is evident that SAPS does not carry on its


own business because the termination of its contract with P&G automatically meant for it also the termination of its employees’ services. It is obvious from its act that SAPS had no other clients and had no intention of seeking other clients in order to further its merchandising business. From all indications SAPS, existed to cater solely to the need of P&G for the supply of employees in the latter’s merchandising concerns only. Under the circumstances prevailing in the instant case, we cannot consider SAPS as an independent contractor.

WHEREFORE, the petition is GRANTED.

WORKER’S PREFERENCE

DBP vs. NLRC, 242 SCRA 59 [1995]

A preference applies only to claims which do not attach to specific properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent’s assets. It is a right to a first preference in the discharge of the funds of the judgment debtor.

Furthermore, workers’ claims for unpaid wages and monetary benefits cannot be paid outside of a bankruptcy or judicial liquidation proceedings against the employer. It is settled that the application of Article 110 of the Labor Code is contingent upon the institution of those proceedings, during which all creditors are convened, their claims ascertained and inventoried, and their preferences determined. Assured thereby is an orderly determination of the preference given to creditors’ claims; and preserved in harmony is the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code.

BATONG BUHAY GOLD MINES, INC., petitioner, vs. HONORABLE DIONISIO DELA SERNA IN HIS CAPACITY AS THE UNDERSECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, ELSIE ROSALINDA TY, ANTONIO MENDELEBAR, MA. CONCEPCION Q. REYES, AND THE OTHER COMPLAINANTS IN CASE NO. NCR-LSED-CI-2047-87; MFT CORPORATION AND SALTER HOLDINGS PTY. LTD., respondents. [G.R. No. 86963. August 6, 1999]

Private respondents filed a complaint against petitioner for under payment of wages and non payment of benefits. In pursuant to the exercise of the Regional Director’s visitorial and enforcement power, it adopted the recommendation of the LSWOs and issued an order directing the respondent to pay the complainants the sum of P4,818,746.40 representing their unpaid 13th month pay for 1985 and 1986, wage and ECOLA differentials under wage order Nos. 2 and 5, unpaid salaries from 16 March 1986 to present and vacation/sick leave benefits for 1984, 1985 and 1986. When the respondent failed to post a cash/surety bond, and upon motion for the issuance of a writ of execution by the complainants, the Regional Director, issued a writ of execution and ordered the sheriff to comply with the same. The Special Sheriff proceeded to execute the appealed Order and seized three (3) units of Peterbuilt trucks and then sold the same by public auction. Various materials and motor vehicles were also seized on different dates and sold at public auction by said sheriff.

The Supreme Court ruled that the public auction held was null and void since on the properties of petitioner involved was constituted a mortgage between petitioner and the Development Bank of the Philippines. The aforementioned documents were executed between the petitioner and Development Bank of the Philippines (DBP) even prior to the filing of the complaint of petitioner’s employees.

Private respondents contended that even if subject properties were mortgaged to DBP (now under Asset Privatization Trust), Article 110 of the Labor Code, as amended by RA 6715, applies just the same. According to them, the said provision of law grants preference to money claims of workers over and above all credits of the petitioner. This contention is untenable.

In the case of DBP vs. NLRC, the Supreme Court held that the workers preference regarding wages and other monetary claims under Article 110 of the Labor Code, as amended, contemplates bankruptcy or liquidation proceedings of the employer’s business. What is more, it does not disregard the preferential


lien of mortgagees considered as preferred credits under the provisions of the New Civil Code on the classification, concurrence and preference of credits.

Barayoga vs. Asset Privatization Trust, G.R. No. 160073, October 24, 2005 The 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. On December 8, 1986, [Respondent] 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. 14 identifying 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.

Sometime later, on August 28, 1988, 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.

On July 23, 1991, 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, on July 15, 1992, 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 Peñafrancia Sugar Mill (Pensumil).

In the Union’s Position Paper, they 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 May 1991, Philsucor started recalling workers back to work, to the exception of the union members. Management told them that they 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.

After due proceedings, on April 30, 1998, Labor Arbiter Fructuoso T. Aurellano disposed that respondent APT pay complainants of the mandated employment benefits provided for under Section 27 of Proclamation No. 50 which benefits had been earlier extended to other employees similarly situated. Both the union and APT elevated the labor arbiter’s decision before NLRC.

The NLRC affirmed APT’s liability for petitioners’ money claims. While no employer-employee relationship existed between members of the petitioner union and APT, at the time of the employees’ illegal dismissal, the assets of BISUDECO had been transferred to the national government through APT. Moreover, the NLRC held that APT should have treated petitioners’ claim as a lien on the assets of BISUDECO.

Finding their computation to be in order, the NLRC awarded to petitioners their money claims for underpayment, labor-standard benefits, and ECOLA. It also awarded them their back wages, computed at the prevailing minimum wage, for the period May 1, 1991 (the date of their illegal dismissal) until October 30, 1992 (the sale of BISUDECO assets to the BAPCI). On the other hand, the NLRC ruled that petitioners were not entitled to separation pay because of the huge business losses incurred by BISUDECO, which had resulted in its bankruptcy.

Respondent sought relief from the CA via a Petition for Certiorari under Rule 65 of the Rules of Court. The CA ruled that APT should not be held liable for petitioners’ claims for unfair labor practice, illegal dismissal, illegal deduction and underpayment of wages, as well as other labor-standard benefits plus


damages. As found by the NLRC, APT was not the employer of petitioners, but was impleaded only for possessing BISUDECO’s mortgaged properties as trustee and, later, as the highest bidder in the foreclosure sale of those assets, the CA concluded that petitioners’ claims could not be enforced against APT as mortgagee of the foreclosed properties of BISUDECO.

Issue: The main issue raised is whether Respondent APT is liable for petitioners’ monetary claims.

The Court’s Ruling

The Petition has no merit

In the present case, petitioner-union’s members who were not recalled to work by Philsucor in May 1991 seek to hold APT liable for their monetary claims and allegedly illegal dismissal. Significantly, prior to the actual sale of BISUDECO assets to BAPCI on October 30, 1992, the APT board of trustees had approved a Resolution on September 23, 1992. The Resolution authorized the payment of separation benefits to the employees of the corporation in the event of its privatization. Not included in the Resolution, though, were petitioner-union’s members who had not been recalled to work in May 1991.

The question now before the Court is 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).

We rule in the negative. The duties and liabilities of BISUDECO, including its monetary liabilities to its employees, were not all automatically assumed by APT as purchaser of the foreclosed properties at the auction sale. Any assumption of liability must be specifically and categorically agreed upon. In Sundowner Development Corp. v. Drilon,[13] the Court ruled that, unless expressly assumed, labor contracts like collective bargaining agreements are not enforceable against the transferee of an enterprise. Labor contracts are in personam and thus binding only between the parties.

No succession of employment rights and obligations can be said to have taken place between the two. Between the employees of BISUDECO and APT, there is no privity of contract that would make the latter a substitute employer that should be burdened with the obligations of the corporation. To rule otherwise would result in unduly imposing upon APT an unwarranted assumption of accounts not contemplated in Proclamation No. 50 or in the Deed of Transfer between the national government and PNB.

Furthermore, under the principle of absorption, a bona fide buyer or transferee of all, or substantially all, the properties of the seller or transferor is not obliged to absorb the latter’s employees.[14] The most that the purchasing company may do, for reasons of public policy and social justice, is to give preference of reemployment to the selling company’s qualified separated employees, who in its judgment are necessary to the continued operation of the business establishment.

The liabilities of the previous owner to its employees are not enforceable against the buyer or transferee, unless (1) the latter unequivocally assumes them; or (2) the sale or transfer was made in bad faith. Thus, APT cannot be held responsible for the monetary claims of petitioners who had been dismissed even before it actually took over BISUDECO’s assets.

Moreover, it should be remembered that APT merely became a transferee of BISUDECO’s assets for purposes of conservation because of its lien on those assets -- a lien it assumed as assignee of the loan secured by the corporation from PNB. Subsequently, APT, as the highest bidder in the auction sale, acquired ownership of the foreclosed properties. Relevant to this transfer of assets is Article 110 of the Labor Code, as amended by Republic Act No. 6715, which reads:

“Article 110. Worker’s preference in case of bankruptcy. – In the event of bankruptcy or liquidation of the employer’s business, his workers shall enjoy first preference as regards their unpaid wages and other monetary claims shall be paid in full before the claims of the Government and other creditors may be paid.”

Thus, the right of employees to be paid benefits due them from the properties of their employer cannot have any preference over the latter’s mortgage credit. In other words, being a mortgage


credit, APT’s lien on BISUDECO’s mortgaged assets is a special preferred lien that must be satisfied first before the claims of the workers.

Furthermore, workers’ claims for unpaid wages and monetary benefits cannot be paid outside of a bankruptcy or judicial liquidation proceedings against the employer.[26] It is settled that the application of Article 110 of the Labor Code is contingent upon the institution of those proceedings, during which all creditors are convened, their claims ascertained and inventoried, and their preferences determined.[27] Assured thereby is an orderly determination of the preference given to creditors’ claims; and preserved in harmony is the legal scheme of classification, concurrence and preference of credits in the Civil Code, the Insolvency Law, and the Labor Code. As a mere transferee of the mortgage credit and later as the purchaser in a public auction of BISUDECO’s foreclosed properties, APT cannot be held liable for petitioners’ claims against BISUDECO: illegal dismissal, unpaid back wages and other monetary benefits. WHEREFORE, the Petition is hereby DENIED,

PHILIPPINE AIRLINES, INCORPORATED, FRANCISCO X. YNGENTE IV, PAG-ASA C. RAMOS, JESUS FEDERICO V. VIRAY, RICARDO D. ABUYUAN, PETITIONERS, VS. BERNARDIN J. ZAMORA, RESPONDENT. [G. R. No. 166996, February 06, 2007]

Zamora filed a labor Complaint against PAL for illegal dismissal, unfair labor practice, non-payment of wages, damages and attorney’s fees. During the pendency of the case, PAL, was undergoing rehabilitation per SEC’s order appointing a permanent rehabilitation receiver for petitioner. CA, on appeal, awarded the reinstatement of Zamora together with the payment of wages and other benefits. Supreme Court however, reversed said decision. It ruled that the law is clear that, 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. This 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 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 case at bar, allowing such actions to proceed would only increase the work-load of the management committee or the rehabilitation receiver, whose precious time and effort would be dissipated and wasted in defending suits against the corporation, instead of being channeled toward restructuring and rehabilitation. Moreover, 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 in the case of rehabilitation.

Phil. Airlines vs. Phil. Airlines Employees Association, 525 SCRA 29 [2007]

FACTS:

This case arose from a labor complaint filed against PAL by PALEA and Mary Anne el Rosario, Director of Personnel of PAL for unfair labor practice for non-payment of 13th month pay of employees not regularized as of 30th of April 1988 as allegedly stated in the CBA.

CBA was entered into between PAL and PALEA to cover the period of 1986-1989. The pertinent provisions of which state:

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.8

Prior to the payment of the 13th month pay, PAL released an implementing guideline on April 22, 1988. Which reads:

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.10

PALEA assailed the implementation of said guideline on the view that all employees of PAL, whether regular or non-regular, should be paid their 13th month pay.

PAL countered by saying that rank and file employees who were regularized after April 30, 1988 were not enlisted to the 13th month pay as they were already given the Christmas bonus in December 1988 per PD 851.

PALEA disagreed and filed the complaint arguing that the cut-off period for regularization should not be used as the parameter for granting the 13th month pay considering that the law does not distinguish the status of employment but the law covers all employees.

In its position paper PAL countered that those rank and file employees who were not regularized by April 30 of a particular year are, in principle, not denied their 13th month pay, considering they receive said mandatory bonus in the form of the Christmas bonus.

Labor Arbiter dismissed the complaint as the giving of the particular bonus was deemed only an additional practice made in the past, such being the case, it violated no agreement or existing practice or committee unfair labor practice.On appeal, NLRC and the CA ruled in favor of PALEA.

ISSUE:

Whether or not a court or a quasi-judicial agency can amen or alter a CBA by expanding its coverage to non-regular employees who are not covered by the bargaining unit.

HELD:

The court, instead of addressing the issue took cognizance of the fact that PAL, as of that time, was still undergoing rehabilitation per the mandate of the SEC.

The pertinent law concerning the suspension for claims against corporations is PD 902-A, as amended. Particularly, Section 5(d) and 6(c) which reads:

SECTION 5. In addition to the regulatory adjudicative functions of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:x x x x


d) Petitions of corporations, partnerships or associations to be declared in the state of suspension of payments in cases where the corporation, partnership or association possesses property to cover all its debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership or association has no sufficient assets to cover its liabilities, but is under the [management of a rehabilitation receiver or] management committee created pursuant to this Decree.

SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following:x x x xc) To appoint one or more receivers of the property, real or personal, which is the subject of the action pending before the Commission in accordance with the pertinent provisions of the Rules of Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants and/or protect the interest of the investing public and creditors: x x x Provided, finally, That upon appointment of a management committee, the rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (Emphasis supplied.)

The term “claims” refers to debts or demands of a pecuniary nature. It means the assertion of a right to have money paid.

In the instant case, if the Court does not find merit in the petition, PAL will be obliged to satisfy the pecuniary claims of PALEA.

In a plethora of cases, the Court has upheld the suspension of proceedings involving claims against PAL based on the SEC Order which appointed an Interim Rehabilitation Receiver for PAL.

In Rubberworld (Phils.), Inc. v NLRC, the Court posited 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 the Court. xxx the rendition of judgment while petitioner is under a state of receivership could render a violence to the rationale for suspension of payments in Section 6(c) of P 902-A, if the judgment would result in the granting of the private respondent’s claim to separation pay, thus defeating the basic purpose behind Sec. 6 (c) which is to prevent dissipation of the distressed company’s resources.

In PAL v Zamora, the court held that “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 executor.

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.

In actual fact, allowing such actions to proceed would only increase the work-load of the management committee or the rehabilitation receiver, whose precious time and effort would be dissipated and wasted in defending suits against the corporation, instead of being channeled toward restructuring and rehabilitation.”

All told, this Court is constrained to suspend the progress, development and other proceedings in the present petition.

Castillo vs. Uniwide Warehouse Club, G.R. No. 169725, April 30, 2010

FACTS:


This case stems from a complaint filed by Castillo against Uniwide and its President Jimmy Gow for payment of Saturdays worked for the year 2001; holiday pay; separation pay; actual, moral and exemplary damages; and attorney’s fees.

Two months after the filing of the complaint however, the respondents moved to dismiss said complaint on the ground that it petitioned the SEC for suspension of payments and approval of its rehabilitation plan. It appears that on June 29, 1999, the SEC had ruled favorably on the petition and ordered that all claims, actions and proceedings against herein respondents pending before any court, tribunal, board, office, body or commission be suspended, and that following the appointment of an interim receiver, the suspension order had been extended to until February 7, 2000. On April 11, 2000, the SEC declared the Uniwide Group of Companies to be in a state of suspension of payments and approved its rehabilitation plan.

Labor Arbiter and NLRC denied the motion of respondent. Respondent then filed a petition under Rule 65 with the Court of Appeals which found merit in the petition and reversed the resolutions of the NLRC affirming the Labor Arbiter.

ISSUE: Whether or not the proceeding can be validly suspended.

HELD:

Petioner argues that suspension of the proceedings is not in order, because his claim against respondent and the latter’s corresponding liability are yet to be determined. Respondents countered by saying that the CA was correct since it was among those actions for claims that are automatically suspended on the appointment of a management committee or receiver according to Se. 6 of PD 902-A. Respondents advance the notion that while said Section 6 expressly referred to suspension of pending claims, the clear and unmistakable intention of the law is to bar the filing of any such claims in order to maintain parity of status among the different creditors of the distressed corporation at least while the rehabilitation efforts are ongoing.

To begin with, corporate rehabilitation connotes the restoration of the debtor to a position of successful operation and solvency, if it is shown that its continued operation is economically feasible and its creditors can recover by way of the present value of payments projected in the rehabilitation plan, more if the corporation continues as a going concern than if it is immediately liquidated. It contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvency, the purpose being to enable the company to gain a new lease on life and allow its creditors to be paid their claims out of its earnings.

An essential function of corporate rehabilitation is the mechanism of suspension of all actions and claims against the distressed corporation, which operates upon the due appointment of a management committee or rehabilitation receiver. P.D. No. 902-A, as amended. Section 6(c) of the law mandates that, upon appointment of a management committee, rehabilitation receiver, board, or body, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board, or body shall be suspended.

In a plethora of cases, the Court has upheld the suspension of proceedings regaring claims against distressed coprations pursuant to PD902-A. The actions that were 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. More importantly, the new rules on corporate rehabilitation, as well as the interim rules, provide an all-encompassing definition of the term and, thus, include all claims or demands of whatever nature or character against a debtor or its property, whether for money or otherwise. There is no doubt that petitioner’s claim in this case, arising as it does from his alleged illegal dismissal, is a claim covered by the suspension order issued by the SEC, as it is one for pecuniary consideration.

Jurisprudence is settled that the suspension of proceedings referred to in the law uniformly applies to “all actions for claims” filed against a corporation, partnership or association under management or receivership, without distinction, except only those expenses incurred in the ordinary course of business. In the oft-cited case of Rubberworld (Phils.) Inc. v. NLRC, the Court noted that


aside from the given exception, the law is clear and makes no distinction as to the claims that are suspended once a management committee is created or a rehabilitation receiver is appointed. Since the law makes no distinction or exemptions, neither should this Court. Ubi lex non distinguit nec nos distinguere debemos. Philippine Airlines, Inc. v. Zamora declares that the automatic suspension of an action for claims against a corporation under a rehabilitation receiver or management committee embraces all phases of the suit, that is, the entire proceedings of an action or suit and not just the payment of claims.

It must be conceded that the date when the claim arose, or when the action was filed, has no bearing at all in deciding whether the given action or claim is covered by the stay or suspension order. What matters is that as long as the corporation is under a management committee or a rehabilitation receiver, all actions for claims against it, whether for money or otherwise, must yield to the greater imperative of corporate revival, excepting only, as already mentioned, claims for payment of obligations incurred by the corporation in the ordinary course of business.

In the instant case, a Certification issued by the SEC and signed by its General Counsel states that as of August 17, 2006, the petition of Uniwide Sales, Inc. for declaration of suspension of payments and rehabilitations was still pending with it, and that the company was still under its rehabilitation proceedings. Hence, since petitioner’s claim was one for wages accruing from the time of dismissal, as well as for benefits and damages, the same should have been suspended pending the rehabilitation proceedings. In other words, the Labor Arbiter should have abstained from resolving the illegal dismissal case and, instead, directed petitioner to present his claim to the rehabilitation receiver duly appointed by the SEC, inasmuch as the stay or suspension order was effective and it subsisted from issuance until the dismissal of the petition for rehabilitation or the termination of the rehabilitation proceedings. The Court of Appeals was thus correct in directing the suspension of the proceedings.

ATTORNEY’S FEES AND APPEARANCE OF LAWYERS

BANK OF THE PHILIPPINE ISLANDS VS. NLRC, 171 SCRA 556

Facts:

Three cases here intertwined which were consolidated because they all involve the same employee-employer relations of the Bank of the Philippine Islands and its personnel.

G.R. Nos. 69746-47

First Issue

In the course of their negotiations with the Bank of the Philippine Islands for a new collective bargaining agreement to replace the one expiring on March 31, 1982, serious differences arose between the Bank of the Philippine Islands Employees Union-Metro Manila and its mother federation, the Associated Labor Unions. This prompted the former to manifest that it would henceforth negotiate alone with BPI independently of ALU, which in turn, suspended all the elective officers of BPIEU-Metro Manila led by its president, Carlito Reyes, who was replaced by Rolando Valdez as acting president. In retaliation, Reyes and his followers, claiming to be the legal and sole representatives of BPIEU-Metro Manila, formally disaffiliated from ALU on November 16, 1982.

As no agreement could be reached on a wide variety of economic issues, the dispute between BPI and its employees was certified by the Minister of Labor for compulsory arbitration and docketed in the National Labor Relations Commission as Certified Cases Nos. 0279 and 0281. These cases were later consolidated with the Manifestation and Motion for Interpleader and to Consign Union Dues, which was filed by BPI in view of the conflicting claims of the Reyes and Valdez groups for the said dues.

On March 22, 1983, the NLRC resolved the bargaining deadlock 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.


Claiming to be the labor union referred to in the decision, the Reyes group filed a petition with the Bureau of Labor Relations for direct certification on the ground of its disaffiliation from ALU. This petition was denied in a decision dated June 13, 1983, where BLR Director Cresenciano Trajano held that the disaffiliation was invalid because it was done beyond the freedom period.

Issue: The question precisely before the Court then was which as between the Reyes and Valdez groups should be recognized as the legitimate representative of the employees in general to negotiate with BPI NLRC had no jurisdiction to resolve that question.

More importantly, the issue has become moot and academic. In its decision dated June 13, 1985, the Bureau of Labor Relations did hold that the disaffiliation of the Reyes group from ALU was invalid because it was done beyond the freedom period that is within sixty days before the expiration of the collective bargaining agreement on March 31, 1982. But that is all past and done now. That CBA was replaced by another collective bargaining agreement concluded with BPI by the BPIEU-Metro Manila after its disaffiliation valid this time because it was done within the freedom period. That agreement expired on March 31, 1985. In fact, even the agreement concluded afterwards was itself to have expired on March 31, 1988, or almost a year ago.

Second Issue

As a result of its merger with the Commercial Bank and Trust Company in 1981, the BPI found it necessary to close the COMTRUST branch in Davao City and transfer it to General Santos City. Pursuant to an earlier understanding, seven of the employees of the said branch who were absorbed by BPI were transferred to the General Santos City branch. However, three of them, namely Glenna, Ongkiko, Arturo Napales, and Gregorio Gito, refused to move. After efforts to persuade them failed, BPI dismissed them. This triggered a strike by the Davao Chapter of the BPIEU-ALU which was followed by sympathy strikes by other local chapters.

On October 19, 1983, the Minister of Labor sustained the transfer of the three employees by the BPI and issued a return-to-work order. This was ignored by the striking workers, who continued to question the transfer. Another return-to-work order was issued, this time by the NLRC, which was obeyed by the strikers upon admission by the BPI of the three recalcitrant employees to their original stations in Davao City. This was done pending the opening of the General Santos City branch.

Upon the inauguration of the said branch, BPI filed a motion to transfer the said employees thereto as sanctioned earlier by the Minister of Labor. The situation was complicated when another employee, Lennie Aninon who had earlier agreed to transfer, now insisted on remaining in the Davao City branch. She too was included in the motion, which was granted by the NLRC in its decision dated December 5, 1984.

Napales and Gito agreed to move to General Santos City, but the two lady employees, to wit Ongkiko and Aninon remained adamant.

Issue: Whether or not directing the transfer of the four employees is tainted with grave abuse of discretion and should be set aside.

the right of the employer to transfer the employees in the interest of the efficient and economic operation of its business cannot be seriously challenged. That is its prerogative. The only limitation on the discretion of management in this regard is its mala fides. The only time the employer cannot exercise this right is where it is vitiated by improper motive and is merely a disguised attempt to remove or punish the employee sought to be transferred.

Such improper motive has not been shown in the case at bar. On the contrary, it has been established that the transfer was necessitated by the fact that the COMBANK branch in Davao City had to be closed because it was just across the street from the BPI branch. There was certainly no justification to maintain the two branches as they both belonged now to the BPI. Moreover, it is not disputed that the lateral transfer of the employees involved no demotion in their rank or salary or other benefits.

More to the point, it was expressly provided in the collective bargaining agreement then existing that:


Section 1. The UNION and all its members hereby recognize that the Management and operation of the business of the BANK which include, among others, the hiring of employees, promotion, transfer and dismissals for just cause as well as the maintenance of order, discipline and efficiency in its operations, are the sole and exclusive right and prerogative of the BANK Management. . . .

Section 2. The BANK and the UNION agree that permanent transfer of a member of the UNION shall be limited only to the offices of the BANK in the following areas, unless the transfer to an office of the BANK in another area is requested or agreed to by the member, to wit:

Member of the UNION's Davao City Chapter, Tagum Chapter, Digos Chapter to any office of the BANK within the Southern Mindanao area.

It is not disputed that General Santos City is in the Southern Mindanao area.

G.R. Nos. 76842-44

Following the dismissal of its petition against the BLR the Reyes group, on April 26, 1985, filed a motion with the NLRC for the release to it of the union dues consigned by BPI. This motion was opposed by the Valdez group, which subsequently filed its own petition for the payment to it of the said dues, on the ground that it was the legitimate BPIEU recognized by the BLR. In its decision dated September 26, 1986, the NLRC declared as follows:

The disaffiliation of Reyes' group having been disapproved, the local union referred to in Director Trajano's decision is none other than BPIEU-ALU (Valdez). It is the union that is entitled to the disputed union dues deposited with this Commission.

Issue: Who was entitled to have a share of the union dues.

As the disaffiliation of the Reyes group was disallowed by the BLR because it was done beyond the freedom period, the Reyes group could not have claimed an Identity distinct from that of the original BPIEU-Metro Manila. For the same reason, the Valdez group could not exclude the Reyes group from the same BPIEU-Metro Manila because both of them were still part of that original local union. In other words, BPIEU-Metro Manila then consisted of the members of the two contending groups whose affiliation with ALU, as the mother federation, remained intact.

In any event, this issue of dues-sharing has also become moot and academic now because the Reyes group has finally succeeded in disaffiliating from ALU and is now a separate and independent union. As such, it does not have to share with ALU whatever union dues it may now collect from its members. But at the time this petition was filed, the issue was very much alive and had to be resolved to determine who were entitled to the union dues and in what proportion. The NLRC therefore did not commit any grave abuse of discretion in rendering the challenged decision as we have here interpreted it.

G.R. Nos. 76916-17

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.

On April 7, 1983, the Labor Arbiter issued an order directing the respondent bank to check off the amount of 5 % of the total economic benefits due its employees under the new collective bargaining agreement between the bank and the union corresponding to the first year of effectivity thereof and to deliver the amount collected to Atty. Lacsina or to his duly authorized representative.

Accordingly, BPI deducted the amount of P 200.00 from each of the employees who had signed the authorization.


Upon learning about this, the petitioners 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.

Issue: Whether or not it was proper for NLRC to order the payment of attorney’s fees to be made directly by the individual workers.

Ruling:

The court see no such imposition in the case at bar. A reading of the resolution will clearly show that the signatories thereof have not been in any manner compelled to undertake the obligation they have, they are 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."

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. (Emphasis supplied.)

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. TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL NOEL A. CRUZ, respondents. G.R. No. 120592 March 14, 1997

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 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). After the appropriate complaint was filed by private respondent, a favored decision was granted by the Court.


This action was filed by private respondent to collect his attorney’s fees due him. Petitioner 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, NLRC cannot grant the same. Moreover, it insists that it is not guilty of unjust enrichment because all attorney's fees due to private respondent were covered by the retainer fee of P3,000.00 which it has been regularly paying to private respondent under their retainer agreement. To be entitled to the additional attorney's fees as provided in their agreement it avers that there must be a separate mutual agreement between the union and the law firm prior to the performance of the additional services by the latter. Since there was none, the payment of the additional attorney's fees is considered waived.

The Court ruled on the matter. On the issue of jurisdiction, private respondent's present claim for attorney's fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. 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.

As to the 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.

With respect to the first situation, the remedy for recovering attorney's fees as an incident of the main action may be availed of only when something is due to the client. 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 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.

In addition, 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. 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 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.

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.

In addition, 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.

Private respondent is entitled to an additional remuneration for pursuing legal action in the interest of petitioner before the labor arbiter and the NLRC, on top of the P3,000.00 retainer fee he received monthly from petitioner. The law firm's services are decidedly worth more than such basic fee in the retainer agreement.

A quasi-contract is based on the presumed will or intent of the obligor dictated by equity and by the principles of absolute justice. Some of these principles are: (1) It is presumed that a person agrees to that which will benefit him; (2) Nobody wants to enrich himself unjustly at the expense of another; and (3) We must do unto others what we want them to do unto us under the same circumstances.

Viewed from another aspect, since it is claimed that petitioner obtained respondent's legal services and assistance regarding its claims against the bank, only they did not enter into a special contract regarding the compensation therefor, there is at least the innominate contract of facio ut des (I do that you may give). This rule of law, likewise founded on the principle against unjust enrichment, would also warrant payment for the services of private respondent which proved beneficial to petitioner's members. In any case, whether there is an agreement or not, the courts can fix a reasonable compensation which lawyers should receive for their professional services. However, the value of private respondent's legal services should not be established on the basis of Article 111 of the Labor Code alone.

In the first place, the fees mentioned here are the extraordinary attorney's fees recoverable as indemnity for damages sustained by and payable to the prevailing part. In the second place, the ten percent (10%) attorney's fees provided for in Article 111 of the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules is the maximum of the award that may thus be granted. Article 111 thus fixes only the limit on the amount of attorney's fees the victorious party may recover in any judicial or administrative proceedings and it does not even prevent the NLRC from fixing an amount lower than the ten percent (10%) ceiling prescribed by the article when circumstances warrant it.

The measure of compensation for private respondent's services as against his client should properly be addressed by the rule of quantum meruit long adopted in this jurisdiction. Quantum meruit, meaning "as much as he deserves," is used as the basis for determining the lawyer's professional fees in the absence of a contract, but recoverable by him from his client.

Where a lawyer is employed without a price for his services being agreed upon, the courts shall fix the amount on quantum meruit basis. In such a case, he would be entitled to receive what he merits for his services.

It is essential for the proper operation of the principle that there is an acceptance of the benefits by one sought to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer performing the task was expecting to be paid compensation therefor. The doctrine of quantum meruit is a device to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying for it.


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.

Brahm Industries, Inc. vs. NLRC; G.R. No. 118853, October 16, 1997

Respondents filed a case for illegal suspension, illegal dismissal, illegal layoff, illegal deductions, non-payment of service incentive leave, 13th month pay and actual, oral and exemplary damages against petitioner before the Labor Arbiter. Petitioner alleged that respondents were never employed on a regular basis as the latter had their own customers who required them to render home service. The Labor Arbiter ruled in favor of respondents thus the order for reinstatement and payment of backwages in their favor.

Upon appeal by petitioner, the National Labor relations Commission (NLRC) affirmed the Labor Arbiter’s decision but modified it with respect to attorney’s fees, hence its reduction to 5% of the total monetary award (previously 10%). Hence, this petition.

Issue: Whether or not petitioners were entitled to attorney’s fees.

Held:The Supreme Court held that despite the fact that the matter on attorney’s fees was touched only once in the dispositive portion of the Labor Arbiter’s decision and that no discussion or reason was stated thereof, petitioners should be awarded the same.

In the Labor arbiter’s decision, it invoked Art. 2208 of the Civil Code which allows attorney’s fees to be awarded by a court where its claimant is compelled to litigate with third persons by reason of unjustified act or omission of the party from whom it is sought.

The Supreme Court further ruled that nothing precludes the appellate courts from reducing the award of attorney’s fees where it is found to be unconscionable or excessive under the circumstances. In this case, the NLRC reduced to 5% the adjudged relief, it appearing that the substantial portion of the award referred to respondents’ backwages and not to withheld salaries to which the Court affirmed. Petition was dismissed.

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

Facts:

BRIGIDA P. ANIBAN representing the heirs of the late Reynaldo Aniban assails the decision of the National Labor Relations Commission (NLRC), reversing that of the Philippine Overseas Employment Administration (POEA) which ruled that myocardial infarction was an occupational decease in the case of radio operator Reynaldo Aniban and awarded, aside from attorney's fees of US$6,700.00, a total of US$67,000.00 in death benefits to his heirs: US$13,000.00 for death benefits under the POEA Standard Employment Contract; US$30,000.00 for death benefits under the Collective Bargaining Agreement; and, US$24,000.00 as additional compensation for his three (3) children under eighteen (18) years of age at US$8,000.00 each, as well as denying the motion for its reconsideration.

Reynaldo Aniban was employed by the Philippine Transmarine Carriers, Inc. (TRANSMARINE) acting in behalf of its foreign principal Norwegian Ship Management A/S (NORWEGIAN) as radio operator (R/O) on board the vessel "Kassel” for a contract period of nine (9) to eleven (11) months. On 26 June 1992, or 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.


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.

The claim was granted only to the extent of US$13,000.00 provided 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 and her children filed a formal complaint for non-payment of death compensation benefits under the CBA.

On 11 January 1994 the POEA ruled that myocardial infarction was an occupational disease in the case of R/O Aniban and granted the prayer of his heirs for payment of death benefits under the POEA Standard Employment Contract as well as under the Collective Bargaining Agreement plus attorney's fees of US$6,700.00 equivalent to 10% of the total award.

On appeal, however, the NLRC reversed the POEA and denied the claim for additional death benefits on the ground that it was the Employees Compensation Commission (ECC) which had original and exclusive jurisdiction to hear and determine the claim for death benefits. A motion to reconsider the decision of the NLRC was denied; hence, this petition by the heirs of R/O Reynaldo Aniban.

Issues:Whether the POEA has jurisdiction to determine the claim of petitioners for death benefitsWhether myocardial infarction is an occupational disease as to entitle petitioners to the death benefits provided under the CBA.

Ruling:

1st issue

On the issue of jurisdiction, 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.

2nd issue

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 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.

On the award of attorney’s fees:

On the award of attorney's fees which NLRC deleted on the ground that there was no unlawful withholding of wages, suffice it to say that Art. 111 of the Labor Code do not limit the award of attorney’s fees to cases of unlawful withholding of wages only. What it explicitly prohibits is the award of attorney's fees which exceed 10% of the amount of wages recovered. Thus, under the circumstances, attorney's fees are recoverable for the services rendered by petitioner's counsel to compel Aniban's employer to pay its monetary obligations under the CBA. However the amount of P50,000.00 claimed as attorney's fees in this case is the reasonable compensation based on the records and not the maximum 10% of the total award as granted by POEA. The reduction of unreasonable attorney's fees is within our regulatory powers.

Sapio vs. Undaloc Construction et al., G.R. No. 155034, May 22, 2008

Facts: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 filed a complaint against respondent for illegal dismissal, underpayment of wages and non-payment of statutory benefits.

It should be useful to note that respondent is a single proprietorship engaged in road construction business.

On July 12, 1999, the Labor Arbiter rendered a decision against petitioner, to which they appealed to the NLRC. The NLRC sustained the Labor Arbiter’s decision. An appeal to the CA yielded no result.

Thus, the instant petition.

Issues:• Whether or not the payrolls made in pencil were valid.• Whether or not petitioner is entitled to the salary differential ordered by the Labor Arbiter.Ruling:

I.


YES, THEY ARE.

The conclusion of the Labor Arbiter that entries in the December 1995 payroll sheet could have been altered is utterly baseless. The claim that the December 1995 payroll sheet was written in pencil and was thus rendered it prone to alterations or erasures is clearly non sequitur. The same is true with respect to the typewritten payroll sheets. In fact, neither the Labor Arbiter nor the NLRC found any alteration or erasure or traces thereat, whether on the pencil-written or typewritten payroll sheets. Indeed, the most minute examination will not reveal any tampering. Furthermore, if there is any adverse conclusion as regards the December 1995 payroll sheet, it must be confined only to it and cannot be applied to the typewritten payroll sheets. Moreover, absent any evidence to the contrary, good faith must be presumed in this case. Entries in the payroll, being entries in the course of business, enjoy the presumption of regularity under Rule 130, Section 43 of the Rules of Court. Hence, while as a general rule, the burden of proving payment of monetary claims rests on the employer, when fraud is alleged in the preparation of the payroll, the burden of evidence shifts to the employee and it is incumbent upon him to adduce clear and convincing evidence in support of his claim. Unfortunately, petitioner’s bare assertions of fraud do not suffice to overcome the disputable presumption of regularity.

II.

NO, HE IS NOT.

The Labor Arbiter erred in his computation. 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.

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 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.

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.

Atty. Ortiz vs. San Miguel Corp., G.R. No. 151983-84, July 31, 2008

FACTS:

Petitioner is a member of the Philippine Bar who represented the complainants in NLRC Cases No. V-0255-94 and No. V-0068-95 instituted against herein private respondent San Miguel Corporation sometime in 1992 and 1993.


Private respondent, on the other hand, 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 No. V-0255-94 and No. V-0068-95 was employees at private respondents Sales Offices in the provinces. NLRC Case No. V-0255-94 (Aguirre Cases) In 1992, several employees from the Bacolod, Cadiz, and Himamaylan Beer Sales Offices filed with the Labor Arbiter separate complaints against private respondent for illegal dismissal with prayer for reinstatement with backwages; elevation of employment status from casual-temporary to regular-permanent reckoned after six months from the start of complainants employment; underpayment of salaries; non-payment of holiday pay, service incentive leave pay, allowances and sick leaves; non-payment of benefits under the existing Collective Bargaining Agreements (CBA); attorneys fees; moral, exemplary and other damages; and interest. The foregoing complaints were consolidated and initially docketed as RAB Cases No. 06-01-10031-92; 06-01-10048-92; 06-01-10049-92; 06-02-10210-92; 06-02-10211-92; and 06-03-10255-92 (hereinafter collectively referred to as theAguirre Cases). After conducting a full-blown trial, the parties were given the opportunity to submit their respective memoranda. Subsequently, the cases were submitted for resolution. On 30 June 1994, Labor Arbiter Reynaldo J. Gulmatico (Labor Arbiter Gulmatico) rendered a Decision in the Aguirre Cases finding all the complainants to have been illegally dismissed. He ordered complainants reinstatement to their previous or equivalent positions without loss of seniority rights. He also ordered private respondent to pay the complainants (1) full backwages and other CBA benefits in the total amount of P6,197,952.88; (2) rice subsidy or its monetary equivalent; and (3) attorneys fees equivalent to 10% of the monetary award or in the amount of P619,795.28. Labor Arbiter Gulmatico, however, dismissed complainants claim for overtime pay, holiday pay, 13th month pay differential, service incentive leave pay, moral damages and all other claims for lack of merit. Unsatisfied with Labor Arbiter Gulmaticos monetary and economic awards, complainants appealed to the NLRC, where the Aguirre Cases were collectively docketed as NLRC Case No. V-0255-94. The NLRC would later render a Decision dated 21 July 1995 in the Aguirre Cases affirming the Decision of Labor Arbiter Gulmatico, with the following modifications: (1) granting sales commission to the complainants and adopting their computation thereof in their Appeal Memorandum[8] filed before the NLRC; (2) adjusting and/or reducing the amounts awarded to complainants Alfredo Gadian, Jr., Renato Junsay, Agustines Llacuna, and Florencio de la Piedra depending on the dates they were employed; (3) determining that Modesto Jabaybay, who died on 28 December 1993, was to receive only the amount of P356,128.02; (4) declaring that all the complainants except Romeo Magbanua, who withdrew his complaint, were entitled to whatever benefits were given under the CBA; and (5) that complainants Romeo Magbanua and Modesto Jabaybay shall no longer be reinstated. Private respondent moved for the reconsideration of the aforesaid 21 July 1995 NLRC Decision, but its motion was denied by the NLRC in its Resolution dated 27 February 1996. NLRC Case No. V-0068-95 (Toquero Case)

While the Aguirre Cases were still pending resolution by Labor Arbiter Gulmatico, three other employees at the San Carlos Sales Office filed with the Labor Arbiter a similar complaint for illegal dismissal against private respondent in 1993. Their complaint was docketed as RAB Case No. 06-07-10404-93 (hereinafter referred to as the Toquero Case). On 26 December 1994, Labor Arbiter Ray Allan T. Drilon (Labor Arbiter Drilon) rendered his Decision in the Toquero Case also ruling that the three complainants were illegally dismissed. Thus, he ordered the complainants immediate reinstatement to their former positions without loss of seniority rights. He ordered private respondent to pay complainants (1) backwages and other benefits in the amount of P572,542.50; (2) all benefits, privileges and rights enjoyed by the private respondents regular employees in the total amount of P339,055.00; (3) a total of 159 sacks of rice ration; (4) sales commissions based on the monthly sales of beer sold by their office for the last three years; and (5) attorneys fees in the amount of P91,159.75.


Again, the complainants were not contented with Labor Arbiter Drilons Decision, and they appealed their case to the NLRC which was then docketed as NLRC Case No. V-0068-95. On 25 July 1995, the NLRC rendered a Decision modifying the 26 December 1994 Decision of Labor Arbiter Drilon by ordering the private respondent to pay the complainants the following: (1) additional awards of sales commission; (2) tailoring allowance; (3) monetary equivalent of their uniform for two years consisting of 24 sets of t-shirts and 6 pairs of pants; and (4) attorneys fees of 10% of the total monetary award or P198,296.95. In its Resolution dated 9 October 1995, the NLRC partially granted private respondents motion for reconsideration by allowing the deduction from the award of backwages any earnings of complainants elsewhere during the pendency of their case. CA-G.R. SP No. 54576-77 Failing to get a favorable ruling from the NLRC in both the Aguirre and Toquero Cases, private respondent elevated the NLRC Decisions to this Court via a Petition for Certiorari, where they were docketed as G.R. No. 124426 and G.R. No. 122975, respectively. On 15 July 1996, this Court issued a Resolution consolidating the two cases.In another Resolution dated 30 June 1999; this Court referred the said cases to the Court of Appeals conforming to its ruling in St. Martin Funeral Home v. NLRC and Bienvenido Aricayos. The Court of Appeals accepted the consolidated cases in its Resolution dated 7 September 1999, and docketed the same as CA-G.R. SP No. 54576-77. While the private respondents Petitions for Certiorari were pending before the Court of Appeals, all but one of the remaining complainants in the Aguirre and Toquero Cases appeared on various dates before Labor Arbiters Gulmatico and Drilon, and in the presence of two witnesses, signed separate Deeds of Release, Waiver and Quitclaim[22] in favor of private respondent. Based on the Deeds they executed, the 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 attorneys fees and handed it over to petitioner. Private respondent then attached the Deeds of Release, Waiver and Quitclaim to its Manifestation and Motion filed before the appellate court. On 22 August 2001, the Court of Appeals rendered a Decision in CA-G.R. SP No. 54576-77 affirming the NLRC Decision dated 21 July 1995 and Resolution dated 27 February 1996 in the Aguirre Cases, only insofar 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. Private respondent moved for the partial reconsideration of the 22 August 2001 Decision of the Court of Appeals, seeking the reversal and setting aside of the 22 August 2001 Decision of the Court of Appeals in CA-G.R. SP. No. 54576-77, which affirmed the 21 July 1995 Decision and 27 February 1996 Resolution of the NLRC in the Aguirre Cases, insofar as complainant Gadian was concerned; and the dismissal of complainant Gadians complaint against private respondent for lack of merit. Complainant Gadian and his counsel, herein petitioner, for their part, likewise moved for the partial reconsideration of the same Decision of the appellate court praying that the award of attorneys fees of 10% should be based on the monetary awards adjudged by the NLRC. In a Resolution[28] dated9 January 2002, the appellate court denied both motions. G.R. No. 151421 and No. 151427 Private respondent appealed before this Court by filing a Petition for Review, docketed as G.R. No. 151421 and No. 151427. However, private respondents Petition was denied due course by this Court in a Resolution dated 18 March 2002 for failure of the private respondent to show that a reversible error had been committed by the appellate court. The Court also denied private respondents motion for reconsideration. The denial of the private respondents Petition in G.R. No. 151421 and No. 151427 became final and executory on 24 July 2002.

ISSUES:Whether petitioner is entitled to additional attorneys fees on top of what was already received. RULING:


While this Court concedes that the instant Petition for Review raises a question of law, it denies the Petition for lack of merit and lack of petitioners standing to file the same. 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 must involve no examination of the probative value of the evidence presented by the litigants or any of them.[35] 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. In the case at bar, the core issue presented by the petitioner is with respect to the amount of attorneys fees to which he should be entitled: whether he is entitled to the amount of attorneys 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. The aforesaid issue evidently involves a question of law. In determining whether the petitioner should be entitled to the attorneys fees stated in the NLRC Decisions, this Court does not need to go over the pieces of evidence submitted by the parties in the proceedings below to determine their probative value. What it needs to do is ascertain and apply the relevant law and jurisprudence on the award of attorneys fees to the prevailing parties in labor cases. Article 111 of the Labor Code, as amended, specifically provides: ART. 111. ATTORNEYS FEES. - (a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys 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, attorneys fees which exceed ten percent of the amount of wages recovered. (Emphasis supplied.) 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 attorneys fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorneys 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, attorneys 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 attorneys fees. Still according to PCL Shipping, Article 111 is an exception to the declared policy of strict construction in the awarding of attorneys fees. Although express findings of fact and law are still necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. In carrying out and interpreting the Labor Codes provisions and implementing regulations, the employees welfare should be the primordial and paramount consideration. This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law as provided in Article 4 of the Labor Code, which states that all doubts in the implementation and interpretation of the provisions of the Labor Code including its implementing rules and regulations, shall be resolved in favor of labor; and Article 1702 of the Civil Code, which provides that 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. 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, petitioners 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. Provision 8 of the Deeds of Release, Waiver and Quitclaim reads: 8. As a client, I have the right to decide on the matter of whether to settle my case and the amount of the settlement, which right I am now exercising without prejudice to my counsels claim to the legally mandated 10% attorneys fees. As a matter of fact, I had requested and [herein private respondent] has complied with it, that [private respondent] deduct from the gross settlement 10% representing attorneys fees of [herein petitioner] and make a check payable to the latter in such amount. The foregoing provision cannot be taken to mean that the complainants concerned agreed that the attorneys fees awarded by the NLRC pertained to petitioner as additional compensation or part thereof since (1) the Deeds were executed between complainants and private respondent, the petitioner was not even a party to the said documents; and (2) private complainants request that private respondent withhold 10% attorneys fees to be payable to petitioner was in relation to the amount of gross settlement under the Deeds and not to the amounts awarded by the NLRC. In fact, petitioner challenges the due execution of the Deeds, and may not now take an inconsistent position by using the provisions of the very same Deeds as proof that complainants impliedly or expressly agreed that the attorney’s fees awarded by the NLRC pertained to him under the ordinary concept of attorney’s fees. 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 complainant’s 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 attorneys fees awarded by the NLRC should be considered in their ordinary concept, i.e., as compensation for petitioners services, we refer back to Article 111 of the Labor Code, as amended, which provides that the attorneys 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 addition, as found by the Court of Appeals, when the complainants executed their respective Deeds of Release, Waiver and Quitclaim, petitioner already received attorneys fees equivalent to 10% of the amounts paid to the complainants in accordance with the Deeds, as evidenced by several cash vouchers and checks payable to petitioner and signed by his representative. Even petitioner himself admitted this fact. 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, considering the substantial time and efforts he and his assistant lawyers invested, as well as the personal money he expended for the prosecution of complainants cases for more than seven or eight years, then petitioners 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.

Masmud vs. NLRC

FACTS:


On July 9, 2003, Evangelina Masmud’s (Evangelina) husband, the late Alexander J. Masmud (Alexander), filed a complaint3 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. The dispositive portion of the decision, as quoted in the CA Decision, reads:

WHEREFORE, foregoing considered, judgment is rendered finding the [First Victory Shipping Services and Angelakos (Hellas) S.A.] jointly and severally liable to pay [Alexander’s] total permanent disability benefits in the amount of US$60,000.00 and his sickness allowance of US$2,348.00, both in Philippine currency at the prevailing rate of exchange at the time of payment; and to pay further the amount of P200,000.00 as moral damages,P100,000.00 as exemplary damages and attorney’s fees equivalent to ten percent (10%) of the total monetary award.

[Alexander’s] claim for payment of medical expenses is dismissed for lack of basis. SO ORDERED.

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. The employer subsequently filed a motion for reconsideration. The NLRC denied the same in an Order dated October 26, 2004.On appeal before the CA, the decision of the LA was affirmed with modification. The award of moral and exemplary damages was deleted.5 Alexander’s employers filed a petition for certiorari6 before this Court. On February 6, 2006, the Court issued a Resolution dismissing the case for lack of merit.

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 toP3,454,079.20. 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.

In effect, petitioner seeks affirmance of her conviction that the legal compensation of a lawyer in a labor proceeding should be based on Article 111 of the Labor Code.

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.

DECISION:

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 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.

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.

WHEREFORE, in view of the foregoing, the Decision dated October 31, 2007 and the Resolution dated June 6, 2008 of the Court of Appeals in CA-G.R. SP No. 96279 are hereby AFFIRMED.

SPECIAL TYPES OF WORKERS

Bernardo vs. NLRC, G.R. No. 122917. July 12, 1999

Complainants are deaf-mutes who were hired on various periods by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called ‘Employment Contract for Handicapped Workers’. Private respondent alleged that it hired temporarily the petitioners under special employment arrangement which was a result of overtures made by some civic and political personalities to the respondent Bank. In addition, it claimed that from the beginning there have been no separate items in the respondent Bank plantilla for sorters or counters; that the tellers themselves already did the sorting and counting chore as a regular feature and integral part of their duties. 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. Private respondent responded that it hired petitioners as “special workers” according to Art. 80 of the Labor Code and not regular employees. The Labor Arbiter and NLRC ruled against the petitioners. However, the Court reversed such findings and held that (only) the employees, who worked for more than six months and whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), however, justify the application of Article 280 of the Labor Code and not Art. 80 as alleged by the private respondent. The renewal of the contracts of the handicapped workers and the hiring of others (56) 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.

The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta mandates that qualified disabled persons be granted the same terms and conditions of employment as qualified able-bodied employees, herein petitioners are thus covered by Article 280 of the Labor Code.

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. An employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them.

The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled or not. In the present case, the handicap of petitioners (deaf-mutes) is not a hindrance to their work. The eloquent proof of this statement is the repeated renewal of their employment contracts. Why then should they be dismissed, simply because they are physically impaired? The Court believes, that, after showing their fitness for the work assigned to them, they should be treated and granted the same rights like any other regular employees.

EMPLOYMENT OF WOMEN

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.

Decision:

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.

DEL MONTE PHILIPPINES, INC., PETITIONER, VS. LOLITA VELASCO, RESPONDENT.

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.

Issues: 1. Whether the employment of respondent had been validly terminated on the ground of excessive absences without permission. 2. Whether the petitioner discharged the respondent on account of pregnancy, a prohibited act.

Ruling: In the first issue, the employment of respondent has not been validly terminated. 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.

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 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.” 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.

EMPLOYMENT OF HOUSEHELPER

ULTRA VILLA FOOD HAUS vs. GENISTON; Gr. No. 120473, June 23, 1999

Facts:Renato Geniston,private respondent herein filed a complaint for illegal dismissal against the 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 personal driver contained in the mandatory conference order issued by the Labor Arbiter on January 10, 1994.

The 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; and(2) Whether private respondent was illegally dismissed from employment.

Decision:


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 to 13th 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.

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 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.

REMINGTON INDUSTRIAL SALES CORPORATION vs. ERLINDA CASTANEDA; G.R. 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; that she worked for six (6) days a week, starting as early as 6:00 a.m. because she had to do the marketing and would end at around 5:30


p.m., or even later, after most of the employees, if not all, had left the company premises; that she continuously worked with Remington until she was unceremoniously prevented from reporting for work when Remington transferred to a new site in Edsa, Caloocan City. 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.

Issue: 1. Whether or not Erlinda Casteneda is a regular employee of petitioner or mere domestic worker of the family of Mr. Tan.2. Whether or not she was illegally dismissed.

Decision: The Court affirmed the decision of the NLRC and CA holding Erlinda a regular employee of petitioner. Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms “househelper” or “domestic servant” are defined as follows:

“The term ‘househelper’ as used herein is synonymous to the term ‘domestic servant’ and shall refer to any person, whether male or female, who renders services in and about the employer’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family.”The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of the employer’s family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and similar househelps.

The criteria are the personal comfort and enjoyment of the family of the employer in the home of said employer. While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a company staff house may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, the mere fact that the househelper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended.

Clearly, the situs, as well as 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 under the doctrine enunciated in the Apex Mining case. That she works within company premises, and that she does not cater exclusively to the personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioner’s right of control over her functions, which is the primary indicator of the existence of an employer-employee relationship.

Moreover, it is wrong to say that if the work is not directly related to the employer's business, then the person performing such work could not be considered an employee of the latter. The determination of the existence of an employer-employee relationship is defined by law according to the facts of each case, regardless of the nature of the activities involved.

In addition, no less than the company’s corporate secretary has certified that respondent is a bonafide company employee; she had a fixed schedule and routine of work and was paid a monthly salary of P4,000.00; she served with the company for 15 years starting in 1983, buying and cooking food served to company employees at lunch and merienda, and that this service was a regular feature of employment with the company.

In the second issue, abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty; hence, a just cause for termination of employment by the employer under Article 282 of the Labor Code, which enumerates the just causes for termination by the employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to


sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employee has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.

In the instant case, Erlinda’s immediate filing of her complaint with the NLRC negates abandonment. Indeed, an employee who loses no time in protesting her layoff cannot by any reasoning be said to have abandoned her work, for it is well-settled that the filing of an employee of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of her desire to return to work, thus, negating the employer’s charge of abandonment.

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. The employer’s case succeeds or fails on the strength of its evidence and not on the weakness of the employee’s defense. 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.

14. MEDICAL, DENTAL AND OCCUPATIONAL SAFETY

EVELYN TOLOSA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, QWANA KAIUN (through its resident-agent, FUMIO NAKAGAWA), ASIA BULK TRANSPORT PHILS. INC., PEDRO GARATE and MARIO ASIS, respondents. [G.R. No. 149578. April 10, 2003]

Petitioner is the wife of late Capt. Tolosa praying to hold respondents solidarily liable for negligence which resulted to the death of her husband. The labor arbiter ruled in her favor however on appeal, respondents contended that her complaint is based on torts (due to negligence) and it is the regular courts of law which have jurisdiction over the action. She argues that her cause of action is not predicated on a quasi delict or tort, but on the failure of private respondents -- as employers of her husband (Captain Tolosa) -- to provide him with timely, adequate and competent medical services 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.”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 alleges that the “reasonable causal connection” rule should be applied in her favor.

The Supreme Court however affirmed the findings of the CA which ruled that the labor commission had no jurisdiction over the subject matter of the action filed by petitioner. Her cause did not arise from an employer-employee relation, but from a quasi-delict or tort. Further, there is no reasonable causal connection between her suit for damages and her claim under Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an employer-employee relation.

From her paper, it is evident that the primary reliefs she seeks are: (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.

“It is the character of the principal relief sought that appears essential in this connection.”

The labor arbiter found private respondents to be grossly negligent. He ruled that Captain Tolosa, who died at age 58, could expect to live up to 65 years and to have an earning capacity of US$176,400.

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.

On the other hand, petitioner’s claim for damages is not related to any other claim under Article 217, other labor statutes, or collective bargaining agreements. In addition, she 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 standard under Book IV of the same Code. The enforcement of this labor standard 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.

Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]

FACTS:

Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees.

On 15 May 1981, De Vera, via a letter dated 15 May 1981, offered his services to the petitioner, therein proposing his plan of works required of a practitioner in industrial medicine, to include the following:

1. Application of preventive medicine including periodic check-up of employees;2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to employees;3. Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents;4. Conduct pre-employment physical check-up of prospective employees with no additional medical fee;5. Conduct home visits whenever necessary;6. Attend to certain medical administrative function such as accomplishing medical forms, evaluating conditions of employees applying for sick leave of absence and subsequently issuing proper certification, and all matters referred which are medical in nature.

The parties agreed and formalized respondent’s proposal in a document denominated as RETAINERSHIP CONTRACT which will be for a period of one year subject to renewal, it being made clear therein that respondent will cover "the retainership the Company previously had with Dr. K. Eulau" and that respondent’s "retainer fee" will be at P4,000.00 a month. Said contract was renewed yearly. The retainership arrangement went on from 1981 to 1994 with changes in the retainer’s fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally.

In December 1996 when Philcom, thru a letter bearing on the subject boldly written as "TERMINATION – RETAINERSHIP CONTRACT", informed De Vera of its decision to discontinue the latter’s "retainer’s contract with the Company effective at the close of business hours of December 31, 1996" because management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises.

On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision dismissing De Vera’s complaint for lack of merit, on the rationale that as a "retained physician" under a valid contract mutually agreed upon by the parties, De Vera was an "independent contractor" and that he "was not dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed after December 31, 1996".


On De Vera’s appeal to the NLRC, the latter, in a decision dated 23 October 2000, reversed (the word used is "modified") that of the Labor Arbiter, on a finding that De Vera is Philcom’s "regular employee" and accordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement.

De Vera filed a complaint for illegal dismissal.

The Court of Appeals rendered a decision, modifying that of the NLRC by deleting the award of traveling allowance, and ordering payment of separation pay to De Vera in lieu of reinstatement.

Hence, the present petition.

ISSUES:Whether or not an employer-employee relationship exists between petitioner and respondent

RULING:

Under Rule 45 of the Rules of Court, only questions of law may be reviewed by this Court in decisions rendered by the Court of Appeals. There are instances, however, where the Court departs from this rule and reviews findings of fact so that substantial justice may be served. The exceptional instances are where:

"xxx xxx xxx (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of facts are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record.”

As we see it, the parties’ respective submissions revolve on the primordial issue of whether an employer-employee relationship exists between petitioner and respondent, the existence of which is, in itself, a question of fact well within the province of the NLRC. Nonetheless, given the reality that the NLRC’s findings are at odds with those of the labor arbiter, the Court, consistent with its ruling in Jimenez vs. National Labor Relations Commission, is constrained to look deeper into the attendant circumstances obtaining in this case, as appearing on record.

The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test, to wit: [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", considered to be the most important element.

Applying the four-fold test to this case, we initially find that it was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner.

The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employer-employee relationship.Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees. It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.

We note, too, that the power to terminate the parties’ relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause.


Finally, remarkably absent from the parties’ arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished.

Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. He could even embark in the private practice of his profession, not to mention the fact that respondent’s work hours and the additional compensation therefor were negotiated upon by the parties. In fine, the parties themselves practically agreed on every terms and conditions of respondent’s engagement, which thereby negates the element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work.

Buttressing his contention that he is a regular employee of petitioner, respondent invokes Article 157 of the Labor Code, and argues that he satisfies all the requirements thereunder. The provision relied upon reads:

ART. 157. Emergency medical and dental services. – It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of:

The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of this Article;

The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees exceeds two hundred (200) but not more than three hundred (300); and

The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight (8) hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.

Had only respondent read carefully the very statutory provision invoked by him, he would have noticed that in non-hazardous workplaces, the employer may engage the services of a physician "on retained basis." As correctly observed by the petitioner, while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the employer "to retain", not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours.

Respondent takes no issue on the fact that petitioner’s business of telecommunications is not hazardous in nature. As such, what applies here is the last paragraph of Article 157 which, to stress, provides that the employer may engage the services of a physician and dentist "on retained basis", subject to such regulations as the Secretary of Labor may prescribe. The successive "retainership" agreements of the parties definitely hue to the very statutory provision relied upon by respondent.

Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free from doubt. Where the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed. As it is, Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous establishments to engage "on retained basis" the service of a dentist or physician. Nowhere does the law provide that the physician


or dentist so engaged thereby becomes a regular employee. The very phrase that they may be engaged "on retained basis", revolts against the idea that this engagement gives rise to an employer-employee relationship.

We note, however, that even as the contracts entered into by the parties invariably provide for a 60-day notice requirement prior to termination, the same was not complied with by petitioner when it terminated on 17 December 1996 the verbally-renewed retainership agreement, effective at the close of business hours of 31 December 1996.

Be that as it may, the record shows, and this is admitted by both parties, that execution of the NLRC decision had already been made at the NLRC despite the pendency of the present recourse. For sure, accounts of petitioner had already been garnished and released to respondent despite the previous Status Quo Order issued by this Court. To all intents and purposes, therefore, the 60-day notice requirement has become moot and academic if not waived by the respondent himself.

The Supreme Court granted the petition. The Court of Appeals decision was reversed and set aside. The Labor Arbiter’s December 21, 1998 decision was reinstated.

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

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 mentioned hospitals.

When Bandiola asked for additional financial assistance for further expenses in the treatment of his leg which even needed to be casted in fiberglass, U-BIX allegedly refused.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.

In its Decision, dated 16 September 1998, Labor Arbiter allowed Bandiola's claim for salary differential, service incentive leave pay and 13th month pay due to U-BIX's failure to present payrolls or similar documents. Incidentally, the award of these claims is no longer questioned in the present petition. The other claims, particularly those for medical expenses that Bandiola allegedly incurred and for moral and exemplary damages, were dismissed.

Bandiola asserts that U-BIX failed to extend to him any financial assistance after he was injured in the performance of his duties, and that as a result, he suffered physical pain, mental torture, fright, sleepless nights, and serious anxiety. He claims that this entitles him to moral and exemplary damages.

Bandiola filed an appeal before the NLRC. NLRC amended the Decision rendered by the Labor Arbiter ruling that U-BIX should reimburse Bandiola the amount for the medical expenses he incurred in connection with his fractured leg; and 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

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 petitioner U-BIX should reimburse respondent Bandiola for alleged medical expenses of P7,742.50 and pay for moral damages of P25,000.00 and exemplary damages of P25,000.00 to said respondent Bandiola.

Ruling:

Yes.

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.

EMPLOYEES COMPENSATION FOR WORK-RELATED INJURIES, DISABILITIES AND DEATHS - Articles 205 and 206 of the Labor Code set the reportorial requirements in cases when an employee falls sick or suffers an injury arising in the course of employment. An injury is said to arise "in the course of employment" when it takes place within the period of employment, at a place where the employee may reasonably be, and while he is fulfilling his duties or is engaged in doing something incidental thereto. The aforecited provisions of the Labor Code provide that:

ART 205. RECORD OF DEATH OR DISABILITY

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.

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 DEATHNotice 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. GENERAL RULE AND EXCEPTION ON NOTIFICATION - 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 that the employer can be 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 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.

HISTORY AND IMPORTANCE OF “EMPLOYEES COMPENSATION” - As early as 1938, this Court emphasized, in the case of Murillo v. Mendoza, that labor laws have demonstrated an impetus towards ensuring that employees are compensated for work-related injuries. The law has since treated such compensation as a right, which the employees can claim, instead of an act of charity to be given at the employer's discretion.

The intention of the Legislature in enacting the Workmen's Compensation Act was to secure workmen and their dependents against becoming objects of charity, by making a reasonable compensation for such accidental calamities as are incidental to the employment. Under such act injuries to workmen and employees are to be considered no longer as results of fault or negligence, but as the products of the industry in which the employee is concerned. Compensation for such injuries is, under the theory of such statute, like any other item in the cost of production or transportation, and ultimately charged to the consumer. The law substitutes for liability for negligence an entirely new conception; that is, that if the injury arises out of and in the course of the employment, under the doctrine of man's humanity to man, the cost of compensation must be one of the elements to be liquidated and balanced in the course of consumption. In other words, the theory of law is that, if the industry produces an injury, the cost of that injury shall be included in the cost of the product of the industry.

In De Jesus v. Employee's Compensation Commission, this Court further noted that while the present law protects employers from spurious and long overdue claims, it stresses at the same time that the claims for compensation are to be promptly and properly addressed. More importantly, employers no longer need to determine the validity of a claim or to defend themselves from spurious claims. Their duties are thus limited to paying the monthly premiums and reporting the sickness, injury or death for which compensation is due.

The new law establishes a state insurance fund built up by the contributions of employers based on the salaries of their employees. The injured worker does not have to litigate his right to compensation. No employer opposes his claim. There is neither notice of injury nor requirement of controversion. The sick worker simply files a claim with a new neutral Employees' Compensation Commission which then determines on the basis of the employee's supporting papers and medical evidence whether or not


compensation may be paid. The payment of benefits is more prompt. The cost of administration is low. The amount of death benefits has also been doubled.

On the other hand, the employer's duty is only to pay the regular monthly premiums to the scheme. It does not look for insurance companies to meet sudden demands for compensation payments or set up its own funds to meet these contingencies. It does not have to defend itself from spuriously documented or long past claims.

The new law applies the social security principle in the handling of workmen's compensation. The Commission administers and settles claims from a fund under its exclusive control. The employer does not intervene in the compensation process and it has no control, as in the past, over payment of benefits. . . . .

Since there is no employer opposing or fighting a claim for compensation, the rules on presumption of compensability and controversion cease to have importance. The lopsided situation of an employer versus one employee, which called for equalization through the various rules and concepts favoring the claimant, is now absent.

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.

BURDEN OF PROOF ON THE DEFENDANT OF A CLAIM - U-BIX does not question its liability to pay for medical expenses incurred in connection with the 13 April 1997 accident; it admits that it paid for all the medical expenses of its other employees, who were involved in the accident. It refused, however, to reimburse Bandiola for further medical expenses on the ground that the receipts were counterfeit and belatedly presented to U-BIX.

Bandiola presented eight receipts with a total amount of P7,742.50 issued by MCP and his attending physician, Dr. Celestino Musngi. The amounts indicated therein range from P200.00 to P2,936.00. The receipts were issued on 24 April 1997 and 6 May 1997, or around the time the accident occurred on 13 April 1997. From the face of the receipts, there is no showing that these documents are false or falsified. U-BIX could have easily confirmed with MCP or Dr. Celestino Musngi, who issued said receipts, the authenticity of the documents. However, it failed to allege that it took any steps to check the authenticity of the receipts. It also failed to present any evidence that these receipts are fake. Absent any proof, no weight can be attached to the allegation that the receipts are spurious.

The party who alleges the fact has the burden of proving it. The burden of proof is assigned to the defendant of a claim when he or she alleges an affirmative defense, which is not a denial of an essential ingredient in the complainant's cause of action — the existence of the receipts, in the present case — but is one which, if established, will be a good defense, i.e., an avoidance of the claim. One who alleges an affirmative defense that is denied by the complainant — the falsity of the receipts, in this case — has the burden of proving it. Unless the party asserting the affirmative of an issue sustains the burden of proof, his or her cause will not succeed. If he or she fails to establish the facts of which the matter asserted is predicated, the complainant is entitled to a verdict or decision in his or her favor. In this case, U-BIX's affirmative defense that the receipts are spurious is rejected due to utter lack of proof.

U-BIX asserts that no demand was made by the petitioner and that it only came to know of Bandiola's medical expenses when it received the Summons to attend a preliminary conference before the Labor Arbiter. For his part, Bandiola insists that before filing the case with the NLRC, he approached U-BIX three times for financial assistance in connection with his medical expenses, but he was refused. Bandiola identified the persons he spoke to as Rey Reynes and a certain Ms. Clarisse. U-BIX alleges that it sent Rey Reynes to look for Bandiola in the address recorded in their office files, but that he no longer resided therein. Bandiola contested this allegation by stating that he had not changed his residence. As of 20 September 2006, Bandiola still resided at the same address, Sampaloc Site II-B,


Barangay B.F. Homes, Parañaque City, as evidenced by the Certificate of Indigency issued by Barangay BF Homes Chairperson Florencia N. Amurao.

U-BIX maintains that Bandiola kept the company in the dark regarding his medical expenses because he intended to file a baseless suit aimed at extorting money from the company. This Court finds it implausible that a worker who received less than minimum wage would choose to initiate legal proceedings before even seeking to collect from his employer. To automatically presume that Bandiola intended to defraud the company despite the absence of supporting evidence would constitute a hasty and unsubstantiated generalization, which displays a prejudice against ordinary workers, such as Bandiola.

U-BIX's continued and stubborn refusal to reimburse Bandiola's medical expenses was made evident during the mandatory conference before the Labor Arbiter when it refused to recognize the receipts shown to it. If U-BIX had refused to take cognizance of the receipts presented during a quasi-judicial proceeding before a public officer, then it would have been more likely that it ignored, if not flat-out refused, to consider the said receipts when the same were presented by a lowly employee.Under the facts of the case, Bandiola is entitled to moral and exemplary damages. There is no question that moral damages may be awarded in cases when a wrongful act or omission has caused the complainant mental anguish, fright and serious anxiety.

Articles 2217 and 2219, in connection with Article 21 of the Civil Code, read:

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission.

Art. 2219. Moral damages may be recovered in the following and analogous cases:(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. Art. 21. Any person who willfully 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.

U-BIX failed to perform its legal obligation to report to the SSS the injuries suffered by Bandiola, and, thereafter, failed to extend the same "financial aid" it extended to other employees who were involved in the same accident. After it was shown the receipts for the medical expenses Bandiola paid for in connection with the injuries, U-BIX unreasonably refused to reimburse him for the expenses. It is not difficult to accept Bandiola's claim that he suffered mental anguish, serious anxiety and fright when U-BIX left him without any options for financial support while he was suffering from and rendered incapacitated by work-related injuries. He was severely distressed by his plight that he felt that he could no longer continue to work for U-BIX. U-BIX's unjustified and continued refusal to reimburse Bandiola after it failed to report his injury to the SSS, despite the receipts he presented, demonstrates bad faith. By singling out Bandiola from its other employees, who were reimbursed for their medical expenses, and forcing him to litigate for ten years in order to claim the unsubstantial amount of P7,742.50, U-BIX was clearly indulging in malicious conduct.

AWARD ON MORAL DAMAGES - As regards the award of moral damages, this Court has ruled that there is no hard and fast rule in determining the fair amount for moral damages, since each case must be governed by its own peculiar circumstances. It should enable the injured parties to obtain means, diversions or amusements that will serve to alleviate the moral sufferings the injured party has undergone by reason of defendant's culpable action. In other words, the award of moral damages is aimed at a restoration within the limits of the possible, of the spiritual and/or psychological status quo ante; and therefore it must be proportionate to the suffering inflicted. Therefore, in light of the sufferings sustained by Bandiola, this Court sustains the award of P25,000.00 as moral damages.

Article 2229 of the Civil Code provides that exemplary damages may be imposed by way of example or correction for public good. It reads:

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.


Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious consequences, and their imposition is required by public policy to suppress the wanton acts of the offender.

The Labor Code provides for the medical expenses, as well as disability benefits of workers suffering from work-related injuries and recognizes such compensation as their right. Indeed, a system has been put in place for the prompt collection of the benefits, which are given by law to injured employees. All that U-BIX was required to do was to report the injury; it need not have defended itself from what it perceived to be spurious claims. Instead, it took upon itself the duty of determining the validity of Bandiola's claims and unjustifiably refused to reimburse his properly receipted medical expenses. The prolonged litigation of his valid claims is not the only miserable situation which the present labor laws sought to prevent, but the pathetic situation wherein a laborer is placed at the mercy of his or her employer for recompense that is his or hers by right. Exemplary damages are, thus, rightfully imposed against U-BIX.

Escasinas et al., vs. Shangri-la’s Mactan Island Resort et al., G.R. No. 178827, March 4, 2009

FACTS:

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-la’s Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-la. Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and supervise the work of nurses under her.

The Labor Arbiter (LA) declared petitioners to be regular employees of Shangri-la, noting that the petitioners usually perform work which is necessary and desirable to Shangri-la’s business, and thus ordered Shangri-la to grant them the wages and benefits due them as regular employees from the time their services were engaged.

Upon appeal, the NLRC declared that no employer-employee relationship existed between Shangri-la and petitioners. It ruled that contrary to the finding of the LA, even if Art. 280 of the Labor Code states that if a worker performs work usually necessary or desirable in the business of an employer, he cannot be automatically deemed a regular employee, and that the Memorandum of Agreement between the respondent and the respondent doctor amply shows that respondent doctor was in fact engaged by Shangri-la on retainer basis, under which she could hire her own nurses and other clinic personnel.

The Court of Appeals (CA) affirmed the NLRC decision, concluding that all aspects of employment of petitioners being under the supervision and control of respondent doctor and since Shangri-la is not principally engaged in the business of providing medical or healthcare services, petitioners could not be regarded as regular employees of Shangri-la.

ISSUES:

1. Whether or not Article 157 of the Labor Code make it mandatory for covered establishment to employ health personnel;

2. Whether or not there exists an employer-employee relationship between Shangri-la and petitioners.

HELD:


The Court holds that, contrary to petitioners’ postulation, Art. 157 does not require the engagement of full-time nurses as regular employees of a company employing not less than 50 workers. Thus, the Article provides:

ART. 157. Emergency medical and dental services. – It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of:

(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of this Article;(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees exceeds two hundred (200) but not more than three hundred (300); and

(c) The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300).

In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight ( hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.

Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to “furnish” its employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic which means that it should provide or make available such medical and allied services to its employees, not necessarily to hire or employ a service provider. As held in Philippine Global Communications vs. De Vera:

x x x while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees, adding that the law, as written, only requires the employer “to retain”, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours.The term “full-time” in Art. 157 cannot be construed as referring to the type of employment of the person engaged to provide the services, for Article 157 must not be read alongside Art. 280 in order to vest employer-employee relationship on the employer and the person so engaged. So De Vera teaches: x x For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latter’s business, even without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. x x x

The phrase “services of a full-time registered nurse” should thus be taken to refer to the kind of services that the nurse will render in the company’s premises and to its employees, not the manner of his engagement.

The existence of an independent and permissible contractor relationship is generally established by considering the following determinants: whether 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 a specified piece 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 the premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.


On the other hand, existence of an employer- employee relationship is established by the presence of the following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker’s conduct, with the latter assuming primacy in the overall consideration.

Against the above-listed determinants, the Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its employees and guests does not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-la’s principal business – operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employee’s last drawn salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-la’s guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS premium as well as their wages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, “Clinic Policies and Employee Manual” claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the employee manual being followed by Shangri-la’s regular workers, governs how they perform their respective tasks and responsibilities.

In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not petitioners’ employer.

15. MIGRANT WORKER’S ACT AND OVERSEAS FILIPINO ACT OF 1995 AND RECRUITMENT AND PLACEMENT

JSS INDOCHINA CORPORATION, PETITIONER, VS. GERARDO R. FERRER, MELITON A. ASOR, HILARIO Z. DAYRIT, AMADO E. VILLENA, JOEL C. CALDAIRA, HENRY G. DELA ROCA, MARIANO C. TIBUYIN, EDGARDO B. VIAJE, EMMANUEL M. NOCON, LAUDENCIO O. MENDOZA AND GERONIMO O. SALAZAR, RESPONDENTS. [G.R. No. 156381, October 14, 2005]

Respondents, in their complaint, alleged that petitioner hired them as construction workers for its Taiwan-based principal/employer Formosa Plastics Corporation. Pursuant to the parties’ contracts of employment, each respondent would receive a monthly salary of NT$15,360.00. Their employment covered a period of one (1) year or from May 1, 1997 to May 1, 1998.

But upon their arrival, only 20 workers, excluding respondents, were employed as construction workers at Formosa Plastics Corporation. Aggrieved, they sought assistance from Manila Economic and Cultural Office (MECO) officials who directed them to sign separate affidavits alleging that they were assigned, not as construction workers for Formosa Plastics Corporation, but as cable tray/pipe tract workers at Shin Kwan Enterprise Co., Ltd. On May 17, 1997, they were repatriated to the Philippines.

Petitioner denied the allegations in the complaint, claiming that, assisted by MECO officials, respondents pre-terminated their respective contracts of employment as they refused to work after being assigned as cable tray/pipe tract workers by Formosa Plastics Corporation to 33 KV Worksite being administered by Shin Kwan Construction Company Limited.

Issue: Whether respondents were illegally dismissed from employment by petitioner.

There is no question that petitioner violated its contract with respondents. As found by the Labor Arbiter, the NLRC and the Appellate Court, petitioner did not assign them as construction workers for Formosa Plastics Corporation. Instead, they were directed to work as cable tray/pipe tract workers at Shin Kwan Enterprise Co., Ltd.


The Labor Arbiter found that respondents’ “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.” Likewise, the NLRC held that respondents’ “decision to go home to the Philippines was justified in view of the evident breach of contract” by petitioner, as “it clearly appeared that upon their arrival at the jobsite, there was no employer on hand.” Clearly, both labor tribunals correctly concluded, as affirmed by the Court of Appeals, that they were forced to resign and to pre-terminate their employment contracts in view of petitioner’s breach of their provisions. Undoubtedly, the termination of respondents’ services is without just or valid cause.

Section 10 of RA 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act, provides:

“SECTION 10. Money Claims. — 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 his employment contract or for three (3) months for every year of the unexpired term, whichever is less.Verily, as correctly held by the Court of Appeals, respondents who were unjustly dismissed from work are actually entitled to an amount representing their three (3) months salary considering that their employment contract has a term of exactly one (1) year; plus a full refund of their placement fee, with no ceiling, with interest at 12% per annum. Petition denied.

PEOPLE OF THE PHILIPPINES vs. CAPT. FLORENCIO O. GASACAO, G.R. No. 168445, November 11, 2005

Respondent’s guilt which has been proven beyond reasonable doubt appealed that he was not engaged in illegal recruitment. The Court sustained the findings of the trial court. RA No. 8042 defines illegal recruitment which 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 Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: 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.

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;

(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 three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group.

A license is a document issued by the Department of Labor and Employment (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 (insignificant) that appellant committed large scale illegal recruitment while Great Eastern Shipping Agency, Inc. was holding a valid authority. The Court thus finds that the trial court committed no reversible error in not appreciating that the manning agency was a holder of a valid authority when appellant recruited the private complainants.


From the testimonies of the private complainants, it was clearly established that appellant 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. 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 an employment agency require any bond or cash deposit from the worker to guarantee performance under the contract or his/her repatriation.

Gasacao’s assertion that he was unaware of the prohibition against the collection of bonds or cash deposits from applicants is unavailing. It is an established dictum that ignorance of the law excuses no one from compliance therewith. The defense of good faith is neither available. Such failure to deploy constitutes a violation of Section 6 (l) of RA No. 8042. Worse, when it became clear that appellant cannot deploy the private complainants without their fault, he failed to return the amount of the cash bond paid by them. 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 illegal recruitment, thereby rendering his acts tantamount to economic sabotage.

MERCEDITA ACUÑA, MYRNA RAMONES, and JULIET MENDEZ, vs. HON. COURT OF APPEALS and JOIN INTERNATIONAL CORPORATION and/or ELIZABETH ALAÑON, G.R. No. 159832, May 5, 2006

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.

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.

Petitioners alleged that they were brought to a “small room with a cement floor so dirty and smelling with foul odor (sic)”. Forty women were jam-packed in the room and each person was given a pillow. Since the ladies’ comfort room was out of order, they had to ask permission to use the men’s comfort room. Petitioners claim they were made to work twelve hours a day, from 8:00 p.m. to 8:00 a.m.

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.

The Labor Arbiter and the NLRC found that petitioners admitted they resigned from their jobs without force, coercion, intimidation and pressure from private respondents’ principal abroad.


According to the Labor Arbiter, while it may be true that petitioners were not coerced into giving up their jobs, the deplorable, oppressive and sub-human working conditions drove petitioners to resign. In effect, according to the Labor Arbiter, the petitioners did not voluntarily resign.

The NLRC also ruled that there was constructive dismissal since working under said conditions was unbearable.

As the Court has 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.

The Court rule for the petitioners. The claim for overtime pay should not have been disallowed because of the failure of the petitioners to substantiate them. The claim of overseas workers against foreign employers could not be subjected to same rules of evidence and procedure easily obtained by complainants whose employers are locally based. While normally we would require the presentation of payrolls, daily time records and similar documents before allowing claims for overtime pay, in this case, that would be requiring the near-impossible.

It is therefore the private respondents who could have obtained the records of their principal to refute petitioners’ claim for overtime pay. By their failure to do so, private respondents waived their defense and in effect admitted the allegations of the petitioners.

However, although quitclaims are frowned at under the law, a perusal of the records reveals that petitioners were not in any way deceived, coerced or intimidated into signing a quitclaim waiver in the amounts of P13,640, P15,080 and P16,200 respectively. Nor was there a disparity between the amount of the quitclaim and the amount actually due the petitioners.

Petition denied.

ASIAN INTERNATIONAL MANPOWER SERVICES, INC. (AIMS), VS. COURT OF APPEALS and ANICETA LACERNA, G.R. No. 169652, October 9, 2006

The facts as alleged by Lacerna show that Proxy Maid Services Centre (Proxy), a Hong Kong based recruitment agency hired her through AIMS, a recruitment entity in the Philippines.

Issue: Was Lacerna illegally dismissed? If yes, may AIMS be held liable for the monetary claims of Lacerna.

The Court answered in the affirmative. 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.

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.

AIMS argument that it cannot be held liable for the monetary claims of Lacerna because its contract was limited only to Lacerna’s employment with Low See Ting and when she resigned as domestic helper of the latter, the contract was allegedly extinguished making AIMS no longer privy to the subsequent employment contract entered into by Proxy and Lacerna was untenable. The records of the Immigration Department of Hong Kong belie the contention of AIMS that Lacerna was employed by Low See Ting. Hence, between the alleged Lacerna’s resignation letter to Low See Ting and the letters of the Hong Kong Immigration Department showing that Lacerna could not have been employed by


her, credence must be given to the said official records, especially so that AIMS never assailed their authenticity.

Moreover, even granting that Lacerna truly resigned as domestic helper of Low See Ting, the liability of AIMS was not extinguished. The contract of Lacerna as approved by the Philippine Overseas Employment Administration (POEA) reveals that Proxy was her designated principal employer; the agreed salary was HK$3,670.00 a month; and the contract duration was for two years. Since AIMS was the local agency which recruited Lacerna for Proxy, it is solidarily liable with the latter for liabilities arising from her illegal dismissal. To detach itself from the liability of Proxy, AIMS must show by clear and convincing evidence that its contract is limited to Lacerna’s employment by Low See Ting. However, aside from its bare allegation, AIMS presented no proof to corroborate its claim.

On the contrary, in transferring Lacerna from one employer to another, Proxy did not demand a new placement fee from Lacerna. This only shows that Proxy’s conduct was in accordance with the original contract executed with AIMS and not on an entirely new and separate agreement entered into in Hong Kong.

This interpretation is in accord with the rule that all doubts in the construction of labor contracts should be resolved in favor of the working class. The Constitution mandates the protection of labor and the sympathetic concern of the State for the workers conformably to the social justice policy.

Verily, to absolve AIMS from liability based on its unsubstantiated claim that it is not privy to the subsequent employment provided by Proxy for Lacerna would be to undermine the avowed policy of the State. 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. Thus, Section 10 of R.A. No. 8042, 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 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.

The illegal dismissal of Lacerna entitles her to the full reimbursement of placement fee with interest at twelve percent (12%) per annum, plus salaries for the unexpired portion of her employment contract or for three months for every year of the unexpired term, whichever is less. Thus, the Court of Appeals was correct in ordering AIMS to pay HK$11,010.00 corresponding to three months of her salary or its equivalent in the Philippine Peso at the time of payment, plus placement fee of P18,0000.00.

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


Respondent denied any employer-employee relationship between them, and sought the dismissal of the complaint.

On September 3, 2001, the Labor Arbiter rendered its Decision dismissing the case for want of jurisdiction and/or lack of merit. The Labor Arbiter stressed that labor relations system in the Philippines had no extra-territorial jurisdiction. And assuming that the Labor Arbiter had jurisdiction over the case, the case must still be dismissed. Complainant as General Manager is an employee whom the respondent company reposed its trust and confidence. In other words, she held a position of trust. It is well-settled doctrine that the basic premise for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence.

On appeal, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiter's Decision and dismissed petitioner's appeal for lack of merit. Without filing a motion for reconsideration with the NLRC, petitioner went to the Court of Appeals (CA) via a petition for certiorari under Rule 65 of the Rules of Court. In a Resolution dated October 29, 2002, the CA dismissed the petition due to petitioner's non-filing of a motion for reconsideration with the NLRC. Petitioner filed a motion for reconsideration but it was nonetheless denied by the CA per Resolution dated February 26, 2003.

Hence, the present recourse under Rule 45 of the Rules of Court.

ISSUE:

Whether or not a prior motion for reconsideration is indispensable for the filing of a petition for certiorari under Rule 65 of the Rules of Court with the CA.

HELD:

Under Rule 65, the remedy of filing a special civil action for certiorari is available only when there is no appeal; or any plain, speedy, and adequate remedy in the ordinary course of law. A "plain" and "adequate remedy" is a motion for reconsideration of the assailed order or resolution, the filing of which is an indispensable condition to the filing of a special civil action for certiorari. This is to give the lower court the opportunity to correct itself.

There are of course, exceptions. However, petitioner failed to qualify her case as among the few exceptions. In fact, the Court notes that the petition filed before the CA failed to allege any reason why a motion for reconsideration was dispensed with by petitioner. It was only in her motion for reconsideration of the CA's resolution of dismissal and in the petition filed in this case that petitioner justified her non-filing of a motion for reconsideration.

Petitioner argues that filing a motion for reconsideration with the NLRC would be merely an exercise in futility and useless. But it is not for petitioner to determine whether it is so.

Petitioner also contends that the issue at bench is purely a question of law, hence, an exception to the rule. However, a careful reading would reveal that the issues raised in this case are mixed questions of fact and law. The legality of petitioner's dismissal hinges on the question of whether there was an employer-employee relationship, which was denied by respondent; and, if in the affirmative, whether petitioner, indeed, committed a breach of trust and confidence justifying her dismissal. These are mixed questions of fact and law and, as such, do not fall within the exception from the filing of a motion for reconsideration.

Consequently, the CA was not in error when it dismissed the petition. More so since petitioner failed to show any error on the part of the Labor Arbiter and the NLRC in ruling that she was dismissed for cause.

The Court notes, however, a 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 National Labor Relations Commission.


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 any event, since the CA did not commit any error in dismissing the petition before it for failure to file a prior motion for reconsideration with the NLRC, and considering that the Labor Arbiter and the NLRC's factual findings as regards the validity of petitioner's dismissal are accorded great weight and respect and even finality when the same are supported by substantial evidence, the Court finds no compelling reason to relax the rule on the filing of a motion for reconsideration prior to the filing of a petition for certiorari.

WHEREFORE, the petition is DENIED.

Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 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 February 15, 1997, the private respondent reported for his working station one and one-half (1½) 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 to the Labor Arbiter for illegal dismissal and other monetary claims.

The private respondent claimed that he was underpaid in the amount of US$110.00 per month for that same period of five (5) months. He further asserted that his salaries were also deducted US$20.00 per month by the petitioner for alleged union dues. Private respondent argued that it was his first offense committed on board the vessel.

The petitioner justified its monthly deduction made for union dues against the private respondent's salary in view of an alleged existing CBA between the Norwegian Seaman's Union (NSU, for brevity) and the petitioner's principal, Blackfriars Shipping Co., Ltd. The petitioner further asseverated that the private respondent has violated the terms and conditions of his contract as manifested in the said official warning-termination form by always coming late when reporting for duty even prior to the February 15, 1997 incident.

The Labor Arbiter rendered a Decision dated March 5, 1998, holding petitioner liable to respondent for illegal dismissal and unauthorized deductions. Petitioner appealed to the NLRC which affirmed the


Labor Arbiter's decision but modified the monetary award therein. Upon a petition for certiorari filed by petitioner, the CA rendered the August 28, 2003 Decision assailed herein, modifying the NLRC decision as to the monetary award. The CA denied petitioner's Motion for Reconsideration.

ISSUES:

i) Whether or not the Court of Appeals could grant additional affirmative relief by increasing the award despite the fact that respondent did not appeal the decision of both the Labor Arbiter and the NLRC.ii) Whether or not reporting for work one and one-half (1½) hours late and abandoning his work are valid grounds for dismissal.iii) Whether or not respondent is entitled to overtime pay which was incorporated in his award for the unexpired portion of the contract.

HELD:

The LA declared the dismissal of respondent illegal for the reason that the infraction he committed of being tardy by 1½ hour should not have been penalized by petitioner with the ultimate punishment of termination; rather, the commensurate penalty for such single tardiness would have been suspension for one or two weeks.

Petitioner assails the ruling of the CA for being based on the faulty premise that respondent incurred tardiness only once when in fact he had done so habitually. Whether respondent had been habitually tardy prior to February 15, 1997 when he reported for work 1½ hours late is purely factual in nature. As such, the Court defers to the concurrent assessments of the LA and NLRC, as affirmed by the CA, for the evaluation of evidence and the appreciation of the credibility of witnesses fall within their expertise.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.

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.

Finally, the Court comes to the 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.

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.

WHEREFORE, the petition is PARTLY GRANTED.

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


FACTS:

Ventnor is a foreign company based in Liberia and engaged in maritime commerce. It is represented in the Philippines by its manning agent, and co-respondent herein, Trans-Global, a corporation organized and existing under Philippine laws.

Petitioner Marciano Masangcay was hired by Ventnor, through its manning agent, Trans-Global, as an oiler on M/T Eastern Jewel, an oil tanker. While on board M/T Eastern Jewel, Masangcay noticed a “reddish discoloration of his urine upon urination. This happened several times and later became associated with bouts of left lower abdominal pain radiating to the loin area.

Masangcay was brought to the Fujairah Hospital, United Arab Emirates, because of lower abdominal pain and left loin pain with difficulty in urinating. Better removal of the right pelvi-ureteric calculus was the recommended treatment but Masangcay refused surgical intervention and insisted on being repatriated back to the Philippines instead.

Upon his arrival in Manila, Masangcay was immediately referred to Trans-Global’s designated physician. Masangcay was hospitalized at the Makati Medical Center for treatment. The removal of the non-functioning right kidney was advised but Masangcay refused. Masangcay was then referred to Dr. Reynaldo C. de la Cruz of the National Kidney and Transplant Institute (NKTI) for a second opinion. An operation was made and proved successful. Dr. dela Cruz pronounced that Masangcay was fit to resume work as all his laboratory examinations showed normal results. Accordingly, Trans-Global’s designated physician, declared Masangcay fit to go back to work after a regular medical examination.

Trans-Global, in behalf of Ventnor, paid Masangcay his full 120 days Sick Leave Pay as well as all his medical and hospital expenses and professional fees of his attending physicians.

Masangcay was asked to report back to the office of Trans-Global for deployment line-up. When Masangcay reported to the premises of Trans-Global, however, 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.

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. Masangcay alleged that his illness was contracted during the term of his Contract of Employment.

Labor Arbiter found Masangcay’s complaint meritorious and ordered Trans-Global, Ventnor, and Estaniel to pay Masangcay for disability benefit. On appeal to the NLRC, the Commission affirmed the decision of the labor arbiter. The Court of Appeals 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.

Hence, this petition for review on certiorari under Rule 45 of the Revised Rules of Court.

ISSUE: Whether or not Masangcay is entitled to disability benefits on account of his present condition. RULING:

We rule in the negative.

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: permanent total or partial disability suffered by a seafarer during the term of his contract must be caused by work-related illness or injury. 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.


Accordingly, in order to hold Trans-Global and Ventnor liable for payment of his claims, 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; Masangcay 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.

The burden is clearly upon Masangcay to present substantial evidence, or such relevant evidence which a reasonable mind might accept as adequate to justify a conclusion, showing a reasonable connection that the nature of his employment or working conditions between the conditions of his work and his illness; or that the risk of contracting the same was increased by his working conditions. This, he did not do. Masangcay does not even assert that his illness is work-related and/or was, at the minimum, aggravated by his working conditions at the M/T Eastern Jewel.

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.

But even assuming that Masangcay is suffering from chronic renal failure, it still does not entitle him to compensation and benefits for a permanent disability. 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. But other than Masangcay’s bare avowal of entitlement just because an illness became manifest during his contract of employment, there is nothing on record to substantiate the same and would have justified an award of compensation on top of the aid or assistance already extended to him by Trans-Global and Ventnor.

The dispute could have easily been resolved had the parties stayed true to the provisions of Sec. 20(b), paragraph 3 of the 2000 POEA Amended Standard Terms and Conditions: If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Employer and the seafarer. The third doctor’s decision shall be final and binding on both parties.

Without the opinion of a third doctor, we are constrained to make a ruling based on the evidences submitted by the parties and made part of the records of this case, which included the medical certifications of their respective physicians.

Masangcay makes no allegation, much less 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.

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

FACTS:

Respondent Jaime M. Velasquez was hired by petitioner Magsaysay Maritime Corporation as second cook for its foreign principal, co-petitioner ODF Jell ASA. While on duty as second cook on board the vessel M/T Bow Favour, respondent suffered high fever and was unable to work. He took fever relieving medicine but his condition worsened. By the fourth day, his body temperature reached 40.9°C. Respondent was brought to a hospital in Singapore where he was confined. Thereafter, he was repatriated to the Philippines.

Respondent 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. He consulted a certain Dr. Efren 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.” Hence, respondent filed a claim for disability benefits, illness allowance/ reimbursement of medical expenses, damages and attorney’s fees but petitioners refused to pay.


The Labor Arbiter rendered a decision in favor of respondent. The NLRC rendered a decision reversing that of the Labor Arbiter and dismissed respondent’s complaint for lack of merit. CA set aside the decision of the NLRC and reinstated that of the Labor Arbiter.

ISSUE:

Whether or not the CA committed reversible error when it upheld the findings of respondent’s private physician rather than the findings of the company-designated physician.

RULING:

CA committed reversible error in ignoring the medical assessment of the company-designated physician.

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 clearly illustrate that respondent’s disability can only be assessed by the company-designated physician. If the company-designated physician declares him fit to work, then the seaman is bound by such declaration. 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.

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.

It is beyond cavil that it is the company-designated physician who is entrusted with the task of assessing the seaman’s disability. However, 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 company-designated doctors was properly evaluated by the NLRC.

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. 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.

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

Facts:

Antonio M. Serrano was hired by Gallant Maritime Services, Inc. and Marlow Navigation Co., Ltd. under a Philippine Overseas Employment Administration (POEA)-approved Contract of Employment with the following terms and conditions:

Duration of contract 12 monthsPosition Chief OfficerBasic monthly salary US$1,400.00Hours of work 48.0 hours per weekOvertime US$700.00 per monthVacation leave with pay 7.00 days per month


On March 19, 1998, the date of his departure, petitioner was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000.00, upon the assurance and representation of MSI that he would be made Chief Officer by the end of April 1998.

MSI did not deliver on their promise to make petitioner Chief Officer. Hence, Soriano refused to stay on as Second Officer and was repatriated to the Philippines on May 26, 1998.

Soriano’s employment contract was for a period of 12 months or from March 19, 1998 up to March 19, 1999, but at the time of his repatriation on May 26, 1998, he had served only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.

He filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73 as well moral and exemplary damages and attorney’s fees.

He got a favourable decision with the Labor Arbiter in the amount of US$ 8,770.00. In awarding Soriano a lump-sum salary of US$8,770.00, the LA based his computation on the salary period of three months only -- rather than the entire unexpired portion of nine months and 23 days of petitioner's employment contract - applying the subject clause. However, the LA applied the salary rate of US$2,590.00, consisting of petitioner's “[b]asic salary, US$1,400.00/month + US$700.00/month, fixed overtime pay, + US$490.00/month, vacation leave pay = US$2,590.00/compensation per month.”

MSI appealed to the National Labor Relations Commission (NLRC) to question the finding of the LA that petitioner was illegally dismissed.

Soriano also appealed to the NLRC on the sole issue that the LA erred in not applying the ruling of the Court in Triple Integrated Services, Inc. v. National Labor Relations Commission that in case of illegal dismissal, OFWs are entitled to their salaries for the unexpired portion of their contracts.

In a Decision dated June 15, 2000, the NLRC modified the LA Decision, ordering MSI to pay Soriano, jointly and severally, in Philippine currency, at the prevailing rate of exchange at the time of payment the following:

1. Three (3) months salary $1,400 x 3 US$4,200.002. Salary differential 45.00 US$4,245.00 3. 10% Attorney’s fees424.50 TOTAL US$4,669.50 The NLRC corrected the LA's computation of the lump-sum salary awarded to Soriano by reducing the applicable salary rate from US$2,590.00 to US$1,400.00 because R.A. No. 8042 “does not provide for the award of overtime pay, which should be proven to have been actually performed, and for vacation leave pay.”

Soriano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the subject clause. The NLRC denied the motion.

Issue:

Whether or not Soriano is entitled to his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days?

Held:

Yes, Soriano is entitled to his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been


differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment.

The Court concludes that 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 clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

People vs. Domingo, G.R. No. 181475, April 7, 2009

Facts:

In or about the month of November 1999 to January 20, 2000, in the Municipality of Malolos, province of Bulacan, Philippines, Domingo, being a non-licensee or non-holder of authority from the Department of Labor and Employment to recruit and/or place workers under local or overseas employment, did then and there willfully and feloniously, with false pretenses, undertake illegal recruitment, placement or deployment of Wilson A. Manzo, and 22 other individuals. This offense involved economic sabotage, as it was committed in large scale.

The Informations for 23 counts of Estafa, all of which were similarly worded but varying with respect to the name of each complainant and the amount which each purportedly gave to Domingo.

That in or about the month of November, 1999 to January, 2000, in the municipality of Malolos, province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, by means of deceit, false pretenses and fraudulent manifestations, and with intent of gain, did then and there willfully, unlawfully and feloniously defraud one [Wilson A. Manzo] by then and there falsely representing that he has the power and capacity to recruit and employ persons in Saipan and could facilitate the necessary papers in connection therewith if given the necessary amount, and by means of deceit of similar import, when in truth and in fact, as the accused knew fully well his representation was false and fraudulent and designed to inveigle [Wilson A. Manzo] to give, as in fact the latter gave and delivered the amount of [P14,000.00] to him, which the accused misappropriated to himself, to the damage and prejudice of Wilson A. Manzo in the said amount of [P14,000.00].

Rogelio Cambay: Domingo recruited him for a painting job in Marianas Island for which he paid him the amount of P15,000 in two installments – P2,500 during his medical examination at Newton Clinic in Makati City, and the balance of P12,500 before the scheduled departure on January 25, 2000.

On his scheduled departure, appellant did not show up at their meeting place in Malolos, Bulacan, hence, the around one hundred people who waited for him organized a search party to look for him in Zambales. Appellant was arrested on February 25, 2000 at the Balintawak tollgate.

Verification with the Department of Labor and Employment showed that appellant was not a licensed recruiter.

Florentino Ondra: He was recruited by Domingo for employment as laborer in Saipan, for which he gave P14,700 representing expenses for passporting, NBI clearance, and medical examination.

Dionisio Aguilar: In September, 1999, he met Domingo thru a friend whereupon he was interviewed, tested for a hotel job, and scheduled for medical examination. He gave P30,000 to Domingo inside the latter’s car on November, 1999 after his medical examination. While he was twice scheduled for departure, it did not materialize.

Ma. Leah Vivas: After meeting Domingo thru Eddie Simbayan on October 19, 1999, she applied for a job as a domestic helper in Saipan, for which she paid appellant P10,000, but like the other complainants, she was never deployed. Simeon Cabigao: He was recruited by Domingo in September, 1999 for employment as carpenter in Saipan with a guaranteed salary of $375 per month. For the promised employment, he paid Domingo P3,000 for medical fee, and an additional P9,000, supposedly to bribe the examining physician


because, per information of Domingo, he (Cabigao) was found to have an ailment. He was scheduled for departure on February 23, 2000, but the same never took place.

He was among those who looked for appellant in Zambales.

Cabigao later recanted this testimony, per his affidavit dated March 3, 2003. Testifying anew, this time for the defense, he averred that the one who actually recruited him and his co-complainants and received their money was Danilo Gimeno (Gimeno), and that they only agreed among themselves to file a case against appellant because Gimeno was nowhere to be found.

Domingo’s Argument:

Domingo, denying all the accusations against him, claimed as follows: He was a driver hired by the real recruiter, Gimeno, whom he met inside the Victory Liner Bus bound for Manila in September, 2000. It was Gimeno who undertakes recruitment activities in Dakila, Malolos, Bulacan at the residence of Eddie Simbayan, and that the other cases for illegal recruitment filed against him before other courts have all been dismissed.

Domingo likewise presented as witnesses Enrico Espiritu and Roberto Castillo who corroborated his claim that it was Gimeno who actually recruited them, and that the filing of the complaint against appellant was a desperate attempt on their part to get even because Gimeno could not be located.

Issue:

Whether or not Domingo is guilty of Illegal Recruitment despite that there is no evidence showing that he actually received money from complainants?

Held:

Yes, Domingo is guilty of Illegal Recruitment. 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.

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.

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.

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.

Great Southern Maritime Services Corp. vs. Surigao, G.R. No. 183646, September 18, 2009

FACTS:

These consolidated petitions assail the Amended Decision[1] of the Court of Appeals dated May 14, 2008 in CA-G.R. SP No. 80619 and CA-G.R. SP No. 81030 finding White Falcon Services, Inc. and Becmen Service Exporter and Promotion, Inc. solidarily liable to indemnify spouses Simplicio and Mila Cuaresma the amount of US$4,686.73 in actual damages with interest.

On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen Service Exporter and Promotion, Inc.[2] (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.

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.

On March 11, 1999, Jasmin’s remains were exhumed and examined by the National Bureau of Investigation (NBI). The toxicology report of the NBI, however, tested negative for non-volatile, metallic poison and insecticidesOn 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.[8] In their complaint, the Cuaresmas claim that 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 February 28, 2001, the Labor Arbiter rendered a Decision dismissing the complaint for lack of merit.

On appeal, the National Labor Relations Commission (Commission) reversed the decision of the Labor Arbiter. Relying on the findings of the City Health Officer of Cabanatuan City and the NBI as contained in their autopsy and toxicology report, respectively, the Commission, via its November 22, 2002


Resolution declared that, based on substantial evidence adduced, Jasmin was the victim of compensable work-connected criminal aggression.

The appellate court affirmed the NLRC’s findings that Jasmin’s death was compensable, the same having occurred at the dormitory, which was contractually provided by the employer. Thus her death should be considered to have occurred within the employer’s premises, arising out of and in the course of her employment.

ISSUE:

The issue for resolution is whether the Cuaresmas are entitled to monetary claims, by way of benefits and damages, for the death of their daughter Jasmin.

HELD:

Yes, they are. 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

The Court cannot subscribe to the idea that Jasmin committed suicide while halfway into her employment contract. It is beyond human comprehension that a 25-year old Filipina, in the prime of her life and working abroad with a chance at making a decent living with a high-paying job which she could not find in her own country, would simply commit suicide for no compelling reason.

Rajab & Silsilah Company, White Falcon Services, Inc., Becmen Service Exporter and Promotion, Inc They have placed their own financial and corporate interests above their moral and social obligations, and chose to secure and insulate themselves from the perceived responsibility of having to answer for and indemnify Jasmin’s heirs for her death. Under Republic Act No. 8042 (R.A. 8042), or the Migrant Workers and Overseas Filipinos Act of 1995,[22] the State shall, at all times, uphold the dignity of its citizens whether in country or overseas, in general, and Filipino migrant workers, in particular.[23] The State shall provide adequate and timely social, economic and legal services to Filipino migrant workers.[24] The rights and interest of distressed[25] overseas Filipinos, in general, and Filipino migrant workers, in particular, documented or undocumented, are adequately protected and safeguarded.[26] Becmen and White Falcon, as licensed local recruitment agencies, miserably failed to abide by the provisions of R.A. 8042. Recruitment agencies are expected to extend assistance to their deployed OFWs, especially those in distress. Instead, they abandoned Jasmin’s case and allowed it to remain unsolved to further their interests and avoid anticipated liability which parents or relatives of Jasmin would certainly exact from them. They willfully refused to protect and tend to the welfare of the deceased Jasmin, treating her case as just one of those unsolved crimes that is not worth wasting their time and resources on. The evidence does not even show that Becmen and Rajab lifted a finger to provide legal representation and seek an investigation of Jasmin’s case. Worst of all, they unnecessarily trampled upon the person and dignity of Jasmin by standing pat on the argument that Jasmin committed suicide, which is a grave accusation given its un-Christian nature.

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.

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.


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