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Labor Standards Finals Case Digest(0 ratings)|Views: 5,920|Likes: 32Published by chacileSee more 

University of San Carlos –College of Law Labor Standards

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 Finals Case DigestsM a . C e c e l i a T i m b a l L l B –2 R m 4 0 2| 35be cognizable by the Commissionafter the SSS through its President, Manager

or Officer-in-charge of theDepartment/Branch/Representative Office concerned had first taken action thereon in writing.(Emphasis supplied.)It is clear then from the aforesaid provisions that any issue regarding the

compulsory coverage of the SSS iswell within the exclusive domain of the petitioner SSC.It is important to note, though, that the mandatorycoverage under the SSS Law is premised on the existence of an

employer-employee relationship except incases of compulsory coverage of the self-employed.It is axiomatic that the allegations in the complaint, not the defenses set up in the Answer or in the Motion toDismiss,

determine which court has jurisdiction over an action; otherwise, the question of jurisdiction woulddepend almost entirely upon the defendant. Moreover, it is well-settled that once jurisdiction is acquired

by thecourt, it remains with it until the full termination of the case. The said principle may be applied even to quasi-judicial bodies.In this case, the petition-complaint filed by the petitioner SSS before the petitioner SSC

against the respondentcooperative and Stanfilco alleges that the owners-members of the respondent cooperative are subject to thecompulsory coverage of the SSS because they are employees of the

respondent cooperative.Consequently, therespondent 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 theSocial Security Law of 1997. Accordingly, based on the aforesaid allegations in the petition-complaint filed before thepetitioner SSC, the

case clearly falls within its jurisdiction.Although the Answer with Motion to Dismiss filed by therespondent cooperative challenged the jurisdiction of the petitioner SSC on the alleged lack of

employer-employeerelationship between itself and its owners-members, the same is not enough to deprive the petitioner SSC of its jurisdiction over the petition-complaint filed before it.Thus, the petitioner SSC cannot be faulted

for initiallyassuming jurisdiction over the petition-complaint of the petitioner SSS.Nonetheless, since the existence of an employer-employee relationship between the respondent cooperative and

itsowners-members was put in issue and considering that the compulsory coverage of the SSS Law is predicated on theexistence of such relationship, it behooves the petitioner SSC to determine if there is

really an employer-employeerelationship that exists between the respondent cooperative and its owners-members.The question on the existence of an employer-employee relationship is not within the exclusive

jurisdiction of theNational Labor Relations Commission (NLRC).Article 217 of the Labor Code enumerating the jurisdiction of theLabor Arbiters and the NLRC provides that:ART. 217.

 JURISDICTION OF LABOR ARBITERS AND THE COMMISSION . - (a) x x6. Except claims for Employees Compensation,Social Security , Medicare and maternity benefits, all

other claims, arising from employer-employee relations, including those ofpersons in domestic or household service, involving an amount exceeding five thousandpesos (P5,000.00) regardless of whether

accompanied with a claim for reinstatement.Although the aforesaid provision speaks merely of claims for Social Security, it would necessarily includeissues on the coverage thereof, because claims are

undeniably rooted in the coverage by the system.Hence,the question on the existence of an employer-employee relationshipfor the purpose of determining thecoverage of the

Social Security Systemis explicitly excluded from the jurisdiction of the NLRC and falls 

University of San Carlos –College of Law 

Labor Standards Finals Case DigestsM a . C e c e l i a T i m b a l L l B –2 R m 4 0 2| 36within the jurisdiction of the SSC which is primarily charged with

the duty of settling disputes arising underthe Social Security Law of 1997.On the basis thereof, considering that the petition-complaint of the petitioner SSS involved the issue of compulsorycoverage

of the owners-members of the respondent cooperative, this Court agrees with the petitioner SSC when itdeclared in its Order dated 17 February 2004 that as an incident to the issue of compulsory coverage,

it may inquireinto the presence or absence of an employer-employee relationship without need of waiting for a priorpronouncement or submitting the issue to the NLRC for prior determination.Since both the petitioner

SSC and theNLRC are independent bodies and their jurisdiction are well-defined by the separate statutes creating them,petitioner SSC has the authority to inquire into the relationship existing between the worker

and the person or entityto whom he renders service to determine if the employment, indeed, is one that is excepted by the Social SecurityLaw of 1997 from compulsory coverage.In determining the

existence of an employer-employee relationship, the following elements are considered: (1) theselection and engagement of the workers; (2) the payment of wages by whatever means; (3) the power of

dismissal;and (4) the power to control the workers conduct, with the latter assuming primacy in the overall consideration.Themost important element is the employers control of the employees conduct, not only as to

the result of the work tobe done, but also as to the means and methods to accomplish.The power of control refers to the existence of thepower and not necessarily to the actual exercise thereof.It is not

essential for the employer to actually supervise theperformance of duties of the employee; it is enough that the employer has the right to wield that power. All theaforesaid elements

are present in this case.First.It is expressly provided in the Service Contracts that it is the respondent cooperative which has theexclusivediscretion in the

 selection and engagement of the owners-members as well as its team leaders who will beassigned at Stanfilco.Second.

Wages are defined as remuneration or earnings, however designated , capable of beingexpressed in terms of money, whether fixed or ascertained, on a time, task, piece or commission basis, or

othermethod of calculating the same, which ispayable by an employer to an employee under a written or unwrittencontract of employment for work done or to be done, or

for service rendered or to be rendered. In this case, theweeklystipends or the so-called shares in the service surplus given by the respondent cooperative to its owners-members were in reality wages, as the

same were equivalent to an amount not lower than that prescribed by existinglabor laws, rules and regulations, including the wage order applicable to the area and industry; or the same shall not be lower than the

prevailing rates of wages. It cannot be doubted then that those stipends or shares in the servicesurplus are indeed wages, because these are given to the owners-members as compensation in rendering services

torespondent cooperatives client, Stanfilco.Third.It is also stated in the above-mentioned Service Contracts that it is therespondent cooperative which has the

power to investigate, discipline and remove the owners-members and itsteam leaderswho were rendering services at Stanfilco.Fourth.As earlier opined, of the four elements of theemployer-employee relationship,

the control test is the most important.In the case at bar, it is therespondentcooperative which has the sole control over the manner and means of performing the services under the ServiceContracts with Stanfilco as well as the

means and methods of work. Also, the respondent cooperative is solely andentirely responsible for its owners-members, team leaders and other representatives at Stanfilco. All these clearlyprove that,

indeed, there is an employer-employee relationship between the respondent cooperative and its owners-members.It is true that the Service Contracts executed between the respondent cooperative and

Stanfilco expressly providethat there shall be no employer-employee relationship between the respondent cooperative and its owners-members.This Court, however, cannot give the said

provision force and effect. 

University of San Carlos –College of Law Labor Standards Finals Case Digests

M a . C e c e l i a T i m b a l L l B –2 R m 4 0 2| 37As previously pointed out by this Court, an employee-employer relationship actually exists between the respondentcooperative

and its owners-members.The four elements in the four-fold test for the existence of an employmentrelationship have been complied with.The respondent cooperative must not be allowed to deny its employmentrelationsh

ip with its owners-members by invoking the questionable Service Contracts provision, when in actuality, itdoes exist.The existence of an employer-employee relationship cannot be negated by expressly repudiating it in

acontract, when the terms and surrounding circumstances show otherwise.The employment status of a person isdefined and prescribed by law and not by what the parties say it should be. 

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 notbe 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 respondentcooperative merely to circumvent the compulsory coverage of its employees, who are also its owners-members, bythe Social Security Law.This

Court is not unmindful of the pronouncement it made inCooperative Rural Bank of Davao City, Inc. v. Ferrer-Callejawherein it held that:A cooperative, therefore, is by its nature different from an ordinary business

concern, being run either by persons,partnerships, or corporations. Its owners and/or members are the ones who run and operate the business while theothers are its employees x x x.

An employee therefore of such a cooperative who is a member and co-owner thereof cannot invoke the right tocollective bargaining for certainly an owner cannot bargain with himself or his co-owners

. In the opinion ofAugust 14, 1981 of the Solicitor General he correctly opined that employees of cooperatives who are themselvesmembers of the cooperative have no right to form or join labor organizations for

purposes of collective bargaining for being themselves co-owners of the cooperative.However, in so far as it involves cooperatives with employees who are not members or co-owners thereof,certainly such

employees are entitled to exercise the rights of all workers to organization, collective bargaining, negotiations and others as are enshrined in the Constitution and existing laws of the country.The situation in the aforesaid case is

very much different from the present case.The declaration made by theCourt in the aforesaid case was made in the context of whether an employee who is also an owner-memberof a cooperative can exercise the right to

bargain collectively with the employer who is the cooperativewherein he is an owner-member. Obviously, an owner-member cannot bargain collectively with thecooperative of which he is also the owner because an

owner cannot bargain with himself.In the instant case,there is no issue regarding an owner-members right to bargain collectively with the cooperative.Thequestion involved here is whether an employer-employee relationship

can exist between the cooperativeand an owner-member.In fact, a closer look atCooperative Rural Bank of Davao City, Inc.will show that itactually recognized that an owner-member of a cooperative can

be its own employee.It bears stressing, too, that a cooperative acquires juridical personality upon its registration with theCooperative 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- 

University of San Carlos –College of Law Labor Standards Finals Case Digests

M a . C e c e l i a T i m b a l L l B –2 R m 4 0 2| 38members.Consequently, an owner-member of a cooperative can be an employee of the latter and anemployer-employee relationship

can exist between them.In the present case, it is not disputed that the respondent cooperative had registered itself with theCooperative 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 therespondent cooperative.Clearly then, the management

of the affairs of the respondent cooperative is vestedin its Board of Directors and not in its owners-members as a whole.Therefore, it is completely logical thatthe respondent cooperative, as a juridical person

represented by its Board of Directors, can enter into anemployment with its owners-members.In sum, having declared that there is an employer-employee relationship between the respondentcooperative

and its owners-member, we conclude that the petitioner SSC has jurisdiction over the petition-complaint filed before it by the petitioner SSSJaguar Security and Investigation Agency vs Sales (2008) G.R. 162420Facts:

Petitioner Jaguar Security and Investigation Agency ("Jaguar") is a private corporation engaged in the business ofproviding 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 DanethFetalvero 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. Allegedlytheir 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 thesemoney claims, Caranyagan and Tamayo argue that they were entitled to separation pay and back wages, for the timethey were illegally dismissed until finality of the

decision. Furthermore, all respondents claim for moral andexemplary 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 dispositiveportion of which provides:"WHEREFORE, judgment is hereby rendered dismissing the charges

of illegal dismissal on the part of thecomplainants 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 andseverally pay all the six complainants, namely: RODOLFO A. SALES, MELVIN R. TAMAYO, JAIME MORON

andDANETH FETALVERO the following money claims for their services rendered from April 24, 1995 to April 24, 1998:a) wage differentials b) overtime pay differentials (4 hours a day)c) rest day payd)

holiday paye) holiday premium payf) 13th month pay differentials 

University of San Carlos –College of Law Labor Standards 

Finals Case DigestsM a . C e c e l i a T i m b a l L l B –2 R m 4 0 2| 39g) 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 awardsand 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

resolveits 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 forumto raise the issue. It went on to say that Jaguar, being the direct employer of the security guards, is the one principallyliable to the employees. Thus, it directed petitioner to file a separate civil action for recovery of

the amount before theregular 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 datedNovember 9, 2001.Petitioner filed a petition for certiorari with the CA, which, in the herein assailed Decision dated October 21, 2002 andResolution 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 thelabor 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 benefitsclaims awarded and to be paid to the guard employees. There is

no labor dispute involved in the cross-claim againstDelta 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 itsemployees 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 seekreimbursement for the share which corresponds to each of

the debtors. In this case, it appears that petitioner has yetto pay the guard employees.The petition is DENIED.Almeda et al., vs Asahi Glass (2008) G.R. 177785Facts:This a complaint for illegal dismissal with

claims for moral and exemplary damages and attorney’s fees filed byAlmeda, et al against Asahi Glass and San Sebastian Allied Services, Inc. SSASI. Petitioners alleged that Asahi andSSASI entered into a service

contract whereby SSASI undertook to provide Asahi with the necessary manpower forits operations. Pursuant to such a contract, SSASI employed petitioners Randy Almeda, Edwin Audencial, Nolie 

University of San Carlos –College of Law Labor Standards Finals Case DigestsM a . C e c e l i a T i m b a l L l B –

2 R m 4 0 2| 40Ramirez and Ernesto Calicagan as glass cutters, and petitioner Reynaldo Calicagan as Quality Controller, all assignedto work for respondent. Asahi terminated its service contract with SSASI,

which in turn, terminated the employmentof petitioners on the same date. Believing that SSASI was a labor-only contractor, and having continuously worked asglass 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 regularemployees of the Asahi; and that

their dismissal from employment without the benefit of due process of law wasunlawful.Asahi claimed that petitioners were employees of SSASI and were merely assigned by SSASI to work for respondentto

perform intermittent services pursuant to an Accreditation Agreement. SSASI averred that it was the one whohired petitioners andassigned them to work for respondent on occasions that the

latter’s work force could not meetthe demands of its customers. Eventually, however, respondent ceased to give job orders to SSASI, constraining thelatter to terminate petitioners’ employment.

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

Yes. Almeda, et al are employees of Asahi Glass.Permissible job contracting or subcontractingrefers to an arrangement whereby a principal agrees to put out orfarm out to a contractor or

subcontractor the performance or completion of a specific job, work or service within adefinite or predetermined period, regardless of whether such job, work or service is to be performed or completedwithin or

outside the premises of the principal. A person is considered engaged in legitimate job contracting orsubcontracting if thefollowing conditions concur:(a) The contractor or subcontractor carries on a distinct and

independent business and undertakes toperform the job, work or service on its own account and under its own responsibility according to its ownmanner and method, and free from the control and

direction of the principal in all matters connected withthe 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 employeesentitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security

of tenure, and social and welfare benefits.On the other hand,labor-only contracting , a prohibited act, is an arrangement in which the contractor orsubcontractor merely recruits, supplies or places

workers to perform a job, work or service for a principal. In labor-only contracting, thefollowing elements are present:(a) The contractor or subcontractor does not have substantial capital or investment to

actually perform the job, work or service under its own account and responsibility;(b) The employees recruited, supplied or placed by such contractor or subcontractor is performing activitieswhich are

directly related to the main business of the principal.In labor-only contracting , the statutes create an employer-employee relationship for a comprehensive purpose: toprevent

circumvention of labor laws.The contractor is considered as merely the agent of the principal employerand the latter is responsible to the employees of the labor-only contractor as if such employees are directly

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