Professional Documents
Culture Documents
Labor Finals Digests 2014
Labor Finals Digests 2014
COLLEGE OF LAW
_________________________________
IN PARTIAL FULFILLMENT
_________________________________
SUBMITTED BY:
JD 2 (EH306)
SUBMITTED TO:
1. Tolosa vs. NLRC, G.R. No. 149578, April 21. Cosare vs. Broadcom Asia, Inc. GR No.
10, 2003 201298, February 5, 2014, citing 2010
2. Austria vs. NLRC, 312 SCRA 413 Matling Industrial and Commercial Corp et
3. Eviota vs. Court of Appeals, 407 SCRA 394 al., vs. Coros, GR No. 157802 and 2011
4. Dynamic Signmaker Outdoor Advertising
Real vs. Sangu Phils., Inc., et al., G.R. No.
Services vs. Potongan, G.R. No. 156589,
168757
June 27, 2005
5. Metromedia Times Corp., vs. Pastorin, G.R. 2011 NLRC RULES OF PROCEDURE
No. 154295, July 29, 2005
6. Yusen Air & Sea Service Phils vs. Villamor, 22. T/SGP Larkins vs. NLRC, G.R. No. 92432,
G.R. No. 154942, August 16, 2005 February 23, 1995
7. Duty Free Phils., vs. Mojica, G.R. No. 23. UERM Memorial Medical Center vs.
166365, September 30, 2005 NLRC, G.R. No. 110419, March 3, 1997
8. Easycall Communication Phils., vs. King, 24. Phil Tranco Services vs. NLRC, G.R. No.
G.R. No. 145901, December 15, 2005 124100, April 1, 1998
9. San Miguel Foods Inc., vs. San Miguel Corp 25. St. Martin Funeral Homes vs. NLRC, G.R.
Employees Union-PTGWO, G.R. No. No. 130866, September 16, 1998
168569, October 5, 2007 26. Ludo & Luym Corp., vs. Saornido, G.R. No.
10. Leyte IV Electric Cooperative Inc vs. 140960, January 20, 2003
LEYECO IV Employees Union-ALU, G.R. 27. Hansin Engineering & Construction vs. CA,
No. 1577745, October 19, 2007 G.R. No. 165910, April 10, 2006
11. Atty Garcia vs. Eastern Telecommunications 28. Phil. Journalist Inc. vs. NLRC, G.R. No.
Phils., et al., GR No. 173115 & 173163-64, 166421, Sept. 5, 2006
April 16, 2009 29. Balagtas Multi-purpose Coop. Vs. CA, G.R.
12. Halaguena et al., vs. Phil Airlines GR No. No. 159268, Oct. 27, 2006
172013, Oct 2, 2009 30. St. Martin Funeral Homes vs. NLRC, G.R.
13. Okol vs. Slimmers World International, et No. 142351, Nov. 22, 2006
al., G.R. No. 160146, December 11, 2009 31. DOLE Phils. Vs. Esteva, G.R. No. 161115,
14. Hugo et al., vs. Light Rail Transit Authority, Nov. 30, 2006
G.R. No. 181866, March 18, 2010 32. Intercontinental Broadcasting Corp., vs.
15. Matling Industrial and Commercial Corp et Panganiban, G.R. No. 151407, February 6,
al., vs. Coros, GR No. 157802, Oct. 13, 2007
2010 33. Far East Agricutural Supply vs. Lebatigue,
16. Manila Electric Co. et al., vs. Lim, GR No. G.R. No. 162813, February 12, 2007
184769, Oct. 5, 2010 34. Letran Calamba Faculty & Employees
17. Hongkong and Shanghai Banking Corp., vs. Association vs. NLRC, G.R. No. 156225,
Sps. Broqueza, GR No. 178610, Nov. 17, January 29, 2008
2010 35. Metro Transit Organization vs. Piglas
18. Real vs. Sangu Phils., Inc., et al., G.R. No. NFWU-KMU et al., G.R. No. 175460, April
168757, January 19, 2011 14, 2008
19. Portillo vs. Rudolf Lietz, Inc. et al., G.R. 36. J.K. Mercado & Sons Agricultural
No. 196539, October 10, 2012 Enterprises, Inc., vs Sto. Tomas, G.R.No.
20. Ace Navigation Co. Inc. et al., vs. 158084, August 29, 2008
Fernandez, G.R. No. 197309, October 10, 37. J. Phil. Marine Inc., vs. NLRC, G.R. No.
2012 1753661, August 11, 2008; but see Ilagan
vs. Court of Appeals, G.R. No. 162089, July 60. San Miguel Vs. NLRC, G.R. No. 147566,
9, 2008 Dec. 6, 2006 citing Maerc Integrated
38. Sy vs. ALC Industries, G.R. No. 168339, Services case
October 10, 2008 61. Eparwa Security & Janitorial Services vs.
39. PCI Travel Corp., vs. NLRC, G.R. No. Liceo De Cagayan Univ. G.R. No. 150402,
154379, October 31, 2008 Nov. 28, 2006, citing Eagle Security case
40. Lopez vs. Q. C. Sports Club, G.R. No. 62. Lapanday Agri Development Corp., vs.
164032, January 19, 2009 Court of Appeals, 324 SCRA 39
41. Lockheed Detective & Watchman Agency, 63. Escario vs. NLRC, 333 SCRA 257 [2000]
G.R. No. 185918, April 18, 2012 64. Aboitiz Haulers vs. Dimapatoi, G.R. No.
42. Portillo vs. Rudolf Lietz, Inc. et al., G.R. 148619, Sept. 19, 2006
No. 196539, October 10, 2012 65. GSIS vs. NLRC, G.R. No. 157647, October
43. Building Care Corp. vs. Macaraeg, G.R. No. 15, 2007, citing Rosewood Processing vs.
198357, December 10, 2012 NLRC, 290 SCRA 408
66. Republic of the Phils/SSC/SSS vs. Asiapro
OTHER IMPORTANT LABOR PROVISIONS Cooperative, G.R. No. 172101, November
23, 2007
A.CONTRACTING ARRANGEMENT 67. Almeda et al., vs. Asahi Glass, G.R. No.
177785, Sept 3, 2008
68. Sasan, Sr et al., vs. NLRC and EPCIB, G.R.
44. PBCom vs. NLRC, 146 SCRA 347 [1986] No. 176240, October 17, 2008
45. Neri vs. NLRC, 224 SCRA 717 [1993] 69. Purefoods Corp., vs. NLRC et al., G.R. No.
46. Filipinas Synthetic Fiber Corp., vs. NLRC, 172241, November 20, 2008
257 SCRA 336 [1996] 70. Maranaw Hotels and Resort vs. Court of
47. Maraquinot vs. NLRC, 284 SCRA 539 Appeals, et al., G.R. No. 149660, Jan. 20,
[1998] 2009
48. Urbanes Jr. vs. Sec. Of Labor, G.R. No. 71. CCBPI vs. Agito et al., G.R. No. 179546,
122791, Feb. 19, 2003 Feb. 13, 2009
49. San Miguel vs. Maerc Integrated Services, 72. South Davao Development Company et al.,
G.R. No. 144672, July 10, 2003 vs. Gamo et al., GR No. 171814, May 8,
50. Mariveles Shipyard vs. CA, G.R. No.
2009
144134, Nov. 11, 2003 73. Traveno et al., vs. Bobongon Banana
51. New Golden City Builders vs. CA, G.R. No.
Growers Multi-purpose Cooperative et al.,
154715, Dec. 11, 2003 GR No. 164205, Sept. 3, 2009
52. National Food Authority vs. Maceda
74. Locsin et al., vs. PLDT, GR No. 185251,
SecurIty Agency, G.R. No. 163448, March Oct 2, 2009
8, 2005 75. Aliviado et al vs. Procter & Gamble Phils
53. Abella vs. PLDT, G.R. No. 159469, June 8, GR No. 160506, March 9, 2010
2005 76. San Miguel Corp. vs. Semillano et al., GR
54. San Miguel vs. Aballa, G.R. No. 149011, No. 164257, July 5, 201
June 28, 2005 77. Manila Water Co. vs. Dalumpines, GR No.
55. Manila Electric Co., vs. Benamira, G.R. No. 175501, Oct. 4, 2010
145271, July 14, 2005 78. Teng vs. Pahagac, GR No. 169704,
56. Granspan Development Corp., vs. Bernardo, November 17, 2010
G.R. No. 141464, Sept. 21, 2005 79. GSIS vs. NLRC et al., GR No. 180045, Nov.
57. Acevedo vs. Advanstar Co., G.R. No. 17, 2010
157656, Nov. 11, 2005 80. Sy et al., vs. Fairland Knitcraft Co Inc. G.R.
58. Big AA Manufacturer vs. Antonio, G.R. No. No. 189658, December 12, 2011
1608504, March 3, 2006 81. Polyfoam-RGC International Corp., vs.
59. DOLE Phils. Vs. Esteva, G.R. No. 161115, Concepcion, G.R. No. 172349, June 13,
Nov. 30, 2006
2012
82. Superior Packaging Corp., vs. Balagsay et Manila Water Company, G.R. No. 174179,
al., G.R. No. 178909, October 10, 2012 November 16, 2011
83. Digital Telecommunications Phils Inc. vs. 102.Malvar vs. Kraft Food Phils Inc. et al., G.R.
Digitel Employees Union et al., G.R. No. No. 183952, Sept. 9, 2013
184903-04, October 10, 2012
84. Norkis Trading Corp., vs. Buenavista, et al., D.SPECIAL TYPES OF WORKERS
G.R. No. 182018, October 10, 2012
85. Goya Inc. vs. Goya Inc. Employees Union- 103.Bernardo vs. NLRC, 310 SCRA 186 [1999]
FFW G.R. No. 170054, Jan. 21, 2013
E. EMPLOYMENT OF WOMEN
86. Vigilla et al., vs. Phil. College of
Criminology Inc., G.R. No. 200094, June 104.PT&T vs. NLRC, 272 SCRA 596 [1997]
10, 2013
87. BPI Employees Union-Davao city-FUBU 105.Del Monte Phils vs. Velasco, G.R. No.
vs. Bank of the Phil Islands et al., G.R. No. 153477, March 6, 2007
174912, July 24, 2013
106.Co vs. Vargas, G.R. No. 195167, November
B.WORKER'S PREFERENCE 16, 2011
113.U-Bix Corp., vs. Bandiola, 525 SCRA 566 G.R. No. 167614, March 24, 2009 En
[2007] Banc
114.Ocean Builders Construction vs. Sps. 124.Becmen Service Exporter and Promotion
Cubacub, GR No. 150898, April 13, 2011 Inc., vs. Spouses Cuaresma, GR Nos.
182978-79 & 184298-99, April 7, 2009
MIGRANT WORKER'S ACT & OVERSEAS
FILIPINO ACT OF 1995 & RECRUITMENT 125.People vs. Domingo, GR No. 181475, April
115.ISS Indochina Corp., vs. Ferrer, G.R. No. 126.ATCI Overseas Corp. et al., vs. Echin, GR
116.People vs. Capt. Gasacao, G.R. No. 168449, 127.Yap vs. Thenamaris Ship Management et al.,
117.Acuna vs. CA, G.R. No. 159832, May 5, 128.Skippers United Pacific vs. Doza et al., G.R.
CA, G.R. No. 169652, October 9, 2006 Logarta, G.R. No. 163657, April 18, 2012
119.Sim vs. NLRC et al., G.R. No. 157376, 130.Pert/Cpm Manpower Exponent Co., Inc. vs.
1. Tolosa vs. NLRC G.R. No. 149578, April 10, alleged that the reasonable causal rule should be
2003 applied in her favor.
Facts: Petitioner is the wife of Capt. Tolosa who was Issue: Whether or not the Labor Arbiter has
hired to be the master of M/V Lady Dona with jurisdiction over the subject matter?
private respondents Garate and Asis as Chief Mate
and Second Mate of the vessel respectively. Capt. Ruling: No, the Labor Arbiter does not have
Tolosa was hired by co-private respondent Qwana- jurisdiction over the subject matter. The Court ruled
Kaiun through the manning agent Asia Bulk that labor arbiters and the NLRC have no power to
Transport Phils., Inc. The voyage was from grant reliefs from claims that do not arise from
Yokohama, Japan to Long Beach, California. Capt. employer-employee relationships. They have no
Tolosa was given a compensation of US$1,700 jurisdiction over torts that do not have a reasonable
monthly plus US$400 overtime allowance monthly. causal connection to any of the claims provided for in
Upon embarkation, Capt. Tolosas health was still in the Labor Code, other labor statutes, or collective
good shape but after being drenched in rainwater bargaining agreements.
after embarkation, he suffered Loose Bowel
It has been emphasized that the allegation of the
Movement and fever which led eventually to his
complaint determines the nature of the action and
death after several days.
consequently, the jurisdiction of the courts. The Court
Petitioner filed a Complaint/Position Paper with the was convinced that the allegations were in the nature
Philippine Overseas Employment Agency against of an action based on quasi-delict or tort resulting
private respondents herein but because of the from gross negligence. Even though Labor Arbiters
amendatory law expanding the jurisdiction of the have jurisdiction to grant damages under the Civil
National Labor Relations Commission (NLRC), the Code, these reliefs must still be based on an action
case was raffled to a Labor Arbiter. She sought to that has a reasonable causal connection with the
recover (a) loss of earning capacity as actual Labor Code, other labor statutes, or collective
damages and (b) blacklisting imputing gross bargaining agreements. It is the character of the
negligence to private respondents Garate and Asis. principal relief that appears essential in this
She anchored her claim on Article 161 of the Labor connection.
Code regarding Assistance of Employer.
In the case at hand, loss of earning capacity and
Private respondents, on the other hand, asserted that blacklisting cannot be equated to wages, overtime
the Labor Arbiter has no jurisdiction as the complaint compensation or separation pays. They arise from
is based on torts which the regular courts have causes within the realm of civil law. Petitioner cannot
jurisdiction. also anchor her claim on Article 161 as this does not
grant or specify a claim or relief.
The Labor Arbiter ruled in favor of petitioner
granting her the relief sought. On appeal, the NLRC
reversed the Labor Arbiters Decision. It ruled that 2. Austria vs. NLRC G.R. No. 124382
the Labor Arbiter had no jurisdiction over the subject August 16, 1999
matter. The Court of Appeals affirmed the NLRC. It
ruled that the case did not arise from a quasi-delict or Facts:
tort and not from an employee-employer relationship Private Respondent Central Philippine Union Mission
nor does it have any reasonable causal connection for Corporation of the Seventh-Day Adventists (SDA) is
a religious corporation duly organized and existing
damages to be awarded incident to an employee-
under Philippine law. Austria was a Pastor of the
employer relationship. Hence, this instant petition. SDA until 1991, when his services were terminated.
Petitioner argued that her cause of action is not based
Austria worked with the SDA for 28 years from 1963
on negligence but on Art. 161 of the Labor Code. She
to 1991. He began his work with the SDA as a
literature evangelist, selling literature of the SDA sacraments and other activities with attached
over the island of Negros. From then on, he worked religious significance.
his way up the ladder and got promoted several
times. He was elevated to the position of Pastor and While the matter at hand relates to the church and its
the finally as a District Pastor in Negros with 12 religious minister it does not ipso facto give the case
churches under his jurisdiction. a religious significance. What is involved here is the
relationship of the church as an employer and the
On various occasions, Austria received several minister as an employee. The matter of terminating
communications the treasurer of the Negros Mission an employee, which is purely secular in nature, is
asking him to admit accountability and responsibility different from the ecclesiastical act of expelling a
for the church tithes and offerings. After several member from the religious congregation. As such, the
meetings were held and an investigation was made on State, through the Labor Arbiter and the NLRC, has
the matter, Austria received a letter of dismissal citing the right to take cognizance of the case and to
misappropriation of denominational funds, willful determine whether the SDA, as employer, rightfully
breach of trust, serious misconduct, gross and exercised its management prerogative to dismiss an
habitual neglect of duties, and commission of an employee. This is in consonance with the mandate of
offense against the person of employer's duly the Constitution to afford full protection to labor.
authorized representative, as grounds for the
termination of his services. Under the Labor Code, the provision which governs
the dismissal of employees, is comprehensive enough
Reacting against the adverse decision of the SDA, to include religious corporations, such as the SDA, in
Austria filed a before the Labor Arbiter for illegal its coverage. Article 278 of the Labor Code on post-
dismissal against the SDA and its officers and prayed employment states that "the provisions of this Title
for reinstatement with backwages and benefits, moral shall apply to all establishments or undertakings,
and exemplary damages and other labor law benefits. whether for profit or not." Obviously, the cited article
does not make any exception in favor of a religious
The SDA contended that by virtue of the doctrine of corporation. This is made more evident by the fact
separation of church and state, the Labor Arbiter and that the Rules Implementing the Labor Code,
the NLRC have no jurisdiction to entertain the particularly, Section 1, Rule 1, Book VI on the
complaint filed by Austria. Since the matter at bar Termination of Employment and Retirement,
allegedly involves the discipline of a religious categorically includes religious institutions in the
minister, it is to be considered a purely ecclesiastical coverage of the law, to wit:
affair to which the State has no right to interfere.
Sec. 1. Coverage. This Rule shall apply
Issue: to all establishments and undertakings,
Do the Labor Arbiter and the NLRC have jurisdiction whether operated for profit or not, including
to try and decide the complaint filed by Austria educational, medical, charitable and
against the SDA? religious institutions and organizations, in
cases of regular employment with the
Ruling: exception of the Government and its
Yes, they have jurisdiction. political subdivisions including government-
owned or controlled corporations.
The principle of separation of church and state finds
no application here. The case at bar does not concern
an ecclesiastical or purely religious affair as to bar
the State from taking cognizance of the same. An 3. Eviota vs. Court of Appeals 407 SCRA 394
ecclesiastical affair involves the relationship between
the church and its members and relate to matters of FACTS:
faith, religious doctrines, worship and governance of
the congregation. To be concrete, examples of this so- Sometime on January 26, 1998, the respondent
called ecclesiastical affairs to which the State cannot Standard Chartered Bank and petitioner Eduardo G.
meddle are proceedings for excommunication, Eviota executed a contract of employment under
ordinations of religious ministers, administration of which the petitioner was employed by the respondent
bank as Compensation and Benefits Manager, VP
(M21). Petitioner came up with many proposals HELD: The SC held that the RTC has jurisdiction.
which the bank approved and made preparations of. Case law has it that the nature of an action and the
He was also given privileges like car, renovation of subject matter thereof, as well as which court has
the office, and even a trip to Singapore at the jurisdiction over the same, are determined by the
companys expense. However, the petitioner abruptly material allegations of the complaint and the reliefs
resigned from the respondent bank barely a month prayed for in relation to the law involved. Not every
after his employment and rejoined his former controversy or money claim by an employee against
employer. On June 19, 1998, the respondent bank the employer or vice-versa is within the exclusive
filed a complaint against the petitioner with the RTC jurisdiction of the labor arbiter. A money claim by a
of Makati City for damages brought about his abrupt worker against the employer or vice-versa is within
resignation. Though petitioner reimbursed part of the the exclusive jurisdiction of the labor arbiter only if
amount demanded by Standard, he was not able topay there is a reasonable causal connection between the
it full. Standard alleged that assuming arguendo that claim asserted and employee-employer
had the right to terminate his employment with the relation. Absent such a link, the complaint will be
Bank for no reason, the manner in and circumstances cognizable by the regular courts of justice. Actions
under Eviota which he exercised the same are clearly between employees and employer where the
abusive and contrary to the rules governing human employer-employee relationship is merely incidental
relations, governed by the Civil Code. Further, and the cause of action precedes from a different
Standard alleged that petitioner also violated the source of obligation is within the exclusive
Labor Code when he terminated his employment jurisdiction of the regular court. The jurisdiction of
without one (1) notice in advance. This stipulation the Labor Arbiter under Article 217of the Labor
was also provided in the employment contract of Code, as amended, is limited to disputes arising from
Eviota with Standard, which would also constitute an employer-employee relationship which can only
breach of contract. The petitioner filed a motion to be resolved by reference to the Labor Code of the
dismiss the complaint on the ground that the action Philippines, other labor laws or their collective
for damages of the respondent bank was within the bargaining agreements. Jurisprudence has evolved the
exclusive jurisdiction of the Labo Arbiter under rule that claims for damages under paragraph 4 of
paragraph 4, Article 217 of the Labor Code of the Article 217, to be cognizable by the Labor Arbiter,
Philippines, as amended. The petitioner averred that must have a reasonable causal connection with any of
the respondent banks claim for damages arose out of the claims provided for in that article. Only if there is
or were in connection with his employer-employee such a connection with the other claims can the claim
relationship with the respondent bank or some aspect for damages be considered as arising from employer-
or incident of such relationship. The respondent bank employee relations. In this case, the private
opposed the motion, claiming that its action for respondents first cause of action for damages is
damages was within the exclusive jurisdiction of the anchored on the petitioners employment of deceit
trial court. Although its claims for damages and of making the private respondent believe that he
incidentally involved an employer-employee would fulfil his obligation under the employment
relationship, the said claims are actually predicated contract with assiduousness and earnestness. The
on the petitioners acts and omissions which are petitioner volte face when, without the requisite
separately, specifically and distinctly governed by the thirty-day notice under the contract and the Labor
New Civil Code. Code of the Philippines, as amended, he abandoned
his office and rejoined his former employer; thus,
forcing the private respondent to hire
a replacement. The private respondent was left in
ISSUE: Whether or not the RTC had jurisdiction
a lurch, and its corporate plans and program in
over the case.
jeopardy and disarray. Moreover, the petitioner took
off with the private respondents computer diskette,
papers and documents containing confidential
information on employee compensation and other
bank matters. On its second cause of action, the 16, 1996, certain persons to take over the operations
petitioner simply walked away from his employment of the corporation including Rufino Hornilla6 who
with the private respondent sans any written notice, took over petitioners functions.
to the prejudice of the private respondent, its banking
operations and the conduct of its business. Anent its By February 21, 1996, respondents salary was
withheld7 and was advised to take a leave of absence
third cause of action, the petitioner made false and
until further notice.8
derogatory statements that the private respondent
reneged on its obligations under their contract of Respondent later received on February 28, 1996 a
employment; thus, depicting the private respondent letter from petitioner Filomeno P. Hernandez,
as unworthy of trust. The primary relief sought is for President/General Manager of the corporation,
liquidated damages for breach of a "inviting" him to answer the following charges:
contractual obligation. The other items demanded are
not labor benefits demanded by workers generally 1.) That on February 21, 1996, at around 9:00 A.M.
taken cognizance of in labor disputes, such as you entered the company fabrication shop where you
payment of wages, overtime compensation or were assigned as supervisor and caused to create fire
by secretly switching on the idle plastic oven and
separation pay. The items claimed are the natural grounded the 2 electric machine welders while the
consequences flowing from breach of an obligation, strike was on-going outside the premises.
intrinsically a civil dispute. It is evident that the
causes of action of the private respondent against the Witnesses also in the persons of Mr. Luis Mimay, and
petitioner do not involve the provisions of the Labor his men found out later what you have done and
Code of the Philippines and other labor laws but the noticed the electric current and the burning of the
New Civil Code. Thus, the said causes of action are oven already very hot. You secretly left the premises
intrinsically civil. There is no causal relationship and had not for the said witnesses and contractors,
you had vehemently caused to burn the companys
between the causes of action of the private
main building and its offices.
respondents causes of action against the petitioner
and their employer-employee relationship. The fact 2.) That you allegedly on several occasions, urged
that the private respondent was the erstwhile strongly the same group of contractors led by Mr.
employer of the petitioner under an existing Luis Mimay, working on some left over jobs at the
employment contract before the latter abandoned his factory, to slow down work or not to work at all in
employment is merely incidental. Petition is denied. sympathy to the strikerswho are in the ranking files.
Those proved also that as our trusted staff and
supervisor you have caused disruption of work of the
4. DYNAMIC SIGNMAKER OUTDOOR contractors. The company suffered losses in its
ADVERTISING SERVICES, INC. vs. failure to accomplish its job projects on due dates.
FRANCISCO POTONGAN G.R. No. 156589 Your actuations and actions proved disastrous to the
June 27, 2005 companys interest. Considering these circumstances,
we urge you to reply your side on these matters so
FACTS: that we could institute proper corresponding action
based on the above in 5 days time from receipt of this
In 1987, respondent started working for petitioner letter.9 (Underscoring supplied)
corporation as a Production Supervisor at a monthly
salary ofP16,000.00.3 By letter of March 4, 1996, respondent through
counsel, denied the charges proffered against him, he
In early February 1996, the union of rank and file insisting that they were fabricated to justify his
employees of petitioner corporation, termination due to suspicions that he was a strike-
the BigkisManggagawasaDynamicSignmakers sympathizer.10 In the same letter, respondent
Outdoor Advertising Services expressed his openness to the conduct of a full-blown
KilusanngManggagawangMakabayan (KMM- investigation of the case by the NLRC.11
Katipunan),4declared a strike on account of which
petitioner corporation replaced all its supervisors and Respondent later filed on January 29, 1997 a
designated, by letter memorandum5 dated February complaint against herein petitioners for illegal
dismissal, reinstatement, backwages and damages "In cases of illegal dismissal, the burden is on the
with the Regional Arbitration Branch of the NLRC, employer to prove that there was a valid ground for
docketed as NLRC Case No. RAB-IV-1-8738-97- dismissal." Medenilla vs. Philippne Veterans Bank,
RI,12 the case subject of the petition. 328 SCRA 1, 7. We failed to extract from the record
any evidence to show that there exists valid and just
Respondent complained that although he was not sent cause to terminate herein petitioner from
a formal notice of termination, he was effectively employment. In fact during the pendency of the
dismissed from employment for after he was asked to complaint for illegal dismissal by the petitioner
take a leave of absence on February 21, 1996, as he against private respondents, the latter in a letter dated
did, and he was not instructed nor allowed to return March 1, 1999, ordered petitioner to report back to
to work, nor paid his salaries.13 work immediately. This in itself proves that herein
private respondents believe that there exists no valid
By Decision30 of September 30, 2002, the appellate and just grounds (sic) to terminate herein petitioners
court reversed the NLRC decision, it holding that from his employment.42 (Underscoring supplied)
respondent was denied due process and was
dismissed without cause when he was replaced by It upholds too the award to respondent of attorneys
RufinoHornilla and instructed to go on leave fees in the amount of P50,000.00, he having been
indefinitely.31 forced to litigate and thereby incur expenses to
protect his rights and interests.43
In reversing the NLRC decision, the appellate court
noted that it was on account of respondents Clutching at straws, petitioners fault the appellate
replacement as Operations Manager and the court for failure to recognize the final and executory
instruction for him to go on indefinite leave that it nature of the June 24, 1996 NLRC Decision rendered
took almost a year for him to file the complaint for in the consolidated cases and for affirming the
illegal dismissal. Hence, the appellate court nullification of said decision, with respect to
concluded, he should not be faulted for laches. Nor, respondent, which could be attacked only by direct
said the appellate court, could respondent be deemed action.44
to have abandoned his work on receipt of petitioners
counsels return to work March 1, 1999 letter because Contrary to petitioners position, the validity of a
prior thereto he had considered himself illegally judgment or order of a court or quasi-judicial tribunal
terminated as in fact he had filed on January 29, 1997 which has become final and executory may be
the complaint for illegal dismissal.32 attacked when the records show that it lacked
jurisdiction to render the judgment.45 For a judgment
ISSUE: rendered against one in a case where jurisdiction over
his person was not acquired is void, and a void
Petitioners insist that respondent was not illegally judgment maybe assailed or impugned at any
dismissed, "management [having] merely opted to time either directly or collaterally by means of a
reorganize," hence, the award to him of full petition filed in the same or separate case, or by
backwages, reinstatement or separation pay, and resisting such judgment in any action or proceeding
attorneys fees is bereft of factual and legal basis.33 wherein it is invoked.46
conciliation and mediation conference in two (2) (Petitioner) on 10 December 1990 as a Field
settings.
Representative/Collector. His task entailed the
periodic collection of receivables from dealers of
xxx
petitioner's newspapers.
SEC. 6. Service of Notices and Resolutions. a) Respondent, because of tardiness
Notices or summonses and copies of orders, shall be was supposedly terminated by the petitioner
served on the parties to the case personally by the company, but because of the timely
bailiff or duly authorized public officer within three
(3) days from receipt thereof or by registered mail, intervention of the union, the dismissal was
provided that in special circumstances, service of not effected.
summons may be effected in accordance with the However, he incurred another
pertinent provisions of the Rules of Court; xxx infraction when he obtained a loan from a
magazine dealer and when he was not able
Supplementary or applied by analogy to these
provisions are the provisions and prevailing to pay the loan, he stopped collecting the
jurisprudence in Civil Procedure. Where there is then outstanding dues of the dealer/creditor.
no service of summons on or a voluntary general After requiring him to explain, respondent
appearance by the defendant, the court acquires no admitted his failure to pay the loan but gave
jurisdiction to pronounce a judgment in the cause.47
no definitive explanation for the same.
At all events, even if administrative tribunals Thereafter, he was penalized with
exercising quasi-judicial powers are not strictly suspension. He was also not allowed to do
bound by procedural requirements, they are still field work, and was transferred to a new
bound by law and equity to observe the fundamental position. Despite the completion of his
requirements of due process.48
suspension, respondent stopped reporting for
Res inter aliosactanocerenondebet. Things done work and sent a letter communicating his
between strangers ought not to injure those who are refusal to accept the transfer. He then filed a
not parties to them.49 complaint for constructive dismissal, non-
payment of backwages and other money
WHEREFORE, the instant petition is hereby
claims with the labor arbiter.
DENIED. The decision of the appellate court is
hereby AFFIRMED with the MODIFICATION that if
reinstatement is no longer possible due to strained
relations between the parties, petitioners are ordered The complaint was resolved in
to pay respondent, Francisco Potongan, separation favor of respondent. Petitioner lodged an
pay equivalent to One Month salary for every year of
appeal with the NLRC, raising as a ground
service, computed from the time he was first
employed until the finality of this decision. the lack of jurisdiction of the labor arbiter
over respondents complaint. Significally,
SO ORDERED. this issue was not raised by petitioner in the
proceedings before the Labor Arbiter.
coupled with his failure to object to the jurisdiction is not lost by waiver or by
jurisdiction of the court or quasi-judicial estoppel.
body where the action is pending, is
tantamount to an invocation of that The operation of the principle of
jurisdiction and a willingness to abide by the estoppel on the question of jurisdiction
resolution of the case and will bar said party seemingly depends upon whether the lower
from later on impugning the court or bodys court actually had jurisdiction or not. If it
jurisdiction. had no jurisdiction, but the case was tried
and decided upon the theory that it had
ISSUE: jurisdiction, the parties are not barred, on
appeal, from assailing such jurisdiction,
Whether or not petitioner is estopped from for the same 'must exist as a matter of
questioning the jurisdiction of the LA during appeal. law, and may not be conferred by consent
of the parties or by estoppel. However, if
HELD: the lower court had jurisdiction, and the case
The SC held that petitioner is not was heard and decided upon a given theory,
estopped from questioning the such, for instance, as that the court had no
jurisdiction of the LA during appeal. jurisdiction, the party who induced it to
adopt such theory will not be permitted, on
The general rule is that the appeal, to assume an inconsistent position
jurisdiction of a court over the subject that the lower court had jurisdiction. Here,
matter of the action is a matter of law and the principle of estoppel applies. The rule
may not be conferred by consent or that jurisdiction is conferred by law, and
agreement of the parties. The lack of does not depend upon the will of the parties,
jurisdiction of a court may be raised at any has no bearing thereon.
stage of the proceedings, even on appeal.
This doctrine has been qualified by recent Applying the general rule that
pronouncements which stemmed principally estoppel does not confer jurisdiction,
from the ruling in the cited case of petitioner is not estopped from assailing
Sibonghanoy. It is to be regretted, however, the jurisdiction of the labor arbiter before
that the holding in said case had been the NLRC on appeal.
applied to situations which were obviously
not contemplated therein. The exceptional Decision of the CA is set aside.
circumstances involved in Sibonghanoy
which justified the departure from the
accepted concept of non-waivability of
objection to jurisdiction has been ignored YUSEN AIR AND SEA SERVICE PHILIPPINES,
and, instead a blanket doctrine had been INCORPORATED,petitioner
repeatedly upheld that rendered the vs.
supposed ruling in Sibonghanoy not as the ISAGANI A. VILLAMOR,respondent
Facts:
exception, but rather the general rule, -Petitioner,is engaged in the business of freight
virtually overthrowing altogether the time forwarding. As such, it is contracted by clients to
honored principle that the issue of pick-up, unpack, consolidate, deliver, transport and
distribute all kinds of cargoes, acts as cargo or freight
accommodation and enters into charter parties for the -The petition is impressed with merit.
carriage of all kinds of cargoes or freight. - the 2-year prohibition against employment in a
-On 1993, petitioner hired respondent as branch competing company which petitioner seeks to
manager in its Cebu Office. Later, petitioner enforce thru injunction, had already expired
reclassified respondents position to that of Division sometime in February 2004. Necessarily, upon the
Manager, which position respondent held until his expiration of said period, a suit seeking the issuance
resignation on February 1, 2002. of a writ of injunction becomes functusoficio and
- Immediately after his resignation, respondent therefore moot.
started working for Aspac International, a
corporation engaged in the same line of business as 2nd issue:
that of petitioner. With regards to the claim for damages
- On February 11, 2002,petitioner filed against *whether petitioner's claim for
respondent a complaint[3] for injunction and damages damages arose from employer-employee
with prayer for a temporary restraining order, the relations between the parties.
complaint alleged,inter alia, as follows:
HELD:
7. That [respondent]
duly signed an In Dai-Chi Electronics Manufacturing vs.
undertaking to abide by Villarama,with a substantially similar factual
the policies of the backdrop, we held that an action for breach of
[Petitioner] which contractual obligation is intrinsically a civil dispute.
includes the provision on
the employees There, a complaint for damages was filed with
responsibility and the regular court by an employer against a former
obligation in cases of employee who allegedly violated the non-compete
conflict of interest, which provision of their employment contract when, within
reads: two years from the date of the employees
resignation, he applied with, and was hired by a
No employee may engage in any business or corporation engaged in the same line of business as
undertaking that is directly or indirectly in that of his former employer. The employer sought to
competition with that of the company and its recover liquidated damages. The trial court ruled that
affiliates or engage directly or indirectly in any it had no jurisdiction over the subject matter of the
undertaking or activity prejudicial to the interests of controversy because the complaint was for damages
the company or to the performance of his/her job or arising from employer-employee relations, citing
work assignments. The same provision will be Article 217 (4) of the Labor Code, as amended by
implemented for a period of two (2) years from R.A. No. 6715, which stated that it is the Labor
the date of an employees resignation, termination Arbiter who had original and exclusive jurisdiction
or separation from the company. over the subject matter of the case.
-Petitioner thus prayed for a judgment enjoining
respondent from further pursuing his work at Aspac When the case was elevated to this Court, we
International, and awarding it P2,000,000 as actual held that the claim for damages did not arise from
damages; P300,000 as exemplary damages; employer-employee relations, to wit:
- respondent filed against petitioner a case for illegal
dismissal before the National Labor Relations Petitioner does not ask for any relief under the
Commission. Labor Code of the Philippines. It seeks to recover
- Meanwhile, instead of filing his answer, damages agreed upon in the contract as redress for
respondent filed a Motion to Dismiss,arguing that the private respondents breach of his contractual
RTC has no jurisdiction over the subject matter of obligation to its damage and prejudice. Such cause
said case because an employer-employee relationship of action is within the realm of Civil Law.
is involved.
-Indeed, jurisprudence has evolved the rule that
1st issue: claims for damages under paragraph 4 of Article 217,
With regards to the 2 yr prohibition to be cognizable by the Labor Arbiter, must have a
reasonable causal connection with any of the claims
HELD: provided for in that article. Only if there is such a
connection with the other claims can a claim for
damages be considered as arising from employer- concerning terms and conditions of employment),
employee relations. paragraph 4 (claims relating to household services, a
particular species of employer-employee relations),
Article 217, as amended by and paragraph 5 (relating to certain activities
Section 9 of RA 6715, provides: prohibited to employees or employers). It is evident
that there is a unifying element which runs through
Art. 217. Jurisdiction of paragraph 1 to 5 and that is, that they all refer to
Labor Arbiters and the cases or disputes arising out of or in connection with
Commission. (a) Except as an employer-employee relationship.
otherwise provided under this
Code, the Labor Arbiters shall have For it cannot be presumed that money claims of
original and exclusive jurisdiction workers which do not arise out of or in connection
to hear and decide, within thirty with their employer-employee relationship, and
(30) calendar days after the which would therefore fall within the general
submission of the case by the jurisdiction of regular courts of justice, were intended
parties for decision without by the legislative authority to be taken away from the
extension, even in the absence of jurisdiction of the courts and lodged with Labor
stenographic notes, the following Arbiters on an exclusive basis. The Court, therefore,
cases involving all workers, believes and so holds that the money claims of
whether agricultural or non- workers referred to in paragraph 3 of Article 217
agricultural: embraces money claims which arise out of or in
connection with the employer-employee relationship,
xxx xxx xxx or some aspect or incident of such relationship. Put a
little differently, that money claims of workers which
4. Clai now fall within the original and exclusive jurisdiction
ms for of Labor Arbiters are those money claims which have
actual, some reasonable causal connection with the
moral, employer-employee relationship.
exempla
ry and -With the reality that the stipulation refers to the post-
other employment relations of the parties.
forms of
damages For sure, a plain and cursory reading of the
arising complaint will readily reveal that the subject matter is
from the one of claim for damages arising from a breach of
employe contract, which is within the ambit of the regular
r- courts jurisdiction
employe
e
relations
;" Duty Free Philippines v. Rossano Mojica, GR No.
166365, 30 September 2005, First Division,
xxx xxx xxx
Ynares-Santiago1
- In San Miguel Corporation vs. National Labor
Principles of law: Complaints of civil service
Relations Commission
employees come under the jurisdiction of the CSC
While paragraph 3 above refers to all money and not NLRC; any decision of the Labor Arbiter
claims of workers, it is not necessary to suppose that involving a CS employee is void for want of
the entire universe of money claims that might be jurisdiction
asserted by workers against their employers has been
absorbed into the original and exclusive jurisdiction Facts
of Labor Arbiters. In the first place, paragraph 3
should be read not in isolation from but rather within
the context formed by paragraph 1 (relating to unfair
labor practices), paragraph 2 (relating to claims 1 19 August 2014.
filed a complaint for illegal dismissal with NLRC. Validity of the Dismissal
LA found the termination ground for loss of
confidence valid. On appeal, NLRC affirmed that While loss of confidence is a valid ground for
decision of LA but ordered petitioner to indemnify dismissing the employee, it should not be simulated.
respondent for lack of due process. MR dismissed. It must not be indiscriminately used as a shield by the
Filed certiorari before CA.CA held NLRC lacked employer against a claim that the dismissal was
jurisdiction and that there was illegal dismissal. arbitrary.
Petitioner filed MR, denied. Hence, this petition.
Loss of trust and confidence must be based
Issue/s: on a willful breach and founded on cleary
established facts. A breach is willful if it is
1. Whether or not NLRC had jurisdiction over done intentionally, knowingly and
the case of respondents illegal dismissal purposely, without justifiable excuse as
2. Whether or not respondent Edward King opposed to carelessness, thoughtlessness and
was validly dismissed heedlessness. It cannot be from mere
carelessness.
Ruling:
In this case, LAs finding, was that sales record of
SC ruled first with jurisdiction as it is decisive. If respondent at the time he spent work in the field were
NLRC has no jurisdiction, then it would be clear indications of complainants inefficiency and/or
unnecessary to talk about the validity of dismissal. negligence. Inefficiency implies incompetence,
ignorance and carelessness. They were not sufficient
Petitioner contends that it is SEC, and not the NLRC, to claim a loss of confidence as a ground for
who has jurisdiction since respondent was a dismissal.
corporate officer. Is respondent a corporate officer?
Here, petitioner failed to prove that respondent was a Moreover, the promotion of the employee negates the
corporate officer. employers claim that it has lost its trust and
confidence on the employee. The lack of cause in
Corporate officers are those officers who respondents dismissal was aggravated by the
are given that character under the absence of due process. The twin requirements of
Corporation Code. Under Section 25 notice and hearing constitute the essential elements of
thereof, the corporate officers are the due process.
president, secretary, treasurer and such other
officers as may be provided by the by-laws. The law requires the employer to furnish the
employee sought to be dismissed 2 written
Since petitioner failed to satisfy burden of proof that notices before termination can be legally
was required of it, we cannot sanction its claim that effected:
respondent was a corporate officer whose removal
was cognizable by the SEC under PD 902-A and not 1. Written notice apprising the employee
by NLRC. of the particular acts for which his
dismissal is sought to afford him an
An office is created by the charter of the opportunity to be heard and defend
corporation and the officer is elected by the himself
directors and stockholders. On the other 2. Subsequent notice informing
hand, employee occupies no office and employers decision.
generally is employed not by the action of
the directors or stockholders but by the The procedure above is MANDATORY and its
managing officer of the corporation who absence taints the dismissal with illegality. In the case
also determines compensation of employee. at bar, respondent was only served with 1 notice
notice of his termination.
Respondent was appointed VP by Malonzo,
petitioners manager, not by the board of directors. It Petition is DENIED. CA is affirmed.
was also Malozo who determined respondents
compensation package. Thus, respondent was an
employee, not a corporate officer. The CA was
correct in ruling that jurisdiction over the case was
properly with NLRC, not with SEC.
9. SAN MIGUEL FOODS, INC. v. SAN MIGUEL management review," hence, the Union's
CORPORATION EMPLOYEES UNION- requests could not be granted.
PTWGO G.R. NO. 168569 October 5, 2007
October 20, 1993- The Union filed
FACTS: a complaint before the NLRC Arbitration
brance against SMFI, its president and
At the time material to the case, Montesa for "unfair labor practice, [and]
respondent, San Miguel Corporation unjust discrimination in matters of
Employees Union - PTWGO (the Union), promotion . . . " It prayed that SMFI et al.
was the sole bargaining agent of all the be ordered to promote the therein named
monthly paid employees of petitioner San employees "with the corresponding pay
Miguel Foods, Incorporated (SMFI). increases or adjustment including payment
of salary differentials plus attorney's fees[,]
On November 9, 1992, some and to cease and desist from committing the
employees of SMFI's Finance Department, same unjust discrimination in matters of
through the Union represented by Edgar promotion."7
Moraleda, brought a grievance against
Finance Manager Gideon Montesa Instead of filing a position paper as
(Montesa), for "discrimination, is required for step 2, SMFI filed for a
favoritism, unfair labor practices, not motion to dismiss instead on the ground that
flexible [sic], harassment, promoting that the issues raised in the complaint
divisiveness and sectarianism, were grievance issues and, therefore,
etc.," before SMFI Plant Operations "should be resolved in the grievance
Manager George Nava in accordance with machinery provided in [the] collective
Step 1 of the grievance machinery adopted bargaining agreements [sic] of the parties
in the Collective Bargaining Agreement or in the mandated provision of voluntary
(CBA) forged by SMFI and the Union. arbitration which is also provided in the
CBA."
The Union sought:
ISSUE:
1. review, evaluation & upgrading
of all Finance staff and Whether respondent's complaint is one for unfair
labor practice (ULP) over which a Labor Arbiter has
2. promotion of G.Q. Montesa to jurisdiction
other SMC affiliates & subsidiaries.
RULING:
January 14, 1993- A grievance
meeting was held by SMFI informing the The jurisdiction of Labor Arbiters,
Union that a work management review to enumerated in Article 217 of the Labor
be completed on March 1993 would be done Code, includes complaints for ULP.
to address the grievence, asking the finance
personnel to give it their attention. SMFI argues that the allegations in
the Union's complaint filed before the Labor
The "work management review" was not Arbiter do not establish a cause of action
completed by March 1993, however, prompting the for ULP, the Union having merely
Union to, on March 26, 1993, elevate the grievance contended that SMFI was guilty thereof
to Step 2. without specifying the ultimate facts upon
which it was based. It cites Section 1 of
Almost nine months after the Rule 8 of the Rules of Court as applying
grievance meeting was held or on October 6, suppletorily to the proceedings before the
1993, SMFI rendered a "Decision on Step 1 Labor Arbiter, which Section reads:
Grievance" stating that it was still in the
process of completing the "work Section 1. In general. - Every
pleading shall contain in a
its resolution dated 14 June 2006, be number of officers is not limited to these
reconsidered and set aside and that the three. A corporation may have such other
decision of the Labor Arbiter dated 30 officers as may be provided for by its by-
September 2002 be affirmed and reinstated. laws like, but not limited to, the vice-
president, cashier, auditor or general
ISSUE: Whether or not the Labor Arbiter has the manager. The number of corporate officers
jurisdiction over the case is thus limited by law and by the
corporations by-laws.
RULING:Labor Arbiter has no jurisdiction over the
case In the case before us, the by-laws
of ETPI provide:
The Supreme Court, in a long line
of cases, has decreed that a corporate ARTICLE V
officers dismissal or removal is always a
corporate act and/or an intra-corporate Officers
controversy, over which the Securities and
Exchange Commission [SEC] (now the Section 1. Number. The
Regional Trial Court) has original and officers of the Company shall be a
exclusive jurisdiction. Chairman of the Board, a President,
one or more Vice-Presidents, a
We have ruled that an intra- Treasurer, a Secretary, an Assistant
corporate controversy is one which pertains Secretary, and such other officers
to any of the following relationships: (1) as may be from time to time be
between the corporation, partnership or elected or appointed by the Board
association and the public; (2) between the of Directors. One person may hold
corporation, partnership or association and any two compatible offices.
the State insofar as the formers franchise,
permit or license to operate is concerned; Atty. Garcia tries to deny he is an
(3) between the corporation, partnership or officer of ETPI. Not being a corporate
association and its stockholders, partners, officer, he argues that the Labor Arbiter has
members or officers; and (4) among the jurisdiction over the case. One of the
stockholders, partners or associates corporate officers provided for in the by-
themselves. InLozon v. National Labor laws of ETPI is the Vice-President. It can be
Relations Commission,we declared that gathered from Atty. Garcias complaint-
Presidential Decree No. 902-A confers on affidavit that he was Vice President for
the SEC original and exclusive jurisdiction Business Support Services and Human
to hear and decide controversies and cases Resource Departments of ETPI when his
involving intra-corporate and partnership employment was terminated effective 16
relations between or among the corporation, April 2000. It is therefore clear from the by-
officers and stockholders and partners, laws and from Atty. Garcia himself that he is
including their elections or appointments a corporate officer. One who is included in
xxx the by-laws of a corporation in its roster of
corporate officers is an officer of said
Before a dismissal or removal corporation and not a mere
could properly fall within the jurisdiction of employee. Being a corporate officer, his
the SEC, it has to be first established that the removal is deemed to be an intra-corporate
person removed or dismissed was a dispute cognizable by the SEC and not by
corporate officer. Corporate officers in the Labor Arbiter.
the context of Presidential Decree No. 902-
Aare those officers of the corporation who We agree with both the NLRC and
are given that character by the Corporation the Court of Appeals that Atty. Garcias
Code or by the corporations by-laws. There ouster as Vice-President, who is a corporate
are three specific officers whom a officer of ETPI, partakes of the nature of an
corporation must have under Section 25 of intra-corporate controversy, jurisdiction over
the Corporation Code. These are the which is vested in the SEC (now the
president, secretary and the treasurer. The RTC). The Labor Arbiter thus erred in
assuming jurisdiction over the case filed by females and sixty (60) for males. Xxxx
Atty. Garcia, because he had no jurisdiction
over the subject matter of the controversy.
12.)HALAGUEA vs. PHILIPPINE AIRLINES On July 29, 2004, petitioners filed a Special Civil
INCORPORATED Action for Declaratory Relief with Prayer for the
Issuance of Temporary Restraining Order and Writ of
G.R. No. 172013 Preliminary Injunction with the Regional Trial Court
(RTC) of Makati City against respondent for the
October 2, 2009 invalidity of Section 144, Part A of the PAL-FASAP
CBA.
the legality or constitutionality of the provisions on agreement but by the general civil law, the
the compulsory retirement age contained in the CBA jurisdiction over the dispute belongs to the regular
between respondent PAL and FASAP. courts of justice and not to the labor arbiter and the
NLRC.
METRO thus hired its own employees including employees of petitioner LRTA, a
herein petitioners-members of the Pinag- government-owned and controlled
isangLakasngManggagawasa METRO, Inc.-National corporation with original charter,
Federation of Labor, otherwise known as PIGLAS- are covered by civil service rules.
METRO, INC.-NFL-KMU (the Union), the certified Herein private respondent workers cannot
exclusive collective bargaining representative of have the best of two worlds, e.g., be
METRO's rank-and-file employees. considered government employees of
petitioner LRTA, yet allowed to strike as
When the Agreement expired on July 31, 2000, LRTA private employees under our labor laws. x
did not renew it. It instead took over the management xx.
and operations of the light rail transit system, hiring
new personnel for the purpose. METRO thus x xxx
considered the employment of all its
personnel terminated effective September 30, 2000. . . . [I]t is inappropriate to pierce
the corporate veil of petitioner
Petitioners filed a complaint for illegal dismissal and METRO. x xx.
unfair labor practice with prayer for reinstatement
and damages against METRO and LRTA before the In the instant case, petitioner
NCR Arbitration Branch, National Labor Relations METRO, formerly Meralco Transit
Commission (NLRC). Organization, Inc., was originally
owned by the Manila Electric
Company and registered with the
Securities and Exchange
Issue: Commission more than a decade
before the labor dispute. It then
Whether or not the Labor Arbiter's decision
entered into a ten-year agreement
against LRTA was rendered without
with petitioner LRTA in 1984.
jurisdiction.
And, even if petitioner LRTA
Ruling: eventually purchased METRO in
1989, both parties maintained their
The Labor Arbiter and the NLRC do not have separate and distinct juridical
jurisdiction over LRTA. Petitioners themselves personality and allowed the
admitted in their complaint that LRTA "is a agreement to proceed. In 1990, this
government agency organized and existing pursuant Court, in Light Rail Transit
to anoriginal charter (Executive Order No. 603)," and Authority v. Commission on
that they are employees of METRO. Audit (G.R. No. 88365, January 9,
1990), even upheld the validity of
Light Rail Transit Authority v. Venus, Jr., which has a the said agreement. Consequently,
similar factual backdrop, holds that LRTA, being a the agreement was extended
government-owned or controlled corporation created beyond its ten-year period. In 1995,
by an original charter, is beyond the reach of the METRO's separate juridical
Department of Labor and Employment which has identity was again recognized when
jurisdiction over workers in the private sector, viz: it entered into a collective
bargaining agreement with the
. . . [E]mployees of petitioner METRO
workers' union. All these years,
cannot be considered as employees of
METRO's distinct corporate
petitioner LRTA. The employees hired by
personality continued quiescently,
METRO are covered by the Labor Code and
separate and apart from the
are under the jurisdiction of the Department
of Labor and Employment, whereas the
juridical personality of petitioner dismissal against Matling and some of its corporate
LRTA. officers (petitioners) in the NLRC, Sub-Regional
Arbitration Branch XII, Iligan City.
The labor dispute only arose in
2000, after a deadlock occurred The petitioners moved to dismiss the complaint
contending that the complaint pertained to the
during the collective bargaining
jurisdiction of the Securities and Exchange
between petitioner METRO and the Commission (SEC) due to the controversy being
workers' union. This alone is not a intra-corporate inasmuch as the respondent was a
justification to pierce the corporate member of Matlings Board of Directors aside from
veil of petitioner METRO and being its Vice-President for Finance and
make petitioner LRTA liable to Administration prior to his termination.
private respondent workers. There
The respondent opposed the
are no badges of fraud or any
petitioners motion to dismiss, insisting that his status
wrongdoing to pierce the corporate as a member of Matlings Board of Directors was
veil of petitioner METRO. doubtful, considering that he had not been formally
elected as such; that he did not own a single share of
x xxx stock in Matling, considering that he had been made
to sign in blank an undated indorsement of the
In sum, petitioner LRTA cannot certificate of stock he had been given in 1992; that
be held liable to the employees of Matling had taken back and retained the certificate of
petitioner METRO. stock in its custody; and that even assuming that he
had been a Director of Matling, he had been removed
IN FINE, the Labor Arbiter's decision against LRTA as the Vice President for Finance and Administration,
was rendered without jurisdiction, hence, it is void, not as a Director, a fact that the notice of his
thus rendering it improper for the remand of the case termination dated April 10, 2000 showed.
to the NLRC, as ordered by the appellate court, for it
The petitioners motion to dismiss was granted by the
(NLRC) to give due course to LRTA's appeal. Labor Arbiter ruling that the respondent was a
corporate officer because he was occupying the
A final word. It bears emphasis that this Court's position of Vice President for Finance and
present Decision treats only with respect to the Labor Administration and at the same time was a Member
Arbiter's decision against respondent LRTA. of the Board of Directors of Matling; and that his
removal was a corporate act of Matling and the
controversy resulting from such removal was under
the jurisdiction of the SEC, pursuant to Section 5,
paragraph (c) of Presidential Decree No. 902.
15. Matling Industrial Corporation vs. Coros
Respondent appealed to the NLRC, which set
This is a petition for review on
aside the dismissal, concluding that the
certiorari assailing the decisionin the case
respondents complaint for illegal dismissal was
entitled Matling Industrial and Commercial
properly cognizable by the LA, not by the SEC,
Corporation, et al. v. Ricardo R. Coros and National
because he was not a corporate officer by virtue of
Labor Relations Commission, whereby by the Court
his position in Matling, albeit high ranking and
of Appeals (CA) sustained the ruling of the National
managerial, not being among the positions listed in
Labor Relations Commission (NLRC) to the effect
Matlings Constitution and By-Laws.
that the LA had jurisdiction because the respondent
was not a corporate officer of petitioner Matling
The petitioners sought
Industrial and Commercial Corporation (Matling).
reconsideration reiterating that the respondent, being
a member of the Board of Directors, was a corporate
FACTS:
officer whose removal was not within the LAs
jurisdiction.
Respondent, Vice-President for Finance and
Administration of Matling was dismissed, thus, he
Nonetheless, on April 30, 2001, the NLRC denied the
filed a complaint for illegal suspension and illegal
petitioners motion for reconsideration.
The power to create new offices and the power Even though he might have become
to appoint the officers to occupy them vested by By- a stockholder of Matling in 1992, his
Law No. V merely allowed Matlings President to promotion to the position of Vice President
create non-corporate offices to be occupied by for Finance and Administration in 1987 was
ordinary employees of Matling. Such powers were by virtue of the length of quality service he
incidental to the Presidents duties as the executive had rendered as an employee of Matling. His
head of Matling to assist him in the daily operations subsequent acquisition of the status of
of the business. Director/stockholder had no relation to his
promotion. Besides, his status of
Second Issue Director/stockholder was unaffected by his
dismissal from employment as Vice
Petitioners further content that because the President for Finance and Administration.
respondent was a Director/stockholder of
Matling, the NLRC had no jurisdiction over WHEREFORE, the petition for review
his complaint, considering that any case for illegal on certiorari is denied.
dismissal brought by a stockholder/officer against the
corporation was an intra-corporate matter that must
fall under the jurisdiction of the SEC conformably 16.) Manila Electric Co. et al., vs. Lim, GR No.
with the context of PD No. 902-A. 184769, Oct. 5, 201056.
The criteria for distinguishing Rosario G. Lim (respondent), also known as Cherry
between corporate officers who may be Lim, is an administrative clerk at the Manila Electric
ousted from office at will, on one hand, and
Company (MERALCO). Her workplace received
ordinary corporate employees who may only
be terminated for just cause, on the other threats through letter and it was directed to her, thus
hand, do not depend on the nature of the the human resource in her workplace directed her
services performed, but on the manner of transfer to other branch. From bulacan she was
creation of the office. In the respondents transferred to muntinlupa.
case, he was supposedly at once an
employee, a stockholder, and a Director of Respondent appealed the transfer through letter, she
Matling. The circumstances surrounding his requested for voice dialogue with the head of HR
appointment to office must be fully administration. She wanted to voice out her concerns
considered to determine whether the
on the matter of her transfer and that there was no
dismissal constituted an intra-corporate
controversy or a labor termination dispute. due process when the direct order was issued, and the
We must also consider whether his status as grueling effort to travel from her home to the place
Director and stockholder had any relation at where she was transferred were not considered and
all to his appointment and subsequent also it violates the CBA with regards to the job
dismissal as Vice President for Finance and security, and she also expressed her thoughts on the
Administration. letter, for her the letter was suspicious, doubtful or
just mere jokes if the letter ever existed.
She received no response from the company, thus she removing him from his position as manager. Petitioner
filed a petition for habeas data, in RTC of bulacan. complained that he was neither notified of the Board
Where she got a favorable decision, The trial court
Meeting during which said board resolution was passed nor
justified its ruling by declaring that, inter alia,
recourse to a writ of habeas data should extend not formally charged with any infraction. He just received
only to victims of extra-legal killings and political from respondents a letterdated March 26, 2001 stating that
activists but also to ordinary citizens, like respondent
he has been terminated from service effective March 25,
whose rights to life and security are jeopardized by
petitioners refusal to provide her with information or 2001 for the following reasons: (1) continuous absences at
data on the reported threats to her person.. his post at Ogino Philippines Inc. for several months which
Thus, this petition for review in Supreme Court. was detrimental to the corporations operation; (2) loss of
trust and confidence; and, (3) to cut down operational
Issue:
expenses to reduce further losses being experienced by
Whether or not, writ of habeas data is applicable in respondent corporation.
the case at bar. Respondentsrefuted petitioners claim of illegal
dismissal by alleging that after petitioner was appointed
Ruling:
Manager, he committed gross acts of misconduct
No, the habeas data rule, in general, is designed to detrimental to the company since 2000. He was almost
protect by means of judicial complaint the image,
privacy, honor, information, and freedom of always absent, and neglected to supervise the employees
information of an individual. It is meant to provide a resulting in complaints from various clients about
forum to enforce ones right to the truth and to employees performance.
informational privacy, thus safeguarding the The Labor Arbiter (2003)found no convincing
constitutional guarantees of a persons right to life,
proof of the causes for which petitioner was terminated and
liberty and security against abuse in this age of
information technology. noted that there was complete absence of due process in the
manner of his termination. It declared petitioner as having
Respondents plea that she be spared from complying
with MERALCOs Memorandum directing her been illegally dismissed and ordered for his reinstatment to
reassignment to the Alabang Sector, under the guise hisformer positions without loss of seniority rights and
of a quest for information or data allegedly in other privileges and to pay their full backwages from the
possession of petitioners, does not fall within the
time of dismissal until actually reinstated, plus attorneys
province of a writ of habeas data.Respondent
trivializes these threats and accusations from fees.
unknown individuals in her earlier-quoted portion of On appeal, the NLRC dismissed the
her July 10, 2008 letter as highly suspicious, petitioners complaint established petitioners
doubtful or are just mere jokes if they existed at all. status as a stockholder and as a corporate officer
18.) Real vs. Sangu Phils., Inc., et al., G.R. No. and hence, his action against respondent
168757, January 19, 2011 corporation is an intra-corporate controversy over
which the Labor Arbiter has no jurisdiction.
Facts:
Renato Real was the Manager of respondent
corporation Sangu Philippines. Heclaimed to have been
illegaly dismissed through Board Resolution 2001- Issues:
03adopted by respondentcorporations Board of Directors
Whether or not petitioners complaint for illegal dismissal corporate regulatory rules of the
constitutes an intra-corporate controversy and thus, beyond corporation. If the relationship and its
incidents are merely incidental to the
the jurisdiction of the Labor Arbiter.
controversy or if there will still be
conflict even if the relationship does
not exist, then no intra-corporate
controversy exists.
Ruling:
such corporation, partnership, the company since 2000. The LA declared petitioner
or association and the State as having been illegally dismissed. Sangu appealed to
insofar as it concerns the NLRC and established petitioners status as a
stockholder and as a corporate officer and hence, his
individual franchises. The
action against respondent corporation is an intra-
second element requires that corporate controversy over which the Labor Arbiter
the dispute among the parties has no jurisdiction. NLRC modified the LAs
be intrinsically connected decision. On appeal, the CA affirmed the decision of
with the regulation of the NLRC.
corporation. If the nature of
the controversy involves Hence, this petition.
matters that are purely civil in
character, necessarily, the
case does not involve an
intra-corporate controversy. ISSUE: WON petitioners complaint for illegal
[Citations omitted.] dismissal constitutes an intra-corporate controversy.
the dispute involves corporate matters as to consider that she intended to engage in businessa rice
them as intra-corporate controversies. dealership, selling rice in wholesale. On 15
June 2005, Lietz Inc. accepted Portillos
resignation and reminded her of the
"Goodwill Clause" in the last letter
19. PORTILLO VS. RUDOLF LIETZ, INC. ET agreement she had signed. Upon receipt
AL. G.R. NO. 196539, OCTOBER 10, 2012 thereof, Portillo jotted a note thereon that the
latest contract she had signed in February
2004 did not contain any "Goodwill Clause"
referred to by Lietz Inc. In response thereto,
Petition for certiorari assailing the Resolutionll dated Lietz Inc. categorically wrote
14 October 2010 of the Court of Appeals in CA-G.R. Please be informed that the standard
SP No. I 065g I which modified its Decisionl dated prescription of prohibiting employees from
31 March 2009, thus allowing the legal compensation engaging in business or seeking employment
or petitioner Marietta N. Portillo's (Portillo) monetary with organizations that directly or indirectly
claims against respondent corporation Rudolf Lietz, compete against [Lietz Inc.] for three (3)
Inc.'s (Lietz Inc.)rll claim for liquidated damages years after resignation remains in effect.
arising from Portillos alleged violation of the
"Goodwill Clause" in the employment contract Subsequently, Lietz Inc. learned
executed by the parties. that Portillo had been hired by Ed Keller
Philippines, Limited to head its Pharma Raw
Material Department. Ed Keller Limited is
purportedly a direct competitor of Lietz Inc.
Facts
alleging grave abuse of discretion in the convinced that the claim for liquidated
labor tribunals rulings. The CA initially damages emanates from the "Goodwill
affirmed the labor tribunals, but on motion Clause of the employment contract and,
therefore, is a claim for damages arising
for reconsideration, modified its previous
from the employeremployee relations.
decision. While upholding the monetary
award in favor of Portillo in the aggregate Singapore Airlines Limited v. Pa,
sum P110, 662.16, the CA allowed legal we established that not all disputes between
an employer and his employee(s) fall within
compensation or set-off of such award of
the jurisdiction of the labor tribunals. We
monetary claims by her liability to Lietz Inc. differentiated between abandonment per se
for liquidated damages arising from her and the manner and consequent effects of
violation of the Goodwill Clause in her such abandonment and ruled that the first, is
employment contract with them. Portillos a labor case, while the second, is a civil law
motion for reconsideration was denied. case.
Hence, this petition for certiorari before the Stated differently, petitioner
SC. seeks protection under the civil laws and
claims no benefits under the Labor Code.
The primary relief sought is for
liquidated damages for breach of a
Issue contractual obligation. The other items
demanded are not labor benefits
Whether Portillos money claimes for unpaid salaries demanded by workers generally taken
may be offset against Lietz Inc.s claim for liquidated cognizance of in labor disputes, such as
damages payment of wages, overtime
compensation or separation pay. The
items claimed are the natural
consequences flowing from breach of an
Ruling obligation, intrinsically a civil dispute.
The Court, therefore, believes
Paragraph 4 of Article 217 of the and so holds that the "money claims of
Labor Code appears to have caused the workers" referred to in paragraph 3 of
reliance by the Court of Appeals on the Article 217 embraces money claims which
"causal connection between Portillos arise out of or in connection with the
monetary claims against respondents and the employer-employee relationship, or some
latters claim from liquidated damages aspect or incident of such relationship.
against the former." Put a little differently, that money claims
Art. 217. Jurisdiction of Labor of workers which now fall within the
Arbiters and the Commission. original and exclusive jurisdiction of
Labor Arbiters are those money claims
(a) Except as otherwise provided under this which have some reasonable causal
code, the Arbiters shall have original and connection with the employer-employee
exclusive jurisdiction to hear and decide, relationship.
within thirty (30) calendar days after the
submission of the case by the parties for In Dai-Chi Electronics
decision without extension, even in the Manufacturing Corporation v. Villarama,
absence of stenographic notes, the following Jr.,which reiterated the San Miguel ruling
case involving all workers, whether and allied jurisprudence, we pronounced that
agricultural or nonagricultural a non-compete clause, as in the "Goodwill
Clause" referred to in the present case, with
4. Claims for actual, moral, exemplary and a stipulation that a violation thereof makes
other forms of damages arising from the the employee liable to his former employer
employer-employee relations; (Underscoring for liquidated damages, refers to post-
supplied) employment relations of the parties
Evidently, the Court of Appeals is
That the "Goodwill Clause" in this necessarily admits that it owes the money
case is likewise a postemployment issue claimed by Portillo.
should brook no argument. There is no
Indeed, the application of
dispute as to the cessation of Portillos
compensation in this case is effectively
employment with Lietz Inc. She simply
barred by Article 113 of the Labor Code
claims her unpaid salaries and commissions,
which prohibits wage deductions except in
which Lietz Inc. does not contest. At that
three circumstances:
juncture, Portillo was no longer an employee
of Lietz Inc. The "Goodwill Clause" or the ART. 113. Wage Deduction. No employer, in
"Non-Compete Clause" is a contractual his own behalf or in behalf of any person,
undertaking effective after the cessation of shall make any deduction from wages of his
the employment relationship between the employees,
parties. In accordance with jurisprudence, except:chanroblesvirtuallawlibrary
breach of the undertaking is a civil law
(a) In cases where the worker is insured with
dispute, not a labor law case.
his consent by the employer, and the
It is clear, therefore, that while deduction is to recompense the employer for
Portillos claim for unpaid salaries is a the amount paid by him as premium on the
money claim that arises out of or in insurance;
connection with an employer-employee
(b) For union dues, in cases where the right
relationship, Lietz Inc.s claim against
of the worker or his union to check-off has
Portillo for violation of the goodwill clause
been recognized by the employer or
is a money claim based on an act done after
authorized in writing by the individual
the cessation of the employment
worker concerned; and
relationship. And, while the jurisdiction over
Portillos claim is vested in the labor arbiter, (c) In cases where the employer is
the jurisdiction over Lietz Inc.s claim rests authorized by law or regulations issued by
on the regular courts. Thus: the Secretary of Labor.
As it is, petitioner does not ask for WHEREFORE, the petition is
any relief under the Labor Code. It merely GRANTED.
seeks to recover damages based on the
parties' contract of employment as redress
for respondent's breach thereof. Such cause 20.)G.R. No. 197309: October 10, 2012
of action is within the realm of Civil Law,
and jurisdiction over the controversy ACE NAVIGATION CO., INC., VELA
belongs to the regular courts. More so must INTERNATIONAL MARINE LTD., and/or
this be in the present case, what with the RODOLFO
reality that the stipulation refers to the PAMINTUAN, Petitioners, v. TEODORICO
postemployment relations of the parties. FERNANDEZ, assisted by GLENITA
FERNANDEZ,Respondent.
The Court of Appeals was misguided. Its conclusion
was incorrect.
Facts:
There is no causal connection
between the petitioner employees claim for On October 9, 2008, seaman
unpaid wages and the respondent employers Teodorico Fernandez (Fernandez), assisted
claim for damages for the alleged "Goodwill by his wife, Glenita Fernandez, filed with
Clause" violation. Portillos claim for unpaid the National Labor Relations Commission
salaries did not have anything to do with her (NLRC) a complaint for disability benefits,
alleged violation of the employment contract with prayer for moral and exemplary
as, in fact, her separation from employment damages, plus attorneys fees, against Ace
is not "rooted" in the alleged contractual Navigation Co., Inc., Vela International
violation. She resigned from her Marine Ltd., and/or Rodolfo Pamintuan
employment. She was not dismissed. (petitioners).
Portillos entitlement to the unpaid salaries is
not even contested. Indeed, Lietz Inc.s
argument about legal compensation
their mutual compliance therewith to foster Labor Relations Commission (NLRC), pursuant to
industrial peace. Republic Act (RA) 8042 otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995
Article 260 of the Labor Code (Grievance machinery or to the original and exclusive jurisdiction of the
and voluntary arbitration) states: voluntary arbitrator or panel of voluntary arbitrators.
If there is no provision as to the voluntary arbitrators
The parties to a Collective to be appointed by the parties, the same shall be
Bargaining Agreement shall include therein appointed from the accredited voluntary arbitrators of
provisions that will ensure the mutual the National Conciliation and Mediation Board of the
observance of its terms and conditions. They Department of Labor and Employment.
shall establish machinery for the adjustment
and resolution of grievances arising from the Under the above-quoted
interpretation or implementation of their constitutional and legal provisions, the
Collective Bargaining Agreement and those voluntary arbitrator or panel of voluntary
arising from the interpretation or arbitrators has original and exclusive
enforcement of company personnel policies. jurisdiction over Fernandezs disability
claim. There is no dispute that the claim
Article 261 of the Labor Code (Jurisdiction of arose out of Fernandezs employment with
Voluntary Arbitrators or panel of Voluntary the petitioners and that their relationship is
Arbitrators): covered by a CBA the AMOSUP/TCC or
the AMOSUP-VELA CBA. The CBA
provides for a grievance procedure for the
The Voluntary Arbitrator or panel resolution of grievances or disputes which
of Voluntary Arbitrators shall have original occur during the employment relationship
and exclusive jurisdiction to hear and decide and, like the grievance machinery created
all unresolved grievances arising from the under Article 261 of the Labor Code, it is a
interpretation or implementation of the two-tiered mechanism, with voluntary
Collective Bargaining Agreement and arbitration as the last step.
those arising from the interpretation or
enforcement of company personnel
policies. Consistent with this finding,
Fernandezs contention that his complaint for
disability benefits is a money claim that falls
Article 262 of the Labor Code (Jurisdiction over within the original and exclusive jurisdiction
other labor disputes) declares: of the labor arbiter under Section 10 of R.A.
No. 8042 is untenable. We likewise reject
The Voluntary Arbitrator or panel his argument that he never referred his claim
of Voluntary Arbitrators, upon agreement of to the grievance machinery (so that no
the parties, shall also hear and decide all unresolved grievance exists as required
other labor disputes including unfair labor under Article 261 of the Labor Code), and
practices and bargaining deadlocks. that the parties to the case are not the union
and the employer.ll Needless to state, no
Further, the POEA-SEC, which such distinction exists in the parties CBA
governs the employment of Filipino and the POEA-SEC.
seafarers, provides in its Section 29 on
Dispute Settlement procedure: It bears stressing at this point that
we are upholding the jurisdiction of the
In cases of claims and disputes arising from this voluntary arbitrator or panel of voluntary
employment, the parties covered by a collective arbitrators over the present dispute, not only
bargaining agreement shall submit the claim or because of the clear language of the parties
dispute to the original and exclusive jurisdiction of CBA on the matter; more importantly, we so
the voluntary arbitrator or panel of voluntary uphold the voluntary arbitrators jurisdiction,
arbitrators. If the parties are not covered by a in recognition of the States express
collective bargaining agreement, the parties may at preference for voluntary modes of dispute
their option submit the claim or dispute to either the settlement, such as conciliation and
original and exclusive jurisdiction of the National
voluntary arbitration as expressed in the The CA granted Broadcoms petition and agreed that
Constitution, the law and the rules. the case involved an intra-corporate controversy
which, pursuant to Presidential Decree No. 902-A, as
It is settled that when the parties amended, was within the exclusive jurisdiction of the
have validly agreed on a procedure for RTC. The CA found that Cosare was indeed a
resolving grievances and to submit a
stockholder of Broadcom, and that he was listed as
dispute to voluntary arbitration then that
procedure should be strictly observed. one of the directors. Moreover, he held the position of
AVP for Sales which is listed as a corporate office.
Hence, aggrieved by the decision of the CA, he raised
it to the SC.
ISSUE:
21 G .R. No. 201298 February 5, 2014
Whether or not this involved a n intra-corporate
Cosare vs. Broadcom Asia Inc. controversy.
FACTS: RULING:
The Labor Arbiter dismissed the complaint on the The Court explained that two
ground that Cosare failed to establish that he was circumstances must concur in order for an
constructively dismissed. On appeal, the NLRC individual to be considered a corporate
reversed the Labor Arbiters decision. Broadcom officer, namely: (1) the creation of the
assailed the NLRCs ruling, raising the new argument position is under the corporations by-laws;
that the case involved an intra-corporate controversy and (2) the election of the officer is by the
and thus, within the jurisdiction of the RTC and not directors or stockholders. It is only when the
of the Labor Arbiter. officer claiming to have been illegally
dismissed is classified as such corporate pay, service incentive leave pay and holiday
officer that the issue is deemed an intra- premiums.
corporate dispute which falls within the
jurisdiction of the trial courts. Petitioner and Lt. Col. Frankhauser failed to answer
the complaint and to appear at the hearings. They,
Broadcom failed to sufficiently likewise, failed to submit their position paper, which
establish that the position of AVP for Sales the Labor Arbiter deemed a waiver on their part to do
so. The case was therefore submitted for decision on
was created by virtue of an act of its board
the basis of private respondents' position paper and
of directors, and that Cosare was specifically supporting documents.
elected or appointed to such position by the
directors. Considering that the dispute On November 21, 1988, the Labor Arbiter rendered a
particularly relates to Cosares rights and decision granting all the claims of private
obligations as a regular officer of Broadcom, respondents. He found both Lt. Col. Frankhauser and
instead of a stockholder of the corporation, petitioner "guilty of illegal dismissal" and ordered
the controversy cannot be deemed intra- them to reinstate private respondents with full back
wages, or if that is no longer possible, to pay private
corporate, the Court concluded
respondents' separation pay.
Joselito Cunanan, however, chose to bring in his own Firstly, the "Agreement Between the Republic of the
workers. As a result, the workers of the De Guzman Philippines and the United States of America
Custodial Services were requested to surrender their Concerning Military Bases," otherwise known as the
base passes to Lt. Col. Frankhauser or to petitioner. R.P. U.S. Military Bases Agreement, governed the
rights, duties, authority, and the exercise thereof by
On August 12, 1988, private respondents filed a Philippine and American nationals inside the U.S.
complaint with the Regional Arbitration Branch No. military bases in the country.
III of the NLRC, San Fernando, Pampanga, against
petitioner, Lt. Col. Frankhauser, and Cunanan for Article XIV is the governing procedure for service of
illegal dismissal and underpayment of wages. On summons on persons inside U.S. military bases.
September 9, 1988, private respondents amended
their complaint and added therein claims for Summonses and other processes issued by Philippine
emergency cost of living allowance, thirteenth-month courts and administrative agencies for United States
Armed Forces personnel within any U.S. base in the
venue for the filing of Nievas complaints Arbiter rendered a Decision, in favor of
for illegal dismissal petitioner declaring that his office had no
jurisdiction over the case.
Ruling: NLRC issued a Resolution
The filing of the complaint with the annulling the Arbiters Decision and
National Capital Region Arbitration Branch remanded the case to him for appropriate
was proper, Manila being considered as part proceedings, to determine the factual issue
of Nievas workplace by reason of his plying of the existence of employer-employee
the Legaspi City-Pasay City route. In fact, relationship between the parties. When its
Section 1(a), Rule IV of the New Rules of motion for reconsideration was rejected by
Procedure of the NLRC is merely the NLRC, petitioner filed a petition for
permissive. Provisions on venue are certiorari under Rule 65 before this Court,
intended to assure convenience for the docketed as G.R. No. 130866.
employee and his witnesses and to promote On September 16, 1998, this Court
the ends of justice provided that it is not through Justice Jose Vitug, rendered the
oppressive to the employer. landmark Decision in this case then
docketed as G.R. No. 130866, holding for
the first time that all petitions for certiorari
under Rule 65 assailing the decisions of the
NLRC should henceforth be filed with the
25 St. Martin Funeral Homes vs. NLRC, G.R. No. CA
142351, Nov. 22, 2006
Issue: WON a petitioner can file his petition for
Facts: certiorari under Rule65 to assail the decision of a
The owner of petitioner St. Martin lower court like NLRC.
Funeral Homes, Inc. (St. Martin) is
AmelitaMalabed. Prior to January 1996, Ruling:
Amelitas mother managed the funeral A petition for certiorari under
parlor. In 1995, Aricayos was granted Rule65 must first be filed at the Court of
financial assistance by Amelitas mother. As Appeals. Said court has a concurrent
a sign of appreciation, respondent extended jurisdiction on petitions for certiorari,
assistance in managing St. Martin without mandamus, prohibitions. This is in
compensation and no written employment consonance with the hierarchy of courts.
contract between Amelitas mother and
respondent Aricayos; furthermore,
respondent Aricayos was not even listed as 26. Ludo & Luym Corp., vs. Saornido, G.R. No.
an employee in the Companys payroll. 140960, January 20, 2003
When Amelitas mother died in
January 1996, Amelita took over as manager
of St. Martin. Much to her chagrin, she
found out that St. Martin had arrearages in Facts:
the payment of BIR taxes and other fees
owing to the government, but company Petitioner LUDO & LUYM CORPORATION
records tended to show that payments were
(LUDO for brevity) is a domestic corporation engaged
made thereon. As a result, Amelita removed
the authority from respondent Aricayos and in the manufacture of coconut oil, corn starch, glucose
his wife from taking part in managing St. and related products. It operates a manufacturing
Martins operations. plant located at Tupas Street, Cebu City and a wharf
Aggrieved, respondent Aricayos where raw materials and finished products are
accused St. Martin of his illegal dismissal as shipped out
Operations Manager of the company. He
believed that the cause of his termination In the course of its business operations, LUDO
was Amelitas suspicion that he pocketed engaged the arrastre services of Cresencio Lu
PhP 38,000.00 which was set aside for
Arrastre Services (CLAS) for the loading and
payment to the BIR of St. Martins valued
added taxes.On October 25, 1996, the Labor unloading of its finished products at the
the 214 complainants, as listed in the we held in San Jose vs. NLRC, that the
Annex A, shall be considered regular jurisdiction of the Labor Arbiter and the
Voluntary Arbitrator or Panel of Voluntary
employees of the respondents six (6)
Arbitrators over the cases enumerated in the
months from the first day of service at Labor Code, Articles 217, 261 and 262, can
CLAS; possibly include money claims in one form
the said complainants, being entitled to or another.] Comparatively, in Reformist
the CBA benefits during the regular Union of R.B. Liner, Inc. vs. NLRC
employment, are awarded a) sick leave, compulsory arbitration has been defined
b) vacation leave & c) annual wage and both as the process of settlement of labor
disputes by a government agency which has
salary increases during such period in
the authority to investigate and to make an
the amount of FIVE MILLION SEVEN award which is binding on all the parties,
HUNDRED SEVEN THOUSAND and as a mode of arbitration where the
TWO HUNDRED SIXTY ONE PESOS parties are compelled to accept the
AND SIXTY ONE CENTAVOS resolution of their dispute through
(P5,707,261.61) arbitration by a third party
In general, the arbitrator is expected to
decide those questions expressly stated and
petitioner raises the following issues: limited in the submission
agreement. However, since arbitration is the
WHETHER OR NOT BENEFITS final resort for the adjudication of disputes,
CONSISTING OF SALARY
the arbitrator can assume that he has the complainants affixed their signatures in the
power to make a final settlement complaints.
While the submission agreement mentioned
only the determination of the date or Petitioners alleged that the complainants were mere
regularization, law and jurisprudence give project employees in its Bohol Irrigation Project and
the voluntary arbitrator enough leeway of that 2 of the workers were charged with qualified
authority as well as adequate prerogative to
theft before the RTC. Some of the complainants had
accomplish the reason for which the law on
voluntary arbitration was created speedy already migrated to USA or had died, while 117 of
labor justice. them were still under the employ of Hanjin.
Since the parties had continued their Petitioner stated that some of the complainants had
negotiations even after the matter was raised voluntarily resigned; 14 were absent without prior
before the Grievance Procedure and the approved leave; 15 had signed a Motion to Withdraw
voluntary arbitration, the respondents had from the complaint; and many of the complainants
not refused to comply with their duty. They
were separated on account of the completion of the
just wanted the complainants to present
some proofs. The complainants cause of project. However, petitioners failed to append any
action had not therefore accrued document to support their claim.
yet. Besides, in the earlier voluntary
arbitration case aforementioned involving Labor Arbiter rendered judgment in favor of the 428
exactly the same issue and employees complainants, granting separation pay and attorney's
similarly situated as the complainants, the fees to each of them stating that the complainants
same defense was raised and dismissed by were regular employees of petitioner and their claims
Honorable Thelma Jordan, Voluntary for underpayment, holiday pay, premium pay for
Arbitrator.
holiday and rest day, 13th month pay, and service
incentive leave would be computed after sufficient
data were made available. Petitioners appealed the
27. Hansin Engineering & Construction vs. CA, decision to the NLRC, which affirmed with
G.R. No. 165910, April 10, 2006 modification the Labor Arbiter's ruling. Petitioners
filed a Motion for the Reconsideration of the decision
Facts: (with a motion to conduct clarificatory hearings)
In April 1998, 712 employees filed complaints for Issue: WON respondents are project employees.
illegal dismissal and for payment of benefits against
petitioners, before the NLRC. The complainants
averred that they were regular employees of Hanjin Ruling:
and that they were separated from employment
without any lawful or just cause. Only 521 of the
While respondent alleged that "complainants all respondent is the awardee of several construction
signed a contract of employment at the time they projects and in many occasions it has been given the
were hired indicating therein the particular project priority in the awarding of subsequent projects.
they will be working on, the period and other
conditions provided in their contracts which In the light of the above facts and circumstances, the
complainants fully knew and understood," nowhere respondent's main defense that completion of the
in the records can the said contracts be found. project worked on by the complainants constitute a
Moreover, let it be stressed that under DO No. 19, valid cause of termination is unsustainable. To repeat,
Series of 1993 on project employment, six (6) there is no substantial evidence on record to sustain
indicators are enumerated therein and one of which is this contention. The mere allegation of the
that: "(T)he termination of his employment in the respondents that under their employment contracts
particular project/undertaking is reported to the the complainants were made to understand that they
Department of Labor and Employment (DOLE) were project employees is definitely not persuasive or
Regional Office having jurisdiction over the unworthy of credence. The best evidence of which
workplace within 30 days following the date of his would have been the alleged contracts. These
separation from work x x x." employees signed duly notarized waivers/quitclaims
and who did not recant later. In the absence of
In this particular case, the records do not show that a evidence showing the contrary, said quitclaims were
similar report was ever made by respondent to the executed voluntarily and without any force or
Department of Labor and Employment. Such failure intimidation.
of respondent employer to report to the nearest
employment office of the Department of Labor, the Petitioners submitted to the NLRC dubious machine
termination of the workers it claimed as project copies of only some of respondents? contracts,
employees at the time it completed the project, is including alleged employment termination reports
proof that complainants were not project employees. submitted to the DOLE. The NLRC found the
contracts barren of probative weight and utterly
The principal test for determining whether particular insufficient to buttress the contention of petitioners
employees are properly characterized as project that respondents were only project employees.
employees is: whether or not the project employees
were assigned to carry out a specific project or Contrary to the representation of respondent's
undertaking, the duration of which were specified at counsel, the original copies of the reports made to
the time the employees were engaged for that project. DOLE were never produced and submitted to this
Predetermination of the duration or period of project Commission. Neither were they presented for
employment is essential in resolving whether one is a comparison with the machine copies. These machine
project employee or not. In the instant case, the copies were not also certified as true copies by the
completion of the project for which the complainants DOLE.
were hired was not determined at the start of their
The actual continuous employment of complainants
employment, there being no substantial proof thereof.
by respondent Hanjin since 1991 until 1995
The fact that complainants had rendered more than
overcomes the piecemeal "appointments" covering
one year of service at the time of their dismissal and
for periods of six (6) months or less. From these short
there being no substantial evidence to support that
term but repeated "appointments," it is apparent that
they were engaged to work on a specific project or
the periods have been imposed to preclude the
undertaking, overturns respondents allegation that
acquisition of tenurial security by the employee and
complainants were project employees hired for a
which kind of employment contracts should be
specific fixed project for a limited period of time.
disregarded for being contrary to public policy.
Complainants herein were, therefore, non-project
The appellate court, the NLRC and the Labor Arbiter
employees, but regular employees. Admittedly, being
are thus one in finding that respondents were not
a duly licensed contractor firm in the Philippines,
project employees, and in sustaining respondents'
claim of illegal dismissal due to petitioners? failure to to reinstate the 31 complainant-employees effective
adduce contrary evidence. Well-settled is the rule that July 1, 2001 without loss of seniority rights and
findings of fact of quasi-judicial agencies, like the
benefits; 17 of them who were previously retrenched
NLRC, are accorded not only respect but at times
were agreed to be given full and complete payment of
even finality if such findings are supported by
their respective monetary claims, while 14 others
substantial evidence. Such findings of facts can only
be set aside upon showing of grave abuse of would be paid their monetary claims minus what they
discretion, fraud or error of law, none of which have received by way of separation pay. The compromise
been shown in this case. agreement was submitted to the NLRC for approval.
The compromise agreement was approved and was
28. ) G.R. No. 166421 deemed closed and terminated.
PHILIPPINE JOURNALISTS, INC., BOBBY The Union filed another Notice of Strike on July 1,
DELA CRUZ, ARNOLD BANARES and ATTY. 2002 claiming that 29 employees where illegally
RUBY RUIZ BRUNO,petitioners, dismissed. After the retrenchment program was
vs. implemented, the members-employees who
NATIONAL LABOR RELATIONS continued working were made to sign 5 month
COMMISSION, HON. COMMS. LOURDES contract and was threatened to be dismissed if they
JAVIER, TITO GENILO and ERNESTO
refused to conform to 40% to 50% salary deduction.
VERCELES, JOURNAL EMPLOYEES UNION,
and THE COURT OF APPEALS, respondents
The NLRC forthwith issued another Resolution on
July 25, 2002, declaring that the Clarificatory Motion
The Philippine Journalists, Inc. (PJI) is a domestic
corporation engaged in the publication and sale of of complainants Floro Andrin, Jr. and Jazen M.
newspapers and magazines. The exclusive bargaining Jilhani had been mooted by the compromise
agent of all the rank-and-file employees in the agreement as they appeared to be included in
company is the Journal Employees Union (Union for paragraph 2.c and paragraph 2.d, respectively thereof.
brevity). As to the seven others who had filed a motion for
clarification, the NLRC held that they should have
Sometime in April 2005, the Union filed a notice of filed individual affidavits to establish their claims or
strike before the National Conciliation and Mediation moved to consolidate their cases with the certified
Board (NCMB), claiming that PJI was guilty of case. Thus, the NLRC granted the computation of
unfair labor practice. PJI was then going to their benefits as shown in the individual affidavits of
implement a retrenchment program due to "over- the complainants. However, as to the prayer to
staffing or bloated work force and continuing actual declare the Union guilty of unfair labor practice, to
losses sustained by the company for the past three continue with the CBA negotiation and to pay moral
years resulting in negative stockholders equity and exemplary damages, the NLRC ruled that there
of P127.0 million. was no sufficient factual and legal basis to modify its
resolution. Thus, the compromise agreement was
After submitting their respective papers, in its
approved and NCMB-NCR-NS-03-087-00 was
resolution dated May 31, 2001, the NLRC declared
deemed closed and terminated.
that the 31 complainants were illegally dismissed and
that there was no basis for the petitioners In its Resolution dated July 31, 2003, the NLRC
retrenchment program thus it ordered their ruled that the complainants were not illegally
reinstatement to their former position without loss of dismissed. The May 31, 2001 Resolution declaring
seniority rights and other other benefits, with the retrenchment program illegal did not attain
payment of unpaid salaries, bonuses and backwages. finality as "it had been academically mooted by the
compromise agreement entered into between both
Thereafter, the parties executed a Compromise parties on July 9, 2001." According to the
Agreement dated July 9, 2001, where PJI undertook Commission, it was on the basis of this agreement
that the July 25, 2002 Resolution which declared the the primacy of free collective bargaining and
case closed and terminated was issued. Thus, the May negotiations, including voluntary arbitration,
31, 2001 Resolution could not be made the basis to mediation and conciliation, as modes of settling labor
justify the alleged continued employment regularity or industrial disputes.
of the 29 complainants subsequent to their
retrenchment. ART. 227 Compromise Agreements. Any
compromise settlement, including those involving
The NLRC also declared that by their separate acts of labor standard laws, voluntarily agreed upon by the
entering into fixed-term employment contracts with parties with the assistance of the Bureau or the
petitioner after their separation from employment by regional office of the Department of Labor, shall be
virtue of retrenchment, they are deemed to have final and binding upon the parties. The National
admitted the validity of their separation from Labor Relations Commission or any court shall not
employment and are thus estopped from questioning assume jurisdiction over issues involved therein
it. The NLRC dismissed the case for lack of merit, except in case of noncompliance thereof or if there is
but directed the company to "give preference to the prima facie evidence that the settlement was obtained
separated 29 complainants should they apply for re- through fraud, misrepresentation, or coercion.
employment."
Thus, a judgment rendered in accordance with a
In its Decision dated August 17, 2004, the appellate compromise agreement is not appealable, and is
court held that the NLRC gravely abused its immediately executory unless a motion is filed to set
discretion in ruling for PJI. The compromise aside the agreement on the ground of fraud, mistake,
agreement referred only to the award given by the or duress, in which case an appeal may be taken
NLRC to the complainants in the said case, that against the order denying the motion. Under Article
is, the obligation of the employer to the 2037 of the Civil Code, "a compromise has upon the
complainants. The CA also ruled that the dismissed parties the effect and authority of res judicata," even
employees were not barred from pursuing their when effected without judicial approval; and under
monetary claims despite the fact that they had the principle of res judicata, an issue which had
accepted their separation pay and signed their already been laid to rest by the parties themselves can
quitclaims. no longer be relitigated.
agreement thus becomes a final act, and it forms part things the provision on security of tenure seeks to
and parcel of the judgment that can be enforced by a prevent.
writ of execution unless otherwise enjoined by a
restraining order. Lastly, it could not be said that the employees in this
case are barred from pursuing their claims because of
Thus, contrary to the allegation of petitioners, the their acceptance of separation pay and their signing
execution and subsequent approval by the NLRC of of quitclaims. It is settled that quitclaims, waivers
the agreement forged between it and the respondent and/or complete releases executed by employees do
Union did not render the NLRC resolution not stop them from pursuing their claims if there is
ineffectual, nor rendered it "moot and academic." a showing of undue pressure or duress. The basic
The agreement becomes part of the judgment of the reason for this is that such quitclaims, waivers and/or
court or tribunal, and as a logical consequence, complete releases being figuratively exacted through
there is an implicit waiver of the right to appeal. the barrel of a gun, are against public policy and
therefore null and void ab initio (ACD Investigation
In any event, the compromise agreement cannot bind Security Agency, Inc. v. Pablo D. Daquera, G.R. No.
a party who did not voluntarily take part in the 147473, March 30, 2004). In the case at bar, the
settlement itself and gave specific individual consent. employees were faced with impending termination.
It must be remembered that a compromise agreement As such, it was but natural for them to accept
is also a contract; it requires the consent of the whatever monetary benefits that they could get.
parties, and it is only then that the agreement may be
considered as voluntarily entered into.
29. Balagtas Multi Purpose Coop. vs. CA, G.R.
No. 159268, Oct. 27, 2006
A careful perusal of the wordings of the compromise
agreement will show that the parties agreed that the Facts:
only issue to be resolved was the question of the Balagtas Multi-Purpose
Cooperative, Inc. is a duly organized and
monetary claim of several employees.
existing cooperative under the laws of the
Philippines. Sometime in April 1991,
The findings of the appellate court are in accord with Balagtas hired Josefina G. Hipolito-Herrero,
the evidence on record, and we note with approval as part time manager in its office.
the following pronouncement: Subsequently, Josefina made known of her
intention to take a leave of absence. Her
Respondents alleged that it hired contractual proposal was immediately approved.
employees majority of whom were those retrenched However, after the lapse of her leave of
because of the increased but uncertain demand for its absence, Josefina did not report for work
anymore. Later on, she filed her resignation.
publications. Respondent did this almost immediately
Consequently Josefina filed a
after its alleged retrenchment program. Another complaint with the Provincial Office of the
telling feature in the scheme of respondent is the fact Department of Labor in Malolos, Bulacan
that these contractual employees were given contracts for illegal dismissal, and non-payment of
of five (5) month durations and thereafter, were 13th month pay or Christmas Bonus. She
offered regular employment with salaries lower than also prayed for reinstatement and paid
their previous salaries. The Labor Code explicitly backwages as well as moral damages.
prohibits the diminution of employees benefits. The Labor Arbiter rendered
judgment in favor of complainant and
Clearly, the situation in the case at bar is one of the
against respondents and ordered the latter to
pay the former 13th month pay, backwages
his wife were no longer allowed to some of the respondents were still working
participate in the management of St. Martin. for petitioner, others were put on stay home
status on varying dates in the years 1994,
These facts, as admitted by the petitioner and the 1995, and 1996 and were no longer
affidavits of St. Martin's witnesses, could have furnished with work thereafter. Together,
been examined more in detail by the Labor respondents filed a Complaint with the
Arbiter in a hearing to convince himself that there NLRC for illegal dismissal, regularization,
wage differentials, damages and attorneys
was indeed no employment relationship between
fees. Petitioner denied that respondents were
the parties as he originally found. its employees. It explained that it found the
need to engage external services to augment
CA decision affirmed. Petition DENIED.
its regular workforce, which was affected by
peaks in operation, work backlogs,
absenteeism, and excessive leaves. It used
to engage the services of individual workers
for definite periods specified in their
31. DOLE Philippines, Inc. vs. Medel Esteva, et al.
employment contracts and never exceeding
[GR No. 161115 November 30, 2006]
one year. However, such an arrangement
became the subject of a labor case, in which
FACTS:
petitioner was accused of preventing the
regularization of such workers.
Petitioner is a corporation engaged
principally in the production and processing
ISSUES:
of pineapple for the export market.
Respondents are members of the Cannery
1. Whether or not the court of appeals was
Multi-Purpose Cooperative (CAMPCO).
correct when it made its own factual
CAMPCO was organized in accordance
findings and disregarded the factual
with Republic Act No. 6938, otherwise
findings of the labor arbiter and the
known as the Cooperative Code of the
NLRC.
Philippines. Pursuant to the Service
Contract, CAMPCO members rendered
2. Whether or not CAMPCO was a mere
services to petitioner. The number of
labor-only contractor.
CAMPCO members that report for work and
the type of service they performed depended
RULING:
on the needs of petitioner at any given time.
Although the Service Contract specifically
Yes. The Court in the exercise of its
stated that it shall only be for a period of six
equity jurisdiction may look into the records
months, i.e., from 1 July to 31 December
of the case and re-examine the questioned
1993, the parties had apparently extended or
findings. As a corollary, this Court is clothed
renewed the same for the succeeding years
with ample authority to review matters, even
without executing another written contract.
if they are not assigned as errors in their
It was under these circumstances that
appeal, if it finds that their consideration is
respondents came to work for petitioner.
necessary to arrive at a just decision of the
DOLE organized a Task Force that
case. The same principles are now
conducted an investigation into the alleged
necessarily adhered to and are applied by the
labor-only contracting activities of the
Court of Appeals in its expanded jurisdiction
cooperatives. The Task Force identified six
over labor cases elevated through a petition
cooperatives that were engaged in labor-
for certiorari; thus, we see no error on its
only contracting, one of which was
part when it made anew a factual
CAMPCO. In this case, respondents alleged
determination of the matters and on that
that they started working for petitioner at
basis reversed the ruling of the NLRC.
various times in the years 1993 and 1994, by
virtue of the Service Contract executed
Yes. CAMPCO was a mere labor-
between CAMPCO and petitioner. All of
only contractor. First, although petitioner
the respondents had already rendered more
touts the multi-million pesos assets of
than one year of service to petitioner. While
CAMPCO, it does well to remember that
such were amassed in the years following its service. In the Service Contract of 1993,
establishment. In 1993, when CAMPCO CAMPCO agreed to assist petitioner in its
was established and the Service Contract daily operations, and perform odd jobs as
between petitioner and CAMPCO was may be assigned. CAMPCO complied with
entered into, CAMPCO only had P6,600.00 this venture by assigning members to
paid-up capital, which could hardly be petitioner. Apart from that, no other
considered substantial. It only managed to particular job, work or service was required
increase its capitalization and assets in the from CAMPCO, and it is apparent, with
succeeding years by continually and such an arrangement, that CAMPCO merely
defiantly engaging in what had been acted as a recruitment agency for petitioner.
declared by authorized DOLE officials as Since the undertaking of CAMPCO did not
labor-only contracting. Second, CAMPCO involve the performance of a specific job,
did not carry out an independent business but rather the supply of manpower only,
from petitioner. It was precisely established CAMPCO clearly conducted itself as a
to render services to petitioner to augment labor-only contractor. Lastly, CAMPCO
its workforce during peak seasons. Petitioner members, including respondents, performed
was its only client. Even as CAMPCO had activities directly related to the principal
its own office and office equipment, these business of petitioner. They worked as can
were mainly used for administrative processing attendant, feeder of canned
purposes; the tools, machineries, and pineapple and pineapple processing, nata de
equipment actually used by CAMPCO coco processing attendant, fruit cocktail
members when rendering services to the processing attendant, and etc., functions
petitioner belonged to the latter. Third, which were, not only directly related, but
petitioner exercised control over the were very vital to petitioners business of
CAMPCO members, including respondents. production and processing of pineapple
Petitioner attempts to refute control by products for export. The declaration that
alleging the presence of a CAMPCO CAMPCO is indeed engaged in the
supervisor in the work premises. Yet, the prohibited activities of labor-only
mere presence within the premises of a contracting, then consequently, an employer-
supervisor from the cooperative did not employee relationship is deemed to exist
necessarily mean that CAMPCO had control between petitioner and respondents, since
over its members. Section 8(1), Rule VIII, CAMPCO shall be considered as a mere
Book III of the implementing rules of the agent or intermediary of petitioner.
Labor Code, as amended, required for
permissible job contracting that the Since respondents are now
contractor undertakes the contract work on recognized as employees of petitioner, this
his account, under his own responsibility, Court is tasked to determine the nature of
according to his own manner and method, their employment. In consideration of all
free from the control and direction of his the attendant circumstances in this case, this
employer or principal in all matters Court concludes that respondents are regular
connected with the performance of the work employees of petitioner. As such, they are
except as to the results thereof. As alleged entitled to security of tenure. They could
by the respondents, and unrebutted by only be removed based on just and
petitioner, CAMPCO members, before authorized causes as provided for in the
working for the petitioner, had to undergo Labor Code, as amended, and after they are
instructions and pass the training provided accorded procedural due process. Therefore,
by petitioners personnel. It was petitioner petitioners acts of placing some of the
who determined and prepared the work respondents on stay home status and not
assignments of the CAMPCO members. giving them work assignments for more than
CAMPCO members worked within six months were already tantamount to
petitioners plantation and processing plants constructive and illegal dismissal.
alongside regular employees performing
identical jobs, a circumstance recognized as
an indicium of a labor-only contractorship. G32.R)No15407u,Febary6
Fourth, CAMPCO was not engaged to INTERCOALBDSGP.VNI
perform a specific and special job or
ACFTS: incentive leave pay and 13th month pay. The Court of
IrenoPagibp(sdt)wmlynAGeragMofhItcildBnsCrpa(eo)fmyM1986utilvhsnrpoeAg2,198.RsdntrifomehpylSb2,198. Appeals reinstated the Arbiters ruling so petitioner
OnApril12,98esodtfacvhwTCRQuezniy,Br93agstmbhofdAnirBO()petalg,mohrsn-ytefidupcaom.AnswlebyJitSago,hdfnserulackojit,pndsmwbryoclaie,uthnsdRTC.gSoiafleptrchwCAngiedaStospfrlckjunehaidtTCRsOr. appealed to the Supreme Court by way of review on
Theraft,spondwlcbyBOAVi-PertfokMngaulJ192.HsdApir3Oy4,6eontflagisprmcelda,otnipyrmbfsudc,age.ThLborAit()dspnaemhwuklbfgc,dtpynoisam,gedtyrnf.PiopalhNLRCbutdenrsfiopah,lwdme.Tcisonafluxtery.
certiorari.
ISUE:
WpONonresdtclaimuf hypresbd.
ISSUE/S:
RULING:
Yesp.RondtclaimhrybsfSep19.Inadito,hclmvrespfnakt,bgwcdoeisujnhmpyltfro1986avbescdi.
The case revolves around two specific points on (1)
TheaplicbwntsAr291ofLaCdewhicpvstlymnargfoe-pltniscudghrfyvoCealbiwhnt3r)(ysfomecauidrh;wtsylbefov.a
Thetrmyonclaisv rgfmneploy-atihscrfnuedpby(a)tilgocn,wxreudjambythocn,i()wrkeldgmftbhyor. whether or not Lebatique was illegally dismissed and
Onthispo,eCurldagmcntofivpsherugaocitnmls,dvurbayonetplifhsrxyacempotnughidbceatl.nH,whfigoCvsecudatrphnigofe-ysctvpdr,nqumialhbyeCAtockrsdfjnvlaheigtoprscdnwhfleiymoca,vgrspndxthleoiaugcvdsnbflet.Thrio-yapscvednthgbiruyflvoCpasendtcihlrybeponSm2,19tasfrhicopeymlnStb2,198.Csquwherpondtfilcmags,epronytimbfdagsJu24l,196hmiceryadnb pscito. on (2) whether or not he is a field personnel who is
not entitled to overtime pay.
work in the field can be determined with reasonable responden school filed with Regional
certainty by the employer. In so doing, an inquiry Arbitration Branch No. IV of the NLRC a
must be made as to whether or not the employees petition to declare as illegal the strike staged
by petitioner.
time and performance are constantly supervised by
On September 28, 1998, the Labor
the employer. Arbiter (LA) handling the consolidated
cases rendered a Decision dismissing the
Given the above definition, Lebatique is not a field money claims and declaring the strike
personnel for the following reasons: illegal. Upon appeal to the NLRC, the
petition was dismissed. Petitioner then
(1) company drivers, including Lebatique, availed of an action for certiorari with the
are directed to deliver the goods at a specified time CA but was also dismissed.
and place;
ISSUES:
(2) they are not given the discretion to 1. Whether or nor the CA erred in holding that
solicit, select and contact prospective clients; and the factual findings of the NLRCcannot be
revied in certiorari proceedings?
(3) Far East issued a directive that company 2. Whether or not the teaching overload should
drivers should stay at the clients premises during be included in the basis in the computation
of their 13th month pay?
truck-ban hours which is from 5:00 to 9:00 a.m. and
5:00 to 9:00 p.m. RULING:
On the first issue
34. LETRAN CALAMBA FACULTY and The Court finds no error in the
EMPLOYEES ASSOCIATION, petitioner, vs. ruling of the CA that since nowhere in the
NATIONAL LABOR RELATIONS petition is there any acceptable
COMMISSION and COLEGIO DE SANJUAN demonstration that the LA or the NLRC
DE LETRAN CALAMBA, INC.,respondent. acted either with grave abuse of discretion
or without or in excess of its jurisdiction, the
FACTS: appellate court has no reason to look into the
On October 8, 1992, the Letran correctness of the evaluation of evidence
Calamba Faculty and Employees which supports the labor tribunals' findings
Association filed with Regional Arbitration of fact.
Branch No. IV of the NLRC a Complaint The findings of the Labor Arbiter,
against Colegio de San Juan de Letran, when affirmed by the NLRC and the CA,
Calamba, Inc for collection of various are binding on the Supreme Court unless
monetary claims due its members. The patently erroneous. Thus, in a petitioner for
complaint alleges among many things, that review on certiorari, this Courts
in the computation for 13th month pay of its jurisdiction is limited to reviewing errors of
academic personnel respondent does not law in the absence of any showing that the
include as basis therefor their compensation factual findings complained of are devoid of
for overloads, that respondent has not paid support in the records or are glaringly
the wage increase, the salary increase due to erroneous.
the non-academic personnel as a result of In petitions for review
job grading has not been given, that the acts on certiorari like the instant case, the Court
of the respondent has resulted in diminution invariably sustains the unanimous factual
of benefits of the faculty members. In its findings of the LA, the NLRC and the CA,
position paper, respondent denied all the specially when such findings are supported
allegations. by substantial evidence and there is no
Prior to the filing of the above- cogent basis to reverse the same, as in this
mentioned complaint, petitioner filed a case.22
separate complaint against the respondent
for money claims with Regional Office No. On the second issue
IV of the Department of Labor and Settled is the doctrine that when an
Employment (DOLE). On the other hand, administrative or executive agency renders
pending resolution in another NLRC case, an opinion or issues a statement of policy, it
merely interprets a pre-existing law and the had issued a Board Resolution which: (1)
administrative interpretation is at best allowed the expiration after 31 July 2000 of
advisory for it is the courts that finally LRTAs MOA with petitioner MTO; and (2)
determine what the law means. Hence, while directed the LRTA to take over the
the DOLE order may not be applicable, the operations and maintenance of the LRT
Court finds that overload pay should be Line. By virtue of said Resolution,
excluded from the computation of the 13 th petitioner MTO sent termination notices to
month pay of petitioners members. its employees, including herein respondents.
In the same manner that payment
for overtime work and work performed Resultantly, respondents filed with
during special holidays is considered as the Labor Arbiter Complaints[4] against
additional compensation apart and distinct petitioners and the LRTA for the following:
from an employee's regular wage or basic (1) illegal dismissal; (2) unfair labor practice
salary, an overload pay, owing to its very for union busting; (3) moral and exemplary
nature and definition, may not be considered damages; and (4) attorneys fees.
as part of a teacher's regular or basic salary,
because it is being paid for additional work On 13 September 2004, the Labor
performed in excess of the regular teaching Arbiter rendered judgment in favor of
load. respondents.
court. As the Court of Appeals reasoned, the conditionally accepted by the NLRC subject
issue before the NLRC is both factual and to the following conditions specified in
legal at the same time, involving as it does its 24 February 2006Order:
the requirements of the property bond for
the perfection of the appeal, as well as the The conditional acceptance of petitioners property
finding that petitioners failed to perfect the bond was subject to the submission of the following:
same. Evidently, the burden is on 1) Certified copy of Board Resolution or a Certificate
petitioners seeking exception to the rule to from the Corporate Secretary of Light Rail Transit
show sufficient justification for dispensing Authority stating that the Corporation President is
with the requirement. Certiorari cannot be authorized by a Board Resolution to submit title as
resorted to as a shield from the adverse guarantee of judgment award; 2) Certified Copy of
consequences of petitioners' own omission the Titles issued by the Registry of Deeds of Pasay
of the filing of the required motion for City; 3) Certified Copy of the current tax declarations
reconsideration. of Titles; 4) Tax clearance from the City Treasurer of
Pasay City; 5) Appraisal report of an accredited
Nonetheless, even if we are to appraisal company attesting to the fair market value
disregard the petitioners procedural faux of property within ten (10) days from receipt of this
pas with the Court of Appeals, and proceed Order. Failure to comply therewith will result in the
to review the propriety of the 19 May 2006 dismissal of the appeal for non-perfection thereof.
NLRC Resolution, we still arrive at the
conclusion that the NLRC did not err in
denying petitioners appeal for its failure to
file a bond in accordance with the Rules of 36. J. K. MERCADO & SONS AGRICULTURAL
Procedure of the NLRC. ENTERPRISES, INC., vs. STO. TOMAS
FACTS:
In cases involving a monetary
award, an employer seeking to appeal the On December 3, 1993, the Regional Tripartite Wages
decision of the Labor Arbiter to the NLRC is and Productivity Board, Region XI, issued Wage
unconditionally required by Article 223of Order No. RTWPB-XI-03, granting a Cost of Living
the Labor Code to post a cash or surety bond Allowance (COLA) to covered workers.
equivalent to the amount of the monetary
award adjudged. It should be stressed that On January 28, 1994, petitioner filed an application
the intention of lawmakers to make the bond for exemption from the coverage of the aforesaid
an indispensable requisite for the perfection wage order. Thus, however, was denied by the
of an appeal by the employer is underscored regional wage board in an Order dated April 11,
by the provision that an appeal by the 1994.
employer may be perfected only upon the
posting of a cash or surety bond. The word
only makes it perfectly clear that the Notwithstanding the said order, private respondents
lawmakers intended the posting of a cash or were not given the benefits due them under Wage
surety bond by the employer to be the Order No. RTWPB-XI-03.
exclusive means by which an employers
appeal may be perfected. Moreover, it bears On July 10, 1998, private respondents filed an
stressing that the perfection of an appeal in Urgent Motion for Writ of Execution, and Writ of
the manner and within the period prescribed Garnishment seeking the enforcement of subject
by law is not only mandatory but wage order against several entities including herein
jurisdictional, and failure to conform to the petitioner.
rules will render the judgment sought to be
reviewed final and unappealable. It cannot On October 7, 1998, the OIC-Regional Director,
be overemphasized that the NLRC Rules, Region XI, issued a Writ of Execution for the
akin to the Rules of Court, promulgated by enforcement of the Order dated April 11, 1994 of the
authority of law, have the force and effect of Regional Tripartite Wages and Productivity Board.
law.[
On November 17, 1998 and November 23, 1998,
As borne by the records, petitioners respectively, petitioner filed a Motion to Quash the
filed a property bond which was
Writ of Execution and a Supplemental Motion to the Art. 291 of the Labor Code applies to money claims
Motion to Quash. Petitioner argued that herein in general and provides for a 3-year prescriptive
private respondents' right had already prescribed due period to file them.
to their failure to move for the execution of the April On the other hand, respondent employees' money
11, 1994 Order within the period provided under claims in this case had been reduced to a judgment, in
Article 291 of the Labor Code, as amended, or within the form of a Wage Order, which has become final
three (3) years from the finality of the said order. and executory. The prescription applicable, therefore,
is not the general one that applies to money claims,
Ruling that the benefits which remained unpaid have but the specific one applying to judgments. Thus, the
not prescribed and that the private respondents need right to enforce the judgment, having been exercised
not file a claim to be entitled thereto, the Regional within five years, has not yet prescribed.
Director denied the Motion to Quash in an Order Stated otherwise, a claimant has three years to press a
dated January 7, 1999. money claim. Once judgment is rendered in her
favor, she has five years to ask for execution of the
Not satisfied with the denial of its motion to quash, judgment, counted from its finality. This is consistent
petitioner filed a Notice of Appeal on January 29, with the rule on statutory construction that a general
1999. provision should yield to a specific one and with the
mandate of social justice that doubts should be
resolved in favor of labor.
Petitioner argued on appeal that the Regional
Director abused his discretion in issuing the writ of
execution since it was not a party to the case. B. NO.
Petitioner likewise argued that the Regional Director
abused his discretion in issuing the writ of execution Clearly, petitioner's contention is premised on the
in the absence of any motion filed by private mistaken belief that the right of private respondents
respondents. Petitioner likewise claimed that since to recover their wage differential or COLA under
more than three (3) years have already elapsed from Wage Order No. 03 is still a contestable issue.
the time of the finality of the order dated April 11, It must be emphasized that the order dated April 11,
1994, the right of private respondents to claim the 1994 had long become final and executory. Petitioner
benefits under the same had already prescribed. did not appeal the said order. Having failed to avail of
the remedy of appeal of the said order, petitioner
However, the appeal to the CA was denied. On March cannot belatedly avoid its duty to comply with the
2, 2001, petitioner filed a Motion for Reconsideration said order by insisting that a money claim must first
but the same was denied for lack of merit by public be filed by herein private respondents. A contrary
respondent in an Order dated March 14, 2002. Hence, ruling would result to absurdity and would even
this petition. unjustly benefit petitioner who for quite sometime
had exerted every effort to avoid the obligation of
giving the wage differential or COLA granted under
ISSUES: Wage Order No. 3.
WON the claim of the private respondents for cost of
living allowance (COLA) pursuant to Wage Order 37. J. Phil. Marine Inc., vs. NLRC, G.R. No.
No. RTWPB-XI-03 has already prescribed because of 1753661, August 11, 2008
the failure of the respondents to make the appropriate Facts:
claim within the three (3) year prescriptive period Warlito E. Dumalaog (respondent),
provided by Article 291 of the Labor Code, as who served as cook aboard vessels plying
amended. overseas, filed on March 4, 2002 before the
National Labor Relations Commission
WON a money claim must be filed first by private (NLRC) a pro-forma complaint1 against
respondents against petitioner for the latter's refusal petitioners manning agency J-Phil Marine,
to pay the COLA granted under WO Inc. (J-Phil), its then president Jesus
Candava, and its foreign principal Norman
Shipping Services for unpaid money
RULING:
claims, moral and exemplary damages, and
attorneys fees.
A. NO. Respondent thereafter filed two
amended pro forma complaints2 praying for
the award of overtime pay, vacation leave jurisdiction over issues involved therein
pay, sick leave pay, and disability/medical except in case of non-compliance thereof or
benefits, he having, by his claim, contracted if there is prima facie evidence that the
enlargement of the heart and severe thyroid settlement was obtained through fraud,
enlargement in the discharge of his duties as misrepresentation, or coercion.
cook which rendered him disabled. That a client has undoubtedly the
Respondents total claim against right to compromise a suit without the
petitioners was P864,343.30 plus intervention of his lawyer24 cannot be
P117,557.60 representing interest and gainsaid, the only qualification being that if
P195,928.66 representing attorneys fees.3 such compromise is entered into with the
By Decision4 of August 29, 2003, intent of defrauding the lawyer of the fees
Labor Arbiter Fe Superiaso-Cellan justly due him, the compromise must be
dismissed respondents complaint for lack of subject to the said fees. 25 In the case at bar,
merit. there is no showing that respondent intended
On appeal,5 the NLRC, by Decision to defraud his counsel of his fees. In fact, the
of September 27, 2004, reversed the Labor Quitclaim and Release, the execution of
Arbiters decision and awarded which was witnessed by petitioner J-Phils
US$50,000.00 disability benefit to president Eulalio C. Candava and one
respondent. It dismissed respondents other Antonio C. Casim, notes that the 20%
claims, however, for lack of basis or attorneys fees would be "paid 12 April 2007
jurisdiction.6 Petitioners Motion for P90,000."
Reconsideration7 having been denied by the
NLRC,8 they filed a petition for certiorari 9
before the Court of Appeals. 38. Sy vs. ALC Industries, G.R. No. 168339,
By Resolution10 of September 22, October 10, 2008
2005, the Court of Appeals dismissed
petitioners petition for, inter alia, failure to
attach to the petition all material documents,
and for defective verification and Facts:
certification. Petitioners Motion for Petitioner was hired by respondent
Reconsideration of the appellate courts corporation ALCII as a supervisor in its purchasing
Resolution was denied;11 hence, they filed office. She was thereafter assigned to ALCII's
the present Petition for Review on construction project in Davao City as business
Certiorari. manager and supervisor of the Administrative
During the pendency of the case Division. Her Davao assignment was from May 1997
before this Court, respondent, against the to April 15, 1999.
advice of his counsel, entered into a Petitioner alleged that respondents refused
compromise agreement with petitioners. He to pay her salary beginning August 1998 and
thereupon signed a Quitclaim and Release allowances beginning June 1998, despite her almost
subscribed and sworn to before the Labor weekly verbal follow-up. Petitioner filed a complaint
Arbiter. before the labor arbiter for unpaid salaries and
Issues: allowances. Despite several notices and warnings,
WON the compromise agreement is valid even respondents did not file a position paper to controvert
without the intervention of the counsel. petitioner's claims. The case was submitted for
Held: resolution based solely on petitioner's allegations and
Yes. The compromise agreement is valid even evidence.
without the intervention of the counsel. In his June 30, 2000 decision, the labor
Article 227 of the Labor Code arbiter ordered ALCII and/or Dexter Ceriales to pay
provides: petitioner P282,560 representing her unpaid salary
Any compromise settlement, and allowance.
including those involving labor standard Respondents filed an appeal with motion for
laws, voluntarily agreed upon by the reduction of bond in the National Labor Relations
parties with the assistance of the Department Commission (NLRC) without posting any cash or
of Labor, shall be final and binding upon the surety bond. In a resolution dated September 6, 2001,
parties. The National Labor Relations the NLRC dismissed respondents' appeal. It ruled that
Commission or any court shall not assume respondents failed to adduce substantial evidence to
support their arguments of non-liability. Moreover, it is apparently intended to assure the workers
found no justifiable reason to grant a reduction in the that if they prevail in the case, they will
required bond. receive the money judgment in their favor
Respondents were able to file a motion for upon the dismissal of the employers' appeal.
reconsideration on time, accompanied by a joint It was intended to discourage employers
undertaking/declaration in lieu of the cash or surety from using an appeal to delay, or even
bond. Nevertheless, respondents' motion for evade, their obligation to satisfy their
reconsideration was denied. employee's just and lawful claims.
On August 2, 2002, respondents filed a The explanation advanced by respondents for their
motion for clarification but this was likewise denied. failure to pay the appeal bond belies their claim. The
Respondents questioned the NLRC's denial of their NLRC found that respondents did not pay the appeal
motion for clarification and reconsideration in the CA bond on the mistaken notion that they were not liable
via a petition for certiorari and prohibition. for the monetary award and had already ceased
In its March 30, 2005 decision, the CA set operations due to bankruptcy. Respondents belatedly
aside the resolutions of the NLRC and the decision of filed a bond with their motion for reconsideration of
the labor arbiter and dismissed petitioner's complaint. the NLRC's dismissal of their appeal. We cannot
countenance such flagrant disregard of established
Issue: WON the decision of the Labor Arbiter has rules of procedure on appeals.
become final and executory. Moreover, the filing of a joint
undertaking/declaration, filed way beyond the ten-
Ruling: day reglementary period for perfecting an appeal and
Article 223. APPEAL. - Decisions, awards, as a substitute for the cash or surety bond, did not
or orders of the Labor Arbiter are final and operate to validate the lost appeal.
executory unless appealed to the Commission by The decision of the labor arbiter therefore
any or both parties within ten calendar days from became final and executory for failure of respondents
receipt of such decisions, awards, or orders. xxx. to perfect their appeal within the reglementary
In case of a judgment involving a monetary period. Clearly, the CA no longer had jurisdiction to
award, an appeal by the employer may be entertain respondents' appeal from the labor arbiter's
perfected only upon the posting of a cash or decision.
surety bond issued by a reputable bonding Respondents point out that we have
company duly accredited by the occasionally allowed exceptions to mandatory and
Commission in the amount equivalent to the jurisdictional requirements in the perfection of
monetary award in the judgment appealed appeals, such as disregarding unintended lapses on
from. (emphasis supplied) the basis of strong and compelling reasons. This is
Section 1, Rule VI of the Rules of true. However, the obvious motive behind
Procedure of the NLRC, as amended, respondents' plea for liberality is to thwart petitioner's
likewise provides that the appeal must be claims. This we cannot allow. Respondents' lapses
filed within ten days from receipt of the were far from unintentional. They were deliberate
decision, resolution or order of the labor attempts to circumvent established rules.
arbiter. Moreover, Section 6 of the same Respondents' other contention that they were
rules provides that an appeal by the deprived of due process is likewise devoid of merit.
employer may be perfected only upon the Due process is satisfied when the parties are afforded
posting of a cash or surety bond. As the right fair and reasonable opportunity to explain their
to appeal is merely a statutory privilege, it respective sides of the controversy. In Mariveles
must be exercised only in the manner and in Shipyard Corp. v. CA, we held:
accordance with the provisions of the law. The requirements of due process in labor
Otherwise, the right to appeal is lost. cases before a Labor Arbiter is satisfied
In a long line of cases, we have ruled that when the parties are given the
the payment of the appeal bond is a jurisdictional opportunity to submit their position
requisite for the perfection of an appeal to the NLRC. papers to which they are supposed to attach
The lawmakers intended to make the posting of a all the supporting documents or
cash or surety bond by the employer the exclusive documentary evidence that would prove
means by which an employer's appeal may be their respective claims, in the event that the
perfected. The rationale for this rule is: Labor Arbiter determines that no formal
The requirement that the employer post a hearing would be conducted or that such
cash or surety bond to perfect its/his appeal hearing was not necessary. (emphasis
government and has the capacity to sue and be sued. In its position paper, Lietz admitted liability for
Thus, it cannot evade execution, and its funds may be Portillos money claims. However, Lietz raised the
subject to garnishment or levy. However, before defense of legal compensation: Portillos money
execution may be had, a claim for payment of the claims should be offset against her liability to Lietz
judgment award must first be filed with COA for liquidated damages for Portillos breach of the
pursuant to Commonwealth Act No. 327. Goodwill Clause in the employment contract when
she became employed with Ed Keller.
42. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No.
196539, October 10, 2012 Issue:
Should the claims of Portillo against Lietz for unpaid
Facts: wages, commissions, etc. be offset against her
Portillo was a Sales Representative of Rudolf Lietz, liability to Lietz for damages from breach of the
Inc. pharmaceutical business. Portillo signed an Goodwill Clause in the contract?
employment contract containing a Goodwill Clause
as follows: Ruling:
No, it should not be offset.
It remains understood and you agreed that,
on the termination of your employment by While Portillos claim for unpaid salaries is a money
act of either you or [Lietz Inc.], and for a claim that arises out of or in connection with an
period of three (3) years thereafter, you employer-employee relationship, Lietz claim
shall not engage directly or indirectly as against Portillo for violation of the goodwill clause is
employee, manager, proprietor, or solicitor a money claim based on an act done after the
for yourself or others in a similar or cessation of the employment relationship. And,
competitive business or the same character while the jurisdiction over Portillos claim is
of work which you were employed by [Lietz vested in the labor arbiter, the jurisdiction over
Inc.] to do and perform. Should you breach Lietz Inc.s claim rests on the regular courts.
this good will clause of this Contract, you
shall pay [Lietz Inc.] as liquidated damages The difference in the nature of the credits that one has
the amount of 100% of your gross against the other, conversely, the nature of the debt
compensation over the last 12 months, it one owes another, which difference in turn results in
being agreed that this sum is reasonable and the difference of the forum where the different credits
just. can be enforced, prevents the application of
compensation. The labor tribunal does not have
Portillo subsequently resigned from her employment jurisdiction over the civil case of breach of contract.
with Lietz. She demanded from Lietz Inc. for the
payment of her remaining salaries and commissions,
which were not paid to her upon such resignation.
Later, and within the 3-year prohibitory period, Lietz
learned that Portillo was hired by Ed Keller 43. Building Care Corp. vs. Macaraeg, G.R. No.
Philippine as head of its Pharma Raw Material 198357, December 10, 2012
Department. Ed Keller is direct competitor of Lietz.
Petitioners are in the business of providing security
As Portillos demand for remaining salaries and services to their clients. They hired respondent as a
commissions from Lietz still went unheeded, she security guard beginning August 25, 1996, assigning
filed a complaint with the NLRC for non-payment of her at Genato Building in Caloocan City. However,
1 months salary, 2 months commission, 13th on March 9, 2008, respondent was relieved of her
month pay, plus moral, exemplary and actual post. She was re-assigned to Bayview Park Hotel
damages and attorneys fees. from March 9-13, 2008, but after said period, she was
allegedly no longer given any assignment. Thus, on
September 9, 2008, respondent filed a complaint Whether the CA erred in liberally applying the rules
against petitioners for illegal dismissal, of procedure and ruling that respondent's appeal
underpayment of salaries, non-payment of separation should be allowed and resolved on the merits despite
pay and refund of cash bond. Conciliation and having been filed out of time.
mediation proceedings failed, so the parties
were ordered to submit their respective position
papers.
RULING:
amplest opportunity for the proper and just Attached to the letter agreement was a "List of
determination of his cause, free from the constraints Messengers assigned at Philippine Bank of
of technicalities," considering that the belated filing Communications" which list included, as item No. 5
thereof, the name of private respondent Ricardo
of respondent's appeal before the NLRC was the fault
Orpiada.
of respondent's former counsel. Note, however, that neither
respondent nor her former counsel gave any explanation or
Ricardo Orpiada was thus assigned to work with the
reason citing extraordinary circumstances for her petitioner bank. As such, he rendered services to the
lawyer's failure to abide by the rules for filing an bank, within the premises of the bank and alongside
appeal. Respondent merely insisted that she had not other people also rendering services to the bank.
been remiss in following up her case with said There was some question as to when Ricardo Orpiada
lawyer. It is, however, an oft-repeated ruling that commenced rendering services to the bank. As noted
the negligence and mistakes of counsel bind the above, the letter agreement was dated January 1976.
However, the position paper submitted by (CESI) to
client. A departure from this rule would bring
the National Labor Relations Commission stated that
about never-ending suits, so long as lawyers could (CESI) hired Ricardo Orpiada on 25 June 1975 as a
allege their own fault or negligence to support Tempo Service employee, and assigned him to work
the clients case and obtain remedies and reliefs with the petitioner bank "as evidenced by the
already lost by the operation of law. appointment memo issued to him on 25 June 1975. "
Be that as it may, on or about October 1976, the
petitioner requested (CESI) to withdraw Orpiada's
assignment because, in the allegation of the bank,
It should also be borne in mind that the right of the Orpiada's services "were no longer needed."
winning party to enjoy the finality of the resolution of
the case is also an essential part of public policy and On 29 October 1976, Orpiada instituted a complaint
the orderly administration of justice. Hence, such in the Department of Labor (now Ministry of Labor
and Employment) against the petitioner for illegal
right is just as weighty or equally important as the
dismissal and failure to pay the 13th month pay
right of the losing party to appeal or seek provided for in Presidential Decree No. 851. This
reconsideration within the prescribed period. complaint was docketed as Case No. R04-1010184-
76-E.After investigation, the Office of the Regional
Director, Regional Office No. IV of the Department
of Labor, issued an order dismissing Orpiada's
When the Labor Arbiter's Decision became final, complaint for failure of Mr.Orpiada to show the
petitioners attained a vested right to said judgment. existence of an employer-employee relationship
between the bank and himself.
44. PHILIPPINE BANK OF
COMMUNICATIONS vs. Despite the foregoing order, Orpiada succeeded in
THE NATIONAL LABOR RELATIONS having his complaint certified for compulsory
COMMISSION et al. G.R. No. L-66598 arbitration in Case No. RB-IV-11187-77
December 19, 1986 entitled "Ricardo Orpiada, complaint vs. Philippine
Bank of Communications, respondent." During the
FACTS: compulsory arbitration proceedings, CESI was
brought into the picture as an additional respondent
by the bank. Both the bank and (CESI) stoutly
Petitioner Philippine Bank of Communications and maintained that (CESI) (and not the bank) was the
the Corporate Executive Search Inc. (CESI) entered employer of Orpiada.
into a letter agreement dated January 1976 under
which (CESI) undertook to provide "Tempo[rary]
Services" to petitioner Consisting of the "temporary ISSUE:
services" of eleven (11) messengers. The contract
period is described as being "from January 1976." Whether or not an employer-employee relationship
The petitioner in truth undertook to pay a "daily existed between the petitioner bank and private
service rate of P18, " on a per person basis. respondent Ricardo Orpiada. The petitioner bank
maintains that no employer-employee relationship
was established between itself and Ricardo Orpiada
and that Ricardo Orpiada was an employee of (CESI) "labor only" contracting exists in a given case, the
and not of the bank. statute itself implies or establishes an employer-
employee relationship between the employer (the
The second ("payment of wages") and third ("power owner of the project) and the employees of the "labor
of dismissal") factors suggest that the relevant only" contractor, this time for
relationship was that subsisting between (CESI) and a comprehensive purpose: "employer for purposes
Orpiada, a relationship conceded by (CESI) to be one of this Code, to prevent any violation or
between employer and employee. Upon the other circumvention of any provision of this Code. " The
hand, the first ("selection and engagement") and law in effect holds both the employer and the "labor-
fourth ("control of employee's conduct") factors only" contractor responsible to the latter's employees
indicate that some direct relationship did exist for the more effective safeguarding of the employees'
between Orpiada and the bank and that such rights under the Labor Code.
relationship may be assimilated to employment.
Perhaps the most important circumstance which Both the petitioner bank and (CESI) have insisted
emerges from an examination of the facts of the tri- that (CESI) was not a "labor only" contractor. Section
lateral relationship between the bank, (CESI) and 9 of Rule VIII of Book III entitled "Conditions of
Orpiada is that the employer-employee relationship Employment," of the Omnibus Rules Implementing
between (CESI) and Orpiada was established the Labor Code provides as follows:
precisely in anticipation of, and for the very purpose
of making possible, the secondment of Orpiada to the In contrast, job contracting-contracting out a
bank. It is therefore necessary to confront the task of particular job to an independent contractor is defined
determining the appropriate characterization of the by the Implementing Rules as follows:
relationship between the bank and (CESI) was that
relationship one of employer and job (independent) The definition of "labor-only" contracting in Rule
contractor or one of employer and "labor-only" VIII, Book III of the Implementing Rules must be
contractor? read in conjunction with the definition of job
contracting given in Section 8 of the same Rules. The
Under the general rule set out in the first and second undertaking given by CESI in favor of the bank was
paragraphs of Article 106, an employer who enters not the performance of a specific job for instance,
into a contract with a contractor for the performance the carriage and delivery of documents and parcels to
of work for the employer, does not thereby create an the addresses thereof. There appear to be many
employer-employes relationship between himself and companies today which perform this discrete service,
the employees of the contractor. Thus, the employees companies with their own personnel who pick up
of the contractor remain the contractor's employees documents and packages from the offices of a client
and his alone. Nonetheless when a contractor fails to or customer, and who deliver such materials utilizing
pay the wages of his employees in accordance with their own delivery vans or motorcycles to the
the Labor Code, the employer who contracted out the addresses. In the present case, the undertaking of
job to the contractor becomes jointly and severally (CESI) was toprovideits client-thebank-with a certain
liable with his contractor to the employees of the number of persons able to carry out the work of
latter "to the extent of the work performed under the messengers. Such undertaking of CESI was complied
contract" as such employer were the employer of the with when the requisite number of persons were
contractor's employees. The law itself, in other assigned or seconded to the petitioner bank. Orpiada
words, establishes an employer-employee utilized the premises and office equipment of the
relationship between the employer and the job bank and not those of (CESI) Messengerial work-the
contractor's employees for a limited purpose, i.e., in delivery of documents to designated persons whether
order to ensure that the latter get paid the wages due within or without the bank premises is of course
to them. directly related to the day-to-day operations of the
bank. Section 9(2) quoted above does notrequire for
A similar situation obtains where there is "labor only" its applicability that the petitioner must be engaged in
contracting. The "labor-only" contractor-i.e "the the delivery of items as a distinct and separate line of
person or intermediary" is considered "merely as an business.
agent of the employer. " The employer is made by the
statute responsible to the employees of the "labor Succinctly put, CESI is not a parcel delivery
only" contractor as if such employees had been company: as its name indicates, it is a recruitment
directly employed by the employer. Thus, where and placement corporation placing bodies, as it were,
in d ifferent client companies for longer or shorter bank. It may well be that the bank may in turn
periods of time. It is this factor that, to our mind, proceed against (CESI) to obtain reimbursement of,
distinguishes this case from American President v. or some contribution to, the amounts which the bank
Clave et al, 114 SCRA 826 (1982) if indeed will have to pay to Orpiada; but this it is not
distinguishing way is needed. necessary to determine here.
The bank urged that the letter agreement entered into WHEREFORE, the petition for certiorari is DENIED
with CESI was designed to enable the bank to obtain and the decision promulgated on 29 December 1983
the temporary services of people necessary to enable of the National Labor Relations Commission is
the bank to cope with peak loads, to replace AFFIRMED. The Temporary Restraining Order
temporary workers who were out on vacation or sick issued by this Court on 11 April 1984 is hereby lifted.
leave, and to handle specialized work. There is, of Costs against petitioner.
course, nothing illegal about hiring persons to carry
out "a specific project or undertaking the completion SO ORDERED.
or termination of which [was] determined at the time
of the engagement of [the] employee, or where the 45. VIRGINIA G. NERI and JOSE CABELIN
work or service to be performed is seasonal in nature vs. NATIONAL LABOR RELATIONS
and the employment is for the duration of the season" COMMISSION FAR EAST BANK & TRUST
(Article 281, Labor Code).<re||an1w> The letter COMPANY (FEBTC) and BUILDING CARE
agreement itself, however, merely required (CESI) to CORPORATION
furnish the bank with eleven 11) messengers for " a G.R. No. Nos. 97008-09 July 23, 1993
contract period from January 19, 1976 ." The
eleven (11) messengers were thus supposed to render
"temporary" services for an indefinite or unstated
period of time. Ricardo Orpiada himself was assigned FACTS:
to the bank's offices from 25 June 1975 and rendered
services to the bank until sometime in October 1976, Neri and Cabelinapllied for and
or a period of about sixteen months. Under the Labor were hired by respondent BCC, a
Code, however, any employee who has rendered at corporation engaged in providing technical,
least one year of service, whether such service is maintenance, engineering, housekeeping,
continuous or not, shall be considered a regular security and other specific services to its
employee (Article 281, Second paragraph). clientele.They were assigned to work in the
Assuming, therefore, that Orpiada could properly be Cagayan de Oro City Branch of respondent
regarded as a casual (as distinguished from a regular) FEBTC on 1 May 1979 and 1 August 1980,
employee of the bank, he became entitled to be respectively, Neri a radio/telex operator and
regarded as a regular employee of the bank as soon as Cabelin as janitor, before being promoted to
he had completed one year of service to the bank. messenger on 1 April
Employers may not terminate the service of a regular 1989.chanroblesvirtualawlibrarychanrobles
employee except for a just cause or when authorized virtual law library
under the Labor Code (Article 280, Labor Code). It is
not difficult to see that to uphold the contractual On 28 June 1989, petitioners
arrangement between the bank and (CESI) would in instituted complaints against FEBTC and
effect be to permit employers to avoid the necessity BCC before Regional Arbitration Branch
of hiring regular or permanent employees and to No. 10 of the Department of Labor and
enable them to keep their employees indefinitely on a Employment to recognize them as its regular
temporary or casual status, thus to deny them security employees and be paid the same wages
of tenure in their jobs. Article 106 of the Labor Code which its employees receive.
is precisely designed to prevent such a result.
On 16 November 1989, the Labor
We hold that, in the circumstances 'instances of this Arbiter dismissed the complaint for lack of
case, (CESI) was engaged in "labor-only" or merit.Respondent BCC was considered an
attracting vis-a-vis the petitioner and in respect c independent contractor because it proved it
Ricardo Orpiada, and that consequently, the petitioner had substantial capital. Thus, petitioners
bank is liable to Orpiada as if Orpiada had been were held to be regular employees of BCC,
directly, employed not only by (CESI) but also by the not FEBTC. The dismissal was appealed to
hired from the company if the promotion business of FILSYN for more than ten (10) years or
was to be effected. Furthermore, BCC was since 1981. FILSYN was declared to be the real
to be paid in lump sum unlike in the employer of Loterte and DELIMA as a mere labor
situation in Philippine Bank of contractor. Hence, FILSYN was adjudged liable for
Communications where the contractor, Loterte's reinstatement, payment of salary
CESI, was to be paid at a daily rate on a per differentials and back wages and other
person basis. And, the contract therein benefits. Hence, this petition for certiorari
stipulated that the CESI was merely to by FILSYN.
provide manpower that would render
temporary services. In the case at bar, Neri Issue:
and Cabelin were to perform specific special Whether or not there exists an employer-employee
services. Consequently, petitioners cannot be relationship between FILSYN and private respondent
held to be employees of FEBTC as BCC Felipe Loterte.
"carries an independent business" and
undertaken the performance of its contract SC Ruling:
with various clients according to its "own
manner and method, free from the control DE LIMA is an independent job contractor, therefore
and supervision" of its principals in all no direct employer-employee relationship exists
matters "except as to the results thereof." between petitioner FILSYN andprivate respondent
The Petition for Certiorari is Felipe Loterte. The relationship between petitioner
dismissed. Filipinas Synthetic Fiber Corporation (FILSYN) and
private respondent DeLima Trading and General
Services (DE LIMA) is one of job-contractorship.
46. Filipinas Synthetic Fiber Corporation vs. NLRC, et al.
Under the Labor Code, two (2) elements must exist
[257 SCRA 336 June 14, 1996] for a finding of labor-only contracting: (a) the person
supplying workers to anemployer does not have
Facts: substantial capital or investment in the form of tools,
On 4 April 1991 FILSYN, a domestic corporation equipment, machineries, work premises, among
engaged in the manufacture of polyester fiber, others, and (b) theworkers recruited and placed by
contracted with De Lima Trading andGeneral such persons are performing activities directly
Services (DE LIMA) for the performance of specific related to the principal business of such employer.
janitorial services Pursuant to the agreement Felipe
Loterte, among others, wasdeployed at FILSYN to These two (2) elements do not exist in the instant
take care of the plants and maintain general case. As pointed out by petitioner, private respondent
cleanliness around the premises.On 24 February 1992 DE LIMA is a going concernduly registered with the
Loterte sued FILSYN and DE LIMA as alternative Securities and Exchange Commission with
defendants for illegal dismissal, underpayment of substantial capitalization of P1,600,000.00,
wages,non-payment of legal holiday pay, service P400,000.00 of which is actuallysubscribed. Hence, it
incentive leave pay and 13th month pay alleging that cannot be considered as engaged in labor-only
he was first assigned to perform janitorial work contracting being a highly capitalized venture.
atFILSYN in 1981 by the La Saga General Services; Moreover, while the janitorialservices performed by
that the La Saga was changed to DE LIMA on August Felipe Loterte pursuant to the agreement between
1991; that when a movement todemand increased FILSYN and DE LIMA may be considered directly
wages and 13th month pay arose among the workers related to theprincipal business of FILSYN which is
on December 1991 he was accused by a certain the manufacture of polyester fiber, nevertheless, they
Dodie La Flores of havingposted in the bulletin board are not necessary in its operation. On the
at FILSYN an article attributing to management a contrary,they are merely incidental thereto, as
secret understanding to block the demand; and, for opposed to being integral, without which production
denyingresponsibility, his gate pass was and company sales will not suffer. Judicial notice
unceremoniously cancelled on 6 February 1992 and hasalready been taken of the general practice in
he was subsequently dismissed private as well as in government institutions and
industries of hiring janitorial services on
Loterte was classified by the Labor Arbiter as a anindependent contractor basis.
regular employee on the ground that he performed
tasks usually necessary or desirablein the main
Respondent De Lima Trading and General Services 1. Whether there was employer-employee
(DE LIMA) are ordered to reinstate private relationship between Viva and the
respondent FELIPE LOTERTE to hisformer position complainants that would merit a filing of an
or its equivalent without loss of seniority rights. And
illegal dismissal case?
private respondent De Lima Trading and General
Services (DE LIMA) isordered jointly and severally
Held
with petitioner Filipinas Synthetic Fiber Corporation
(FILSYN) to pay private respondent FELIPE
1. Yes, the complainants are employees of
LOTERTE his salary differentials, 13th month
pay, service incentive leave pay, and backwages Viva. In fact in most cases, it was Viva that
without prejudice to FILSYN seeking reimbursement paid the complainants. Further, the argument
from DELIMA for whatever amount the former may of Viva that they are contractual employees
pay or have paid the latter is untenable for the reason that the
complainants are employed on long-term
basis.
47. Alejandro Maraguinot and Paulino Enero v.
NLRC, GR No. 120969, 22 January 1998, Davide,
First Division
Facts 48. Urbanes Jr. vs. Sec. of Labor, G.R. No. 122791,
Feb. 19, 2003
Maraguinot and Enero were both hired by Vic del
Rosario to work for his projects under Viva films; Facts:
Petitioner Placido O. Urbanes, Jr., doing business
Sometime in 1992, they asked for their salary to be under the name and style of Catalina Security
adjusted according to the minimum wage; Agency, entered into an agreement to provide
security services to respondent Social Security
It is to be noted that at the time, Maraguinot was System (SSS).
having a salary of only 475 per week (this was in During the effectivity of the agreement, petitioner, by
1991); letter of May 16, 1994, requested the SSS for the
upward adjustment of their contract rate in view of
Both Maraguinot and Enero asked their supervisors Wage Order No. NCR-03 which was issued by the
for their wage to be adjusted according to the Regional Tripartite Wages and Productivity Board-
minimum wage however, they were told that their NCR.
Petitioner sent several letters dated June 7 and June 8,
concern is to be aired to the owner of Viva;
1994, reiterating the request. On June 24, 1994,
petitioner pulled out his agencys services from the
They were told that their wage will be adjusted but
premises of the SSS. Petitioner, on June 29, 1994,
they have to sign a blank employment contract; filed a complaint with the DOLE-NCR against the
Enero did not accept and so he was fired; SSS seeking the implementation of Wage Order No.
NCR-03.
Maraguinot was fired but was asked to return few SSS prayed for the dismissal of the complaint on the
days after; ground that petitioner is not the real party in interest
and has no legal capacity to file the same. In any
He was once again asked to sign a blank employment event, it argued that if it had any obligation, it was to
contract in exchange of the adjustment of his salary the security guards. Morever, it contended that the
according to the minimum wage; this, he did not security guards assigned to the SSS do not have any
legal basis to file a complaint against it for lack of
accede to, hence, he was fired;
contractual privity.
The Regional Director held in favor of petitioner
A case was filed by the two against Viva but NLRC
ordering SSS to pay complainant the sum of P
ruled in favour of Viva saying that there was really no 1,600,858.46 representing the wage differentials
employer-employee relationship between them; under Wage Order No. NCR-03 of the 168 Security
Guards of Catalina Security Agency covering the
Issue period from December 16, 1993 to June 24, 1994.
The SSS moved to reconsider the September 16, Trial Court that has jurisdiction. In its
1994 Order of the Regional Director, praying that the complaint, private respondent is not seeking
computation be revised. The amount was reduced to any relief under the Labor Code but seeks
P 1,237,740.00. payment of a sum of money and damages on
The SSS appealed to the Secretary of Labor upon account of petitioner's alleged breach of its
several assigned errors. Thereafter, the Secretary of obligation under their Guard Service
Labor, by Order of June 22, 1995, set aside the order Contract. The action is within the realm of
of the Regional Director and remanded the records of civil law hence jurisdiction over the case
the case "for recomputation of the wage differentials belongs to the regular courts. While the
using P 5,281.00 as the basis of the wage resolution of the issue involves the
adjustment." And the Secretary held petitioners application of labor laws, reference to the
security agency "Jointly and severally liable for labor code was only for the determination of
wage differentials, the amount of which should be the solidary liability of the petitioner to the
paid directly to the security guards concerned." respondent where no employer-employee
Issues: relation exists.
In the case at bar, even if petitioner filed the
1. Whether or not the Secretary of Labor has complaint on his and also on behalf of the security
jurisdiction to review appeals from decisions guards, the relief sought has to do with the
of the Regional Directors. enforcement of the contract between him and the SSS
2. Whether or not SSS is liable to pay which was deemed amended by virtue of Wage Order
petitioner for wage differentials. No. NCR-03. The controversy subject of the case at
Contentions: bar is thus a civil dispute, the proper forum for the
Petitioner asserts that the Secretary of Labor does not resolution of which is the civil courts.
have jurisdiction to review appeals from decisions of But even assuming arguendo that
the Regional Directors in complaints filed under petitioners complaint were filed with the proper
Article 129 of the Labor Code. Petitioner thus forum, for lack of cause of action it must be
contends that as the appeal of SSS was filed with the dismissed. Articles 106, 107 and 109 of the Labor
wrong forum, it should have been dismissed. Code provide:
The SSS, on the other hand, contends that Article ART. 106. CONTRACTOR OR
128, not Article 129, is applicable to the case. Article SUBCONTRACTOR. Whenever an
128. employer enters into contract with another
Held: person for the performance of the formers
Neither the petitioners contention nor the SSSs is work, the employees of the contractor and of
impressed with merit.Lapanday Agricultural the latters subcontractor, if any, shall be
Development Corporation v. Court of paid in accordance with the provisions of
Appealsinstructs so. In that case, the security agency this Code.
filed a complaint before the RTC against the principal In the event that the contractor or
or client Lapanday for the upward adjustment of the subcontractor fails to pay the wage of his
contract rate in accordance with Wage Order Nos. 5 employees in accordance with this Code, the
and 6. Lapanday argued that it is the National Labor employer shall be jointly and severally liable
Relations Commission, not the civil courts, which has with his contractor or subcontractor to such
jurisdiction to resolve the issue in the case, it employees to the extent of the work
involving the enforcement of wage adjustment and performed under the contract, in the same
other benefits due the agencys security guards as manner and extent that he is liable to
mandated by several wage orders. Holding that the employees directly employed by him.
RTC has jurisdiction over the controversy, this Court ART. 107 INDIRECT EMPLOYER. The
ruled: provisions of the immediately preceding
We agree with the respondent that the RTC Article shall likewise apply to any person,
has jurisdiction over the subject matter of partnership, association or corporation
the present case. It is well settled in law and which, not being an employer, contracts
jurisprudence that where no employer- with an independent contractor for the
employee relationship exists between the performance of any work, task, job or
parties and no issue is involved which may project.
be resolved by reference to the Labor Code, ART. 109. SOLIDARY LIABILTY. The
other labor statutes or any collective provisions of existing laws to the contrary
bargaining agreement, it is the Regional notwithstanding, every employer or indirect
employer shall be held responsible with his business of cleaning, receiving, sorting,
contractor or subcontractor for any violation classifying, etc., glass and metal containers.
of any provision of this Code. For purposes In a letter dated 15 May 1991,
of determining the extent of their civil SMC informed MAERC of the
liability under this Chapter, they shall be termination of their service contract by
considered as direct employers. the end of June 1991. SMC cited its plans
As to the second issue, the liability of the to phase out its segregation activities starting
SSS to reimburse petitioner arises only if and when 1 June 1991 due to the installation of labor
petitioner pays his employee-security guards "the and cost-saving devices.
increases" mandated by Wage Order No. NCR-03. When the service contract was
The records do not show that petitioner has terminated, complainants claimed that
paid the mandated increases to the security guards. SMC stopped them from performing their
The security guards in fact have filed a complaint jobs; that this was tantamount to their
with the NLRC against petitioner relative to, among being illegally dismissed by SMC who was
other things, underpayment of wages. their real employer as their activities were
directly related, necessary and desirable to
the main business of SMC; and, that
49. San Miguel vs. Maerc Integrated Services MAERC was merely made a tool or a shield
G.R. No. 144672, July 10, 2003 by SMC to avoid its liability under the
Labor Code. MAERC admitted that it
recruited the complainants and placed them
FACTS: in the bottle segregation project of SMC but
maintained that it was only conveniently
291 workers filed their complaints used by SMC as an intermediary in
against San Miguel Corporation and Maerc operating the project.
Integrated Services, Inc, for illegal The Labor Arbiter rendered a
dismissal, underpayment of wages, non- decision holding that MAERC was an
payment of service incentive leave pays independent contractor. The National Labor
and other labor standards benefits, and Relations Commission (NLRC) ruled that
for separation pays. MAERC was a labor-only contractor and
The complainants alleged that they that complainants were employees of SMC.
were hired by San Miguel Corporation
(SMC) through its agent or intermediary ISSUE:
Maerc Integrated Services, Inc. (MAERC)
to work in 2 designated workplaces in Whether the complainants are employees of
Mandaue City. They washed and segregated petitioner SMC or of respondent MAERC.
various kinds of empty bottles used by SMC
to sell and distribute its beer beverages to HELD:
the consuming public. They were paid on a
per piece or pakiao basis except for a few Employees are those of SMC.
who worked as checkers and were paid on In ascertaining an employer-
daily wage basis. employee relationship, the following factors
Complainants alleged that long are considered:
before SMC contracted the services of (a) the selection and engagement of
MAERC a majority of them had already employee;
been working for SMC under the guise of (b) the payment of wages;
being employees of another contractor, (c) the power of dismissal; and,
Jopard Services, until the services of the (d) the power to control an
latter were terminated on 31 January employee's conduct.
1988. Evidence discloses that petitioner
SMC denied liability for the claims played a large and indispensable part in
and averred that the complainants were not the hiring of MAERC's workers. It also
its employees but of MAERC, an appears that majority of the complainants
independent contractor whose primary had already been working for SMC long
corporate purpose was to engage in the before the signing of the service contract
between SMC and MAERC in 1988.
Code, the law states that the preceding Article was a labor-only-contractor, thus private
shall likewise apply to person, partnership, respondents were deemed employees of the
association or corporation which, not being an petitioner. Both parties appealed to the
National Labor Relations Commission,
employer, contracts with an independent
which affirmed the Labor Arbiter's decision
contractor. Pursuant to the mentioned provisions with modification that private respondents
of the Labor Code, the Court said that, in this case, were illegally dismissed.
the petitioner as an indirect employer, shall truly be
liable jointly and severally with Longest Force in Since petitioner's motion for
paying backwages and overtime pay to the private reconsideration was denied, it instituted a
respondents. Moreover, the Court emphasized that special civil action for certiorariwith the
Court of Appeals, but the latter denied the
Labor standard are enacted by the legislature to
same; hence, a petition for review in SC.
alleviate the plight of workers whose wages barely
meet the spiraling costs of their basic needs. Labor Issue: Whether NiloLayno Builders was an
laws are considered written in every contract. "independent contractor" or a "labor-only" contractor
Stipulations in violation thereof are considered
null. Therefore, the petitioner should be held jointly Ruling:NiloLayno Builders is an independent
and severally liable, together with Longest Force to contractor.
the private respondents as earlier decided by NLRC,
Under Section 8, Rule VIII, Book
as affirmed by the CA. III, of the Omnibus Rules Implementing the
Labor Code, an independent contractor is
51.) G.R. No. 154715, Dec. 11, 2003 one who undertakes "job contracting," i.e., a
New Golden City Builders vs. CA person who: (a) carries on an independent
business and undertakes the contract work
FACTS: on his own account under his own
responsibility according to his own manner
Petitioner entered into a and method, free from the control and
construction contract with Prince David direction of his employer or principal in all
Development Corporation for the matters connected with the performance of
construction of a 17-storey office and the work except as to the results thereof; and
residential condominium building. Petitioner (b) has substantial capital or investment in
engaged the services of NiloLayno Builders the form of tools, equipment, machineries,
to do the specialized concrete works, forms work premises, and other materials which
works and steel rebars works. Pursuant to are necessary in the conduct of the business.
the contract, NiloLayno Builders hired Jurisprudential holdingsare to the effect that
private respondents to perform work at the in determining the existence of an
project. independent contractor relationship, several
factors may be considered, such as, but not
After the completion of the phase necessarily confined to, whether or not the
for which NiloLayno Builders was contractor is carrying on an independent
contracted, private respondents filed a business; the nature and extent of the work;
complaint against petitioner and its president the skill required; the term and duration of
(NGC Builder and Manuel Sy) for unfair the relationship; the right to assign the
labor practice, non-payment of 13th month performance of specified pieces of work; the
pay, service incentive leave, illegal dismissal control and supervision of the work to
and severance pay, in lieu of reinstatement. another; the employer's power with respect
to the hiring, firing and payment of the
The Labor Arbiter ruled in favor of contractor's workers; the control of the
respondents, but dismissed the charges for premises; the duty to supply premises, tools,
illegal dismissal including their prayers for appliances, materials and labor; and the
back wages and unfair labor practice and mode, manner and terms of payment.
other monetary claims except their 13th
month pay and service incentive leave pay. We are convinced
It was also found that NiloLayno Builders that Nilo Layno Builders is undertaking
permissible labor or job contracting. contractor merely because it does not have
NiloLayno Builders is a duly licensed labor investment in the form of tools or
contractor carrying on an independent machineries. They failed to appreciate the
business for a specialized work that involves fact that Nilo Layno Builders had substantial
the use of some particular, unusual and capitalization for it did not only provide
peculiar skills and expertise, like concrete labor to do the specified project and pay
works, form works and steel rebars works. their wages, but it furnished the materials to
As a licensed labor contractor, it complied be used in the construction.
with the conditions set forth in Section 5,
Rule VII-A, Book III, Rules to Implement In Neri v. NLRC, we held that the labor
the Labor Code, among others, proof of contractor which sufficiently proved that it
financial capability and list of equipment, had substantial capital was not engaged in
tools, machineries and implements to be labor-only contracting. Thus:
used in the business. Further, it entered into While there may be no evidence that it has
a written contract with the petitioner, a investment in the form of tools, equipment,
requirement under Section 3, Rule VII-A, machineries, work premises, among others, it is
Book III, Rules to Implement the Labor enough that it has substantial capital, as was
Code to assure the employees of the established before the Labor Arbiter as well as the
minimum labor standards and NLRC. In other words, the law does not require both
benefits provided by existing laws. substantial capital and investment in the form of
tools, equipment, machineries, etc. This is clear from
The test to determine the existence the use of the conjunction or. If the intention was to
of independent contractorship is whether require the contractor to prove that he has both
one claiming to be an independent capital and the requisite investment, then the
contractor has contracted to do the work conjunction and should have been used.
according to his own methods and without
being subject to the control of the employer,
except only to the results of the work. This 52.)NFA vs. MASADA SECURITY AGENCY,
is exactly the situation obtaining in the case INC.G.R. No. 163448.March 08, 2005
at bar. NiloLayno Builders hired its own
employees, the private respondents, to do
specialized work in the Prince David Project
of the petitioner. The means and methods Facts:
adopted by the private respondents were
directed by NiloLayno Builders except that, On September 17, 1996, respondent MASADA
from time to time, the engineers of the Security Agency, Inc., entered into a one year
petitioner visited the site to check whether
contract with NFA to provide security services to the
the work was in accord with the plans and
specifications of the principal. As admitted various offices, warehouses and installations of the
by Nilo G. Layno, he undertook the contract scope of the NFA Region I.
work on his own account and responsibility,
free from interference from any other Upon the expiration of said contract, the parties
persons, except as to the results; that he was extended the effectivity of the contract on a monthly
the one paying the salaries of private basis under same terms and condition.
respondents; and that as employer of the
private respondents, he had the power to Meanwhile on several occasions, the Regional
terminate or dismiss them for just and valid Tripartite Wages and Productivity Board issued
cause. Indubitably, the Court finds that several wage orders mandating increases in the daily
NiloLayno Builders maintained effective
wage rate.
supervision and control over the private
complainants.
Therefore because of the wage orders mandating
Thus, it was plain conjecture on the increase in the wage rates, respondent requested NFA
part of the Labor Arbiter, the NLRC and the for a corresponding upward adjustment in the
Court of Appeals to conclude monthly contract rate consisting of the increases in
that Nilo Layno Builders was a labor-only
the daily minimum wage of the security guards as However, Section 6 of RA 6727, expressly lodged
well as the corresponding raise in their overtime pay, said obligation to the principals or indirect
holiday pay, 13th month pay, holiday and rest day employers in construction projects and
pay. establishments providing security, janitorial and
similar services.
NFA, however, granted the request but only with
respect to the increase in the daily wage and Section 6 of RA 6727, provides:
denied the same with respect to the adjustments in
the other benefits and remunerations computed on SEC. 6. In the case of contracts for construction
the basis of the daily wage. projects and for security, janitorial and similar
services, the prescribed increases in the wage rates of
Respondent sought the intervention of the Office of the workers shall be borne by the principals or
the Regional Director, Regional Office No. I. clients of the construction/service contractors and the
contract shall be deemed amended accordingly. In
Despite the advisory of DOLE Regional Director the event, however, that the principal or client fails to
sustaining the claim of respondent that the increase pay the prescribed wage rates, the
mandated by Republic Act No. 6727 (RA 6727) and construction/service contractor shall be jointly and
the wage orders issued by the RTWPB is not limited severally liable with his principal or client.
to the daily pay, NFA maintained its stance that it is
not liable to pay the corresponding adjustments in There is merit on the contention of NFA that its
the wage related benefits of respondents security additional liability under the aforecited provision is
guards. limited only to the payment of the increment in the
statutory minimum wage rate, i.e., the rate for a
Respondent filed with the Regional Trial Court of regular eight (8) hour work day.
Quezon, City, Branch 83, a case for recovery of sum
of money against NFA. The term wage as used in Section 6 of RA 6727
pertains to no other than the statutory minimum
On September 19, 2002, the trial court rendered a wage which is the lowest wage rate fixed by law
decision in favor of respondent holding that NFA is that an employer can pay his worker. Hence, the
liable to pay the security guards wage related prescribed increases or the additional liability to be
benefits pursuant to RA 6727. borne by the principal under Section 6 of RA 6727 is
the increment or amount added to the
NFA appealed to the Court of Appeals but the same
remuneration of an employee for an 8-hour work.
was dismissed on February 12, 2004.
Therefore, since the increase in wage referred to in
Hence, this petition.
Section 6 pertains to the statutory minimum wage
Issue: as defined herein, principals in service contracts
cannot be made to pay the corresponding wage
Whether or not the liability of principals in service increase in the overtime pay, night shift
contracts under Section 6 of RA 6727 and the wage differential, holiday and rest day pay, premium
orders issued by the Regional Tripartite Wages and pay and other benefits granted to workers.
Productivity Board is limited only to the increment in
the minimum wage. Applying the elementary rule on statutory
construction that if the statute is clear, plain and free
Ruling: from ambiguity, it must be given its literal meaning
and applied without interpretation. Therefore, the
General rule, payment of the increases in the wage presumption is that lawmakers are well aware that the
rate of workers is ordinarily shouldered by the word wage as used in Section 6 means the statutory
employer. minimum wage. If their intention was to extend the
obligation of principals in service contracts to the
payment of the increment in the other benefits and exclusive authority to select, engage, and discharge
remuneration of workers, it would have so expressly its security guards, with full control over their wages,
specified. In not so doing, the only logical salaries or compensation.
Consequently, respondent PSI deployed
conclusion is that the legislature intended to limit the
security guards to the PLDT. The sixty-five (65)
additional obligation imposed on principals in service security guards supplied by respondent PSI filed a
contracts to the payment of the increment in the Complaint for regularization against the PLDT
statutory minimum wage. alleging that petitioner security guards have been
employed by the company through the years and that
PSI acted as the middleman in the payment of the
minimum pay to the security guards, but no premium
Although the general rule is that construction of a for work rendered beyond eight hours was paid to
statute by an administrative agency charged with the them nor were they paid their 13th month pay. In
task of interpreting or applying the same is entitled to sum, the Complaint states that inasmuch as the
great weight and respect. The Court, however, is not complainants are under the direct control and
supervision of PLDT. Hence they should be
bound to apply said rule where such executive
considered as regular employees by the latter.
interpretation, is clearly erroneous, or when there is Issue: Whether or not an employer- employee
no ambiguity in the law interpreted, or when the relationship exists between petitioners and
language of the words used is clear and plain, as in respondent PLDT;
the case at bar. Besides, administrative Ruling:
interpretations are at best advisory for it is the Court We considered the following factors in
that finally determines what the law means. considering the existence of an employer-employee
relationship: (1) the selection and engagement of the
Hence, the interpretation given by the labor agencies employee; (2) the payment of wages; (3) the power to
dismiss; and (4) the power to control the employees
in the instant case which went as far as
conduct.
supplementing what is otherwise not stated in the law Testimonies during the trial reveal
cannot bind this Court. that interviews and evaluation were
conducted by PLDT to ensure that the
So long as the minimum obligation of the principal, standards it set are met by the security
i.e., payment of the increased statutory minimum guards. In fact, PLDT rarely failed to accept
wage is complied with, the Wage Rationalization Act security guards referred to by PSI but on
is not violated. account of height deficiency. The referral is
nothing but for possible assignment in a
WHEREFORE, the petition is GRANTED designated client which has the inherent
prerogative to accept and reject the assignee
for justifiable grounds or even arbitrarily.
53. Abella vs. PLDT, G.R. No. 159469, June 8, We are thus convinced that the employer-
2005 employee relationship is deemed perfected
Facts: even before the posting of the complainants
Respondent Peoples Security Incorporated with the PLDT, as assignment only comes
entered into an agreement with the PLDT to provide after employment.
the latter with such number of qualified uniformed PSI is a legitimate job contractor pursuant to
and properly armed security guards for the purpose of Section 8, Rule VII, Book II of the Omnibus Rules
guarding and protecting PLDTs installations and Implementing the Labor Code. It is a registered
properties from theft, pilferage, intentional damage, corporation duly licensed by the Philippine National
trespass or other unlawful acts. Under the agreement, Police to engage in security business. It has
it was expressly provided that there shall be no substantial capital and investment in the form of
employer-employee relationship between the PLDT guns, ammunitions, communication equipments,
and the security guards, which may be supplied to it vehicles, office equipments like computer,
by PSI, and that the latter shall have the entire charge, typewriters, photocopying machines, etc., and above
control and supervision over the work and services of all, it is servicing clients other than PLDT like
the supplied security guards. It was likewise PCIBank, Crown Triumph, and Philippine Cable,
stipulated therein that PSI shall also have the among others. Here, the security guards which PSI
had assigned to PLDT are already the formers
employees prior to assignment and if the assigned 54.) San Miguel vs. Aballa, G.R. No. 149011, June
guards to PLDT are rejected by PLDT for reasons 28, 2005
germane to the security agreement, then the rejected
or terminated guard may still be assigned to other Facts:
clients of PSI as in the case of Jonathan Daguno who
was posted at PLDT on 21 February 1996 but was Petitioner San Miguel Corporation entered into a one-
subsequently relieved therefrom and assigned at year contract with the Sunflower Multi-Purpose
PCIBank Makati Square effective 10 May 1996.
Cooperative.
Therefore, the evidence as it stands is at odds with
petitioners assertion that PSI is an in-house agency
Sunflower undertook and agreed to perform and
of PLDT so as to call for a piercing of veil of
corporate identity provide the company on a non exclusive basis for a
It is PSI that determined and paid the period of one year the following: Messengerial,
petitioners wages, salaries, and compensation. As Janitorial, Shrimp harvesting and Sanitation.
elucidated by the Labor Arbiter, petitioners witness
testified that his wages were collected and withdrawn Pursuant to the contract, Sunflower engaged private
at the office of PSI and PLDT pays PSI for the respondents to render services at SMCs Bacolod
security services on a lump-sum basis and that the Shrimp Processing Plant. The contract was renewed
wages of complainants are only a portion of the total and private respondent continued to perform their
sum. The signature of the PLDT supervisor in the
tasks.
Daily Time Records does not ipso facto make PLDT
the employer of complainants inasmuch as the Labor
Later, private respondents filed a complaint praying
Arbiter had found that the record is replete with
evidence showing that some of the Daily Time to be declared as regular employees of SMC, with
Records do not bear the signature of a PLDT claims of recovery of all benefits and privileges.
supervisor yet no complaint was lodged for
nonpayment of the guards wages evidencing that the Issue:
signature of the PLDTs supervisor is not a condition
precedent for the payment of wages of the guards. Whether or not Sunflower is engaged in
Notably, it was not disputed that complainants enjoy labor only contracting
the benefits and incentives of employees of PSI and
that they are reported as employees of PSI with the Ruling:
SSS.
Lastly, petitioners capitalize on the The test to determine the existence of independent
delinquency reports prepared by PLDT personnel contractorship is whether one claiming to be an
against some of the security guards as well as independent contractor has contracted to do the work
certificates of participation in civil disturbance
according to his own methods and without being
course, certificates of attendance in first aid training,
certificate of completion in fire brigade training subject to the control of the employer, except only as
seminar and certificate of completion on restricted to the results of the work.
land mobile radio telephone operation to show that
the petitioners are under the direct control and In legitimate labor contracting, the law creates an
supervision of PLDT and that the latter has, in fact, employer-employee relationship for a limited
the power to dismiss them. purpose, i.e., to ensure that the employees are paid
The Labor Arbiter found from the evidence their wages. The principal employer becomes jointly
that the delinquency reports were nothing but and severally liable with the job contractor, only for
reminders of the infractions committed by the
petitioners while on duty which serve as basis for the payment of the employees wages whenever the
PLDT to recommend the termination of the contractor fails to pay the same. Other than that, the
concerned security guard from PLDT. As already principal employer is not responsible for any claim
adverted to earlier, termination of services from made by the employees.
PLDT did not ipso facto mean dismissal from PSI
inasmuch as some of those pulled out from PLDT In labor-only contracting, the statute creates an
were merely detailed at the other clients of PSI as in employer-employee relationship for a comprehensive
the case of Jonathan Daguno, who was merely purpose: to prevent a circumvention of labor laws.
transferred to PCIBank Makati.
The contractor is considered merely an agent of the 55. Manila Electric Co. vs. Benamira, G.R. No.
principal employer and the latter is responsible to the 145271, July 14, 2005
employees of the labor-only contractor as if such
Facts:
employees had been directly employed by the The individual respondents are licensed
principal employer. security guards formerly employed by Peoples
Security, Inc. and deployed as such at MERALCOs
The following would show that sunflower is engaged head office. The security service agreement between
in labor only contracting: What appears is that PSI and MERALCO was terminated. Thereafter, 56
Sunflower does not have substantial capitalization or of PSIs security guards, including herein eight
investment in the form of tools, equipment, individual respondents, filed a complaint for unpaid
machineries, work premises and other materials to monetary benefits against PSI and MERALCO.
Meanwhile, the security service agreement between
qualify it as an independent contractor.
respondent Armed Security & Detective Agency, Inc.,
(ASDAI) and MERALCO took effect. Subsequently,
It is gathered that the lot, building, machineries and
the individual respondents were absorbed by ASDAI
all other working tools utilized by private and retained at MERALCOs head office. Later, the
respondents in carrying out their tasks were owned security service agreement between respondent
and provided by SMC. Advance Forces Security & Investigation Services,
Inc. (AFSISI) and MERALCO took effect,
Sunflower, during the existence of its service contract terminating the previous security service agreement
with respondent SMC, did not own a single with ASDAI. The individual respondents amended
machinery, equipment, or working tool used in the their complaint to implead AFSISI as party
processing plant. Everything was owned and respondent.
provided by respondent SMC. The lot, the building,
Issue: Whether or not the individual respondents
and working facilities are owned by respondent are employees of MERALCO;
SMC.
Ruling:
And from the job description provided by SMC itself, No. In this case, the terms and conditions
the work assigned to private respondents was directly embodied in the security service agreement between
related to the aquaculture operations of SMC. MERALCO and ASDAI expressly recognized
Undoubtedly, the nature of the work performed by ASDAI as the employer of individual respondents.
private respondents in shrimp harvesting, receiving Under the security service agreement, it was ASDAI
and packing formed an integral part of the shrimp which (a) selected, engaged or hired and discharged
the security guards; (b) assigned them to MERALCO
processing operations of SMC. As for janitorial and
according to the number agreed upon; (c) provided
messengerial services, that they are considered the uniform, firearms and ammunition, nightsticks,
directly related to the principal business of the flashlights, raincoats and other paraphernalia of the
employer has been jurisprudentially recognized. security guards; (d) paid them salaries or wages; and,
Furthermore, Sunflower did not carry on an (e) disciplined and supervised them or principally
independent business or undertake the performance controlled their conduct. The agreement even
explicitly provided that [n]othing herein contained
of its service contract according to its own manner
shall be understood to make the security guards under
and method, free from the control and supervision of this Agreement, employees of the COMPANY, it
its principal, SMC, its apparent role having been being clearly understood that such security guards
merely to recruit persons to work for SMC. shall be considered as they are, employees of the
AGENCY alone. Clearly, the individual respondents
Therefore since Sunflower is labor only contracting, are the employees of ASDAI.
there is the existence of an employer- employee Neither is the stipulation that the agency
relationship between SMC and private respondents. 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 MERALCOs premises
to the latters detriment.
The clause that MERALCO has the right at 56. Granspan Development Corp., vs. Bernardo,
all times to inspect the guards of the agency detailed G.R. No. 141464, Sept. 21, 2005
in its premises is likewise not indicative of control as
it is not a unilateral right. The agreement provides Facts:
that the agency is principally mandated to conduct
inspections, without prejudice to MERALCOs right The instant controversy stemmed from a complaint
to conduct its own inspections. for illegal dismissal and non-payment of benefits
Moreover, ASDAI and AFSISI are not
filed with the Labor Arbiter by Ricardo Bernardo,
labor-only contractors. There is labor only
contract when the person acting as contractor is Antonino Ceidoza and Edgar Del Prado,
considered merely as an agent or intermediary of the respondents, against Grandspan Development
principal who is responsible to the workers in the Corporation, petitioner, and/or its warehouse
same manner and to the same extent as if they had manager, Manuel G. Lee, docketed as NLRC Case
been directly employed by him. On the other hand, No. RAB-IV-11-4605-92-RI.
job (independent) contracting is present if the
following conditions are met: (a) the contractor Those three respondents alleged in their complaint
carries on an independent business and undertakes that they were terminated illegally, the petitioners
the contract work on his own account under his own
(granspan development corp) sent them a notice that
responsibility according to his own manner and
method, free from the control and direction of his they were terminated on the grounds that they
employer or principal in all matters connected with vandalized the logbooks and for the use of profane
the performance of the work except to the result language. Also they alleged that they were employed
thereof; and (b) the contractor has substantial capital by the petitioner, they were given ID and a daily
or investments in the form of tools, equipment, salary of 104 php.
machineries, work premises and other materials
which are necessary in the conduct of his business. Petitioner denied these allegations, claiming that they
Given the above distinction and the provisions of the are contractors. Thus there is no employee-employer
security service agreements entered into by petitioner
relationship, And that the warehouse manager
with ASDAI and AFSISI, we are convinced that
ASDAI and AFSISI were engaged in job contracting. received reports from their supervisor that those
The individual respondents can not be respondents vandalized the companys log book,
considered as regular employees of the MERALCO which violates their companys rules and regulations.
for, although security services are necessary and
desirable to the business of MERALCO, it is not After the submission of the parties pleadings and
directly related to its principal business and may even position papers, the Labor Arbiter rendered a
be considered unnecessary in the conduct of Decision dated June 30, 1994 dismissing
MERALCOs principal business, which is the
respondents complaint. In concluding that
distribution of electricity.
Furthermore, the fact that the individual respondents were validly dismissed from
respondents filed their claim for unpaid monetary employment, the Labor Arbiter held that they were
benefits against ASDAI is a clear indication that the project employees whose services were terminated
individual respondents acknowledge that ASDAI is upon completion of the project for which they were
their employer. hired.
Prado died and was substituted by his surviving contract with petitioner; and (3) there is no proof of
parent, Edgardo Del Prado. its financial capability and has no list of equipment,
tools, machineries and implements used in the
The CA, ruled in favor of the respondents. The court business.
ordered that these respondents should be reinstated
and that del prado shall be paid of his separation pay. The allegations of the petitioners that the respondents
are project employees, thus making them contractors
Petitioner filed a motion for reconsideration. and that their services ended up when the project was
Respondents also filed a motion for reconsideration finished is untenable. petitioner could not present
and/or clarification praying that the Appellate Courts employment contracts signed by respondents
Decision be modified by awarding respondent Del showing that their employment was for the duration
Prado his backwages. Court of Appeals promulgated of the HCMG or Sogo project. Likewise, as correctly
its Resolution denying petitioners motion for observed by the Court of Appeals, petitioner failed to
reconsideration but modifying its Decision in the present any report terminating the services of
sense that petitioner and J. Narag Construction are respondents when its projects were actually finished.
ordered to pay respondent Del Prado his separation
pay and backwages. Time and again, we held that failure of the employer
to file termination reports after every project
Hence, this petition for review on certiorari in SC. completion with the nearest public employment
office is an indication that respondents were
Issues:
employees.
Whether or Not there is employer-employee
Records show that respondents were not served by
relationship in the case at bar.
petitioner with notices, verbal or written, informing
Ruling: them of the particular acts for which their dismissal is
sought. Neither were they required to give their side
Yes, there is employer-employee relationship. regarding the alleged serious misconduct imputed
against them.
The SC upheld the CAs ruling. CA found that the J.
Narag Construction assigned the respondents to
perform activities directly related to the main
business of the petitioner, all the documents that We thus sustain the Court of Appeals ruling that
proved the employment of the respondents were all respondents were deprived of both their substantive
approved by the petitioner, such as the payrolls, the and procedural rights to due process and, therefore,
using of equipment, materials and supplies of the J. the termination of their employment is illegal.
narag construction. The termination of the
respondents also proves that there is employer-
employee relationship, since it was the petitioner who
57. ACEVEDO v ADVANSTAR, GR 157656
terminated them and the J. Narag construction.
FACTS:
Being a legitimate independent contractor cannot be The Advanstar Company Inc.
pinned on J. Narag Construction, rather the CA held (ACI) was engaged in the distribution and
that they are labor-only contractor which was upheld sale of various brands of liquor and
by the SC too. alcoholic spirits, including the Tanduay
brand. To effectively launch its vigorous
On the basis of the records, we have no reason to
marketing operations, ACI hired several
deviate from the Appellate Courts finding that J.
salesmen, one of whom was Tony Jalapadan.
Narag Construction is indeed a labor-only contractor.
On September 1, 1994, ACI executed an
These are the reasons: (1) it is not registered as a
Agreement for the Sale of Merchandise with
building contractor with the SEC; (2) it has no
Jalapadan for a period of one year, Acevedo and ordered him to get his personal
renewable for another year under the same belongings and leave. Acevedo did as he
terms and conditions. Under the agreement, was told. Later, Jalapadan urged Acevedo to
the parties agreed, inter alia, that Jalapadan go back to work, stating that they were one
would promote and sell products of ACI, big family, but Acevedo refused. He then
solicit from customers and outlets within his signed a Letterdated October 10, 1998,
designated territory, collect payments from informing Jalapadan that he was resigning
such customers and account the same to effective that date.
ACI. Jalapadan was provided with a 6-
wheeler truck to facilitate the sale and However, on October 26, 1998,
delivery of products to customers and outlets Acevedo filed a complaint against
from his base of operations. Jalapadan was Jalapadan, ACI and its general manager,
also authorized to employ and discharge a Felipe Loi, for illegal dismissal and for the
driver and other assistants as he deemed recovery of backwages and other monetary
necessary. It was stipulated, however, that benefits.
the hired hands would be considered his
ISSUES:
employees, and that he alone would be
liable for their compensation and actual 1. WON ACI was the employer of Jalapadan---
YES. LABOR-ONLY CONTRACTOR
expenses, including meals while on duty.
Jalapadan hired Arnulfo Acevedo 2. WON Acevedo is an employee of ACI---
as the driver of the truck assigned to him by YES
ACI. Acevedo was tasked to sell and deliver 3. WON Acevedo resigned from his
stocks to outlets and customers, collect employment---NO
payments, and to maintain the truck in good
HELD:
and clean condition. He reported for work
ISSUES 1&2:
from 6:00 a.m. to 8:00 or 9:00 p.m. Acevedo The pertinent provision of the
received a daily wage of P152.00 and was Labor Code on labor-only contracting is
paid on a weekly basis. He also enjoyed paragraph 4 of Article 106, which provides:
sick leave privilege, which benefit was
convertible into cash. Sometime in June There is labor-only
1998, he received from Jalapadan a salary contracting where the person
differential for the period of December 1997 supplying workers to an employer
to June 1998, following a P15.00 increase in does not have substantial capital or
his daily wage. He received his wages from investment in the form of tools,
Jalapadan through vouchers approved by the equipment, machineries, work
latter. premises, among others, and the
workers recruited and placed by
Sometime in July 1998, Acevedo failed to such persons are performing
comply with Jalapadans instructions. At that time, activities which are directly related
they were on their way to Plaridel, Misamis Oriental to the principal business of such
on board the truck. Jalapadan ordered Acevedo to employer. In such cases, the person
alight from the truck, and threatened to leave him or intermediary shall be considered
behind to fend for himself. However, Jalapadan later merely as an agent of the employer
asked him to return to work and the latter agreed. who shall be responsible to the
workers in the same manner and
On October 7, 1998, Acevedo
extent as if the latter were directly
failed to report for work. The next day,
employed by him.
Jalapadan inquired why he failed to check
and wash the truck. Jalapadan berated
contractor. Other factors that may be basis and an unspecified commission based on
considered include the following: whether or booking sales fully remitted to respondent ACI, the
not the contractor is carrying on an latter had the absolute right to change, at any time,
independent business; the nature and extent the amount and/or all the payments of such
of the work; the skill required; the term and compensation and commission. Moreover, notice of
duration of the relationship; the right to such changes was only for information purposes.
assign the performance of specified pieces Furthermore, Jalapadan was obliged to inform
of work; the control and supervision of the respondent ACI of his activities, situation or
work to another; the employers power with whereabouts. Since he did not have any truck for the
respect to the hiring, firing and payment of delivery of products to customers or outlets, he had to
the contractors workers; the control of the rely on the truck entrusted to him by respondent ACI
premises; the duty to supply premises, tools, or, in lieu thereof, a traveling allowance of P600.00 a
appliances, materials and labor; and the month which could even be changed. Respondent
mode and manner or terms of payment. Jalapadan was prohibited from incurring any other
expenses unless permission was first secured from
In the present case, the respondents failed to respondent ACI. He was prohibited from using the
prove that respondent Jalapadan was an independent truck for purposes other than the performance of his
contractor. Indeed, the substantial evidence on record duties and responsibilities under the agreement.
shows that he was merely a labor-only contractor. Respondent Jalapadan was mandated to maintain the
truck and its accessories in clean and good order and
First. The respondents failed to adduce a
condition. The agreement was for a period of one
scintilla of evidence that respondent Jalapadan had
year, renewable under the same terms and conditions
any substantial capital or investment, such as tools
but the parties could terminate the agreement upon
and equipment, to perform the work contracted for.
notice to the other. Moreover, while respondent ACI
There is even no evidence that respondent Jalapadan
did not fix or impose any quota on respondent
had any assets, or that he maintained an office, staff
Jalapadan, it reserved the right to do so.
or a terminal for the truck entrusted to him by
respondent ACI. Fourth. Respondent Jalapadan was obliged to
pay the petitioners monthly wage of P3,648.00, as
Second. Respondent Jalapadan bound and
well as that of his helper, another P4,000.00 a month,
obliged himself to work exclusively for respondent
totaling P7,648.00, exclusive of other expenses such
ACI during the terms of the agreement.
as meals, gasoline, and the upkeep of the vehicle. On
Third. Under the agreement, respondent ACI the other hand, respondent Jalapadan received from
had the right to control not only the end to be attained respondent ACI only P3,590.00 a month as
but also the manner and means to be used in compensation. He had no other means of income
accomplishing that end or purpose. Aside from because he was obliged, under the agreement, to
Jalapadans duties/obligations as salesman, devote all his time for respondent ACI. Respondent
respondent ACI could require him to perform other Jalapadans claim that he sold the products of the
duties and obligations. Respondent Jalapadan was, respondent ACI for a marked-up price as his
likewise, mandated to obey all rules, regulations, commission is belied by their agreement, which
orders, and instructions, whether oral or written, of precisely prohibited him from selling such products
respondent ACI. He was obliged to work only in the at a different price. Respondent Jalapadan was only
territory assigned to him, which may be altered at any entitled to a commission based on their booked sales.
time upon the discretion of ACI. He was also Aside from the fact that such commission was not
prohibited from overpricing or underpricing the fixed, there is no evidence on record how much, if
products of respondent ACI, and was required to sell any, respondent Jalapadan received from the
the same according to the prices dictated solely by it. respondent ACI by way of commission.
While Jalapadan was entitled to a monthly
compensation of P3,590.00 payable on a bi-monthly
Considering all these, then, the spurned such plea. The Court finds,
Court concludes that the petitioners however, that contrary to the rulings of the
wages must have been paid for by NLRC and the CA, the petitioner did not
respondent ACI through respondent resign from his employment.
Jalapadan, its labor-only contractor. Reliance on the handwritten letter of resignation
dated October 10, 1998 signed and thumbmarked by
the petitioner is misplaced. The handwritten letter
of resignation signed by the petitioner is inconsistent
with the respondents claim that respondent Jalapadan
ISSUE 3:
was the petitioners employer. This is so because the
Ruling of NLRC and CA which the SC agrees with: said letter is addressed to Tanduay Corporation, and
not to respondent Jalapadan, thus:
The only incident
from which complainant TANDUAY CORPORATION
drew the conclusion that OZAMIS BRANCH
he was dismissed from
THRU: MR. TONY
work is when he was
JALAPADAN, SALESMAN
allegedly told to
disembark from the SIR:
vehicle. Nothing on
record shows that he was I HAVE THE HONOR TO
terminated from work. On TENDER MY RESIGNATION,
the contrary, complainant EFFECTIVE OCT. 10, 1998, BY
himself reveals that REASON THAT I AM
previously (in July 1995) SEARCHING FOR BETTER
he was also told to INCOME. BY VIRTUE THAT
disembark to be left on the MY SALARY CURRENTLY IS
road by an angry NOT SUFFICIENT FOR MY
Jalapadan, the latter went FAMILY.
back to fetch him and told
HOPE AND PRAY FOR
him that we are just one
YOUR CONSIDERATION AND I
family. Evidently, [these]
REMAIN PRAYING FOR THE
incidents were mere
CONTINUOUS SUCCESS OF
expressions of anger on
YOUR MOST PROGRESSIVE
the part of Jalapadan
COMPANY AND I HAVE NO
without intention of
CLAIM WHATSOEVER.
terminating his
employment. Rather, it HANDTHUMBMARK
was complainant as VERY TRULY YOURS,
admitted by him who,
this time, refused to return
to work (SGD.)________
HANDTHUMBMARK
ARNULFO ACEBEDO
When he testified before the Labor
Arbiter, the petitioner admitted that he was
not dismissed from employment. In fact, Neither the petitioner nor the respondents
respondent Jalapadan appealed to the explained why the letter was addressed to Tanduay
petitioner to go back to work, and the latter Corporation. Significantly, respondent Jalapadan did
not deny the petitioners claim that the letter was Petitioner also denied that respondents were laid-off,
handwritten by him (Jalapadan). If such claim were since they were project employees only. It added that
true, there is neither rhyme nor reason why Tanduay since Eutiquio Antonio had refused a job order of
office tables, their contractual relationship ended.
Corporation was its addressee. Moreover, it appears
that the letter was coursed through respondent
On June 1, 2000, the Labor Arbiter rendered a
Jalapadan as salesman of the said corporation, which
decisionordering petitioner to pay separation pay and
is antithetical to the respondents claim that he was backwages. It ruled that respondents were regular
the petitioners employer and an independent employees because their work as carpenters was
contractor of respondent ACI. necessary and desirable in petitioners business.
Since Eutiquio worked in petitioners premises and
was without substantial capital or investment in the
58. Big AA Manufacturer vs. Antonio, G.R. No. form of tools, equipment, machinery or work
premises, the Labor Arbiter held that Eutiquio was
1608504, March 3, 2006
not an independent contractor. Noting the absence of
contracts providing the duration of respondents
Facts: employment and of reports of project completion to
the Department of Labor and Employment (DOLE),
Petitioner is a sole proprietorship registered in the the Labor Arbiter also rejected petitioners allegation
name of its proprietor, Enrico E. Alejo, with office that respondents were project employees. The Labor
address at 311 Barrio Santol, Balagtas, Bulacan. Arbiter further held that respondents were
constructively dismissed when the Implementing
On January 13, 2000, herein respondents Eutiquio Guidelines changed their status from regular
Antonio,Jay Antonio, Felicisimo Antonio, Leonardo employees to project employees.
Antonio, Sr. and Roberto Fabian filed a complaint for
illegal lay-off and illegal deductions before the On appeal, the NLRC modified the Labor Arbiters
NLRCs Regional Arbitration Branch No. III. They decision by ordering petitioner to reinstate
claimed that they were dismissed on January 11, 2000 respondents to their former positions or to pay them
and sought separation pay from petitioner. separation pay in case reinstatement was no longer
feasible, with full backwages in either case. It ruled
In respondents position paper,they alleged that as that respondents were regular employees, not
regular employees, they worked from 8:00 a.m. to independent contractors. It further held that petitioner
5:00 p.m. at petitioners premises using petitioners failed to justify its reason for terminating respondents
tools and equipment and they received P250 per day. and its failure to comply with the due process
Eutiquio was employed as carpenter-foreman from requirements.
1991-1999; Jay as carpenter from 1993-1999;
Felicisimo as carpenter from 1994-1999; and Issue:
Leonardo, Sr. also as carpenter from 1997-1999.
According to respondents, they were dismissed Whether or not respondents were regular employees
without just cause and due process; hence, their and were illegally dismissed.
prayer for reinstatement and full backwages.
Ruling:
On the other hand, petitioner denied that respondents
were its regular employees. Instead, petitioner Respondents are petitioners regular employees.
claimed that Eutiquio Antonio was one of its Respondents were employed for more than one year
independent contractors who used the services of the and their work as carpenters was necessary or
other respondents. According to petitioner, its desirable in petitioners usual trade or business of
independent contractors were paid by results and manufacturing office furniture. Under Article 280 of
were responsible for the salaries of their own the Labor Code, the applicable test to determine
workers. Allegedly, there was no employer-employee whether an employment should be considered regular
relationship between petitioner and respondents. or non-regular is the reasonable connection between
However, petitioner stated it allowed respondents to the particular activity performed by the employee in
use its facilities to meet job orders. relation to the usual business or trade of the
employer.
True, certain forms of employment require the some overt acts. The second element is the more
performance of usual or desirable functions and determinative factor.
exceed one year but do not necessarily result to
regular employment under Article 280 of the Labor Here, petitioners argument in support of its
Code.Some specific exceptions include project or abandonment charge was that respondents may have
seasonal employment. Yet, in this case, respondents resented its issuance of the Implementing Guidelines.
cannot be considered project employees. Petitioner This, in our view, fails to establish respondents
had neither shown that respondents were hired for a intention to abandon their jobs. On the contrary, by
specific project the duration of which was determined filing the complaint for illegal dismissal within two
at the time of their hiring nor identified the specific days of their dismissal on January 11, 2000 and by
project or phase thereof for which respondents were seeking reinstatement in their position paper,
hired. respondents manifested their intention against
severing their employment relationship with
We also agree that Eutiquio was not an independent petitioner and abandoning their jobs. It is settled that
contractor for he does not carry a distinct and an employee who forthwith protests his layoff cannot
independent business, and he does not possess be said to have abandoned his work.
substantial capital or investment in tools, equipment,
machinery or work premises.He works within Finally, Article 279 of the Labor Code,provides that a
petitioners premises using the latters tools and regular employee who is unjustly dismissed from
materials, as admitted by petitioner. Eutiquio is also work is entitled to reinstatement without loss of
under petitioners control and supervision. Attesting seniority rights and other privileges and to his full
to this is petitioners admission that it allowed backwages, inclusive of allowances, and to his other
respondents to use its facilities for the "proper benefits or their monetary equivalent computed from
implementation" of job orders. Moreover, the the time his compensation was withheld from him up
Implementing Guidelines regulating attendance, to the time of his actual reinstatement. If
overtime, deadlines, penalties; providing petitioners reinstatement is no longer feasible, separation pay
right to fire employees or "contractors"; requiring the equivalent to one month salary for every year of
carpentry division to join petitioners exercise service should be awarded as an alternative. This has
program; and providing rules on machine been our consistent ruling in the award of separation
maintenance, all reflect control and supervision over pay to illegally dismissed employees in lieu of
respondents. reinstatement.
Petitioner likewise alleges that it did not dismiss 59.) DOLE Philippines, Inc. Vs. Esteva
respondents as they were not its regular employees; G.R. No. 161115, Nov. 30, 2006
that respondents failed to sufficiently establish the
fact of illegal dismissal; and that respondents
abandoned the work after it issued the Implementing
Guidelines. Petition for Review on Certiorari
under Rule 45 of the revised Rules of Civil
Having ruled that respondents are regular employees, Procedure seeking the reversal of the
we shall proceed to determine whether respondents Decision, dated 20 May 2002, and the
have, as petitioner contends, abandoned their work,
Amended Decision, dated 27 November
or they have been illegally dismissed.
2003, both rendered by the Court of Appeals
in CA-G.R. SP No. 63405, which declared
The consistent rule is that the employer must
affirmatively show rationally adequate evidence that herein petitioner Dole Philippines, Inc. as
the dismissal was for a justifiable cause, failing in the employer of herein respondents, Medel
which would make the termination illegal, as in this Esteva and 86 others; found petitioner guilty
case. of illegal dismissal; and ordered petitioner to
reinstate respondents to their former
For accusing respondents of abandonment, petitioner positions and to pay the latter backwages.
must present evidence (1) not only of respondents
failure to report for work or absence without valid Facts
reason, but (2) also of respondents clear intention to
sever employer-employee relations as manifested by
VIII, Book III of the implementing rules of the Labor only be removed based on just and
Code, as amended, required for permissible job authorized causes as provided for in the
contracting that the contractor undertakes the contract Labor Code, as amended, and after they are
work on his account, under his own responsibility, accorded procedural due process. Therefore,
according to his own manner and method, free from petitioners acts of placing some of the
the control and direction of his employer or principal respondents on stay home status and not
in all matters connected with the performance of the giving them work assignments for more than
work except as to the results thereof. As alleged by six months were already tantamount to
the respondents, and unrebutted by petitioner, constructive and illegal dismissal.
CAMPCO members, before working for the
petitioner, had to undergo instructions and pass the
training provided by petitioners personnel. It was
petitioner who determined and prepared the work 60.) G.R. No. 147566 December 6, 2006
assignments of the CAMPCO members. CAMPCO
members worked within petitioners plantation and SAN MIGUEL CORPORATION,
processing plants alongside regular employees petitioner vs. NATIONAL LABOR
performing identical jobs, a circumstance recognized RELATIONS COMMISSION AND
as an indicium of a labor-only contractorship. Fourth, RAFAEL MALIKSI, respondent.
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 FACTS:
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 On 16 October 1990, Rafael M.
recruitment agency for petitioner. Since the Maliksi filed a complaint against the San
undertaking of CAMPCO did not involve the Miguel Corporation-Magnolia Division,
performance of a specific job, but rather the supply of herein referred to as SMC and Philippine
manpower only, CAMPCO clearly conducted itself as
Software Services and Education Center
a labor-only contractor. Lastly, CAMPCO members,
including respondents, performed activities directly herein referred to as PHILSSEC to
related to the principal business of petitioner. They compel the said respondents to recognize
worked as can processing attendant, feeder of canned him as a regular employee. He amended
pineapple and pineapple processing, nata de coco the complaint on 12 November 1990 to
processing attendant, fruit cocktail processing include the charge of illegal dismissal
attendant, and etc., functions which were, not only because his services were terminated on
directly related, but were very vital to petitioners
31 October 1990.
business of production and processing of pineapple
products for export.
The declaration that CAMPCO is indeed
engaged in the prohibited activities of labor-
only contracting, then consequently, an The complainants employment
employer-employee relationship is deemed record indicates that he rendered service
to exist between petitioner and respondents, with Lipercon Services from 1 April 1981
since CAMPCO shall be considered as a to February 1982 as budget head assigned
mere agent or intermediary of petitioner. to SMC-Beer Division, then from July
Since respondents are now recognized as
1983 to April 1985 with Skillpower, Inc.,
employees of petitioner, this Court is tasked
to determine the nature of their as accounting clerk assigned to SMC-
employment. In consideration of all the Magnolia Division, then from October
attendant circumstances in this case, this 1988 to 1989 also with Skillpower, Inc.
Court concludes that respondents are regular as acting clerk assigned to SMC-
employees of petitioner. As such, they are Magnolia Finance, and from October
entitled to security of tenure. They could
1989 to 31 October 1990 with 1998, the NLRC reversed that of the
PHILSSEC assigned to Magnolia Finance Labor Arbiter by declaring Maliksi a
as accounting clerk. The complainant regular employee of the petitioner and
considered himself as an employee of ordering the latter to reinstate him
SMC-Magnolia. Lipercon Services, without loss of seniority rights and with
Skillpower, Inc. and PHILSSEC are full benefits.
labor-only contractors and any one of
which had never been his employer. His
dismissal, according to him, was in
retaliation for his filing of the complaint
for regularization in service. His Issue:
dismissal was illegal there being no just
WHETHER OR NOT PRIVATE
cause for the action. He was not accorded
RESPONDENT IS A REGULAR
due process neither was his dismissal
EMPLOYEE OF PETITIONER SMC
reported to the Department of Labor and
DESPITE ITS FINDINGS THAT
Employment.
PHILSSEC IS AN INDEPENDENT JOB
CONTRACTOR? (affirmative)
control and supervision of the workers; (g) the power several motor vehicles and
of the employer with respect to the hiring, firing and other tools, materials and
payment of workers of the contractor; (h) the control equipment to service its
of the premises; (i) the duty to supply premises, tools, clients. It paid rentals of
appliances, materials, and labor; and (j) the mode, P30,020 for the office space
manner and terms of payment. 10 it occupied.
Based on the foregoing criterion, we find that D.L. 64. ABOITIZ HAULERS VS.DIMAPATOI
Admark is a legitimate independent contractor. Sept. 19, 2006, G.R. No. 148619
time cards to monitor the attendance of its personnel. tools, equipment, machineries, work premises, among
Petitioner also alleges that on 9 May 1996, the others, and the workers recruited and placed by such
respondents left the warehouse and did not report to persons are performing activities which directly
work thereafter. As a result of the respondents' related to the principal business of such employer. In
sudden abandonment of their work, there was no such cases, the person or intermediary shall be
orderly and proper turnover of papers and other considered merely as an agent of the employer who
company property in connection with the termination shall be responsible to the workers in the same
of the Written Contract for Services. manner and extent as if the latter were directly
Respondents, on the other hand, claim that employed by him.
most of them worked as checkers in petitioner's The first two paragraphs of Art. 106 set the
warehouse even before 1 March 1994. general rule that a principal is permitted by law to
engage the services of a contractor for the
Issue: performance of a particular job, but the principal,
Whether or not Grigio is a "labor- nevertheless, becomes solidarily liable with the
only" contractor. contractor for the wages of the contractor's
employees. The third paragraph of Art. 106, however,
Ruling: empowers the Secretary of Labor to make
Grigio is a "labor-only" contractor. The first distinctions between permissible job contracting and
issue that needs to be resolved is whether Grigio is a "labor-only" contracting, which is a prohibited act
"labor-only" contractor, which is tantamount to a further defined under the last paragraph. A finding
finding that the petitioner is the employer of the that a contractor is a "labor-only" contractor is
respondents. Article 106 of the Labor Code 24 equivalent to declaring that there is an employer-
explains the relations which may arise between an employee relationship between the principal and the
employer, a contractor and the contractor's employees employees of the supposed contractor, and the "labor-
thus: only" contractor is considered as a mere agent of the
ART. 106. Contractor or principal, the real employer. Section 7 of the Rules
subcontractor. Whenever an Implementing Articles 106 to 109 of the Labor Code,
employer enters into a contract as amended, reiterates the rules in determining the
with another person for the existence of employer-employee relationship between
performance of the former's work, employer, contractor or subcontractor, and the
the employees of the contractor and contractor's or subcontractor's employee.
of the latter's subcontractor, if any, Section 7. Existence of an
shall be paid in accordance with the employer-employee relationship.
provisions of this Code. The contractor or subcontractor
In the event that the contractor or shall be considered the employer of
subcontractor fails to pay the wages of his employees the contractual employee for
in accordance with this Code, the employer shall be purposes of enforcing the
jointly and severally liable with his contractor or provisions of the Labor Code and
subcontractor to such employees to the extent of the other social legislation. The
work performed under the contract in the same principal, however, shall be
manner and extent that he is liable to employees solidarily liable with the contractor
directly employed by him. in the event of any violation of any
The Secretary of Labor may, by appropriate provision of the Labor Code,
regulations, restrict or prohibit the contracting out of including the failure to pay wages.
labor to protect the rights of workers established The principal shall be deemed the
under this Code. In so prohibiting or restricting, he employer of the contractual employee in any
may make appropriate distinctions between labor of the following cases, as declared by a
only contracting and job contracting as well as competent authority:
differentiations within these types of contracting and a. where there is a labor-only contracting; or
determine who among the parties involved shall be b. where the contracting arrangement falls
considered the employer for purposes of this Code, to within the prohibitions provided in Section 6
prevent any violation or circumvention of any (Prohibitions) hereof.
provision of this Code. In determining whether or not a
There is "labor-only" contracting where the "labor-only" contracting exists, Art. 106 of
person supplying workers to an employer does not the Labor Code and Section 5 of the Rules
have substantial capital or investment in the form of Implementing Articles 106 to 109 of the
Labor Code, as amended, provides the Article 248 (C) of the Labor Code, as
following criteria: (1) where the person amended.
supplying workers to an employer does not "Substantial capital or investment"
have substantial capital or investment in the refers to capital stocks and subscribed
form of tools, equipment, machineries, work capitalization in the case of corporations,
premises, among other things; (2) the tools, equipment, implements, machineries
workers recruited and placed by such and work premises, actually and directly
persons are performing activities which are used by the contractor or subcontractor in
directly related to the principal business of the performance or completion of the job,
such employer; and (3) the contractor does work or service contracted out.
not exercise the right to control the The "right to control" shall refer to the right
performance of the work of the contractual reserved to the person for whom the services of the
employee. In order that one is considered by contractual workers are performed, to determine not
law as a "labor-only" contractor, all three only the end to be achieved, but also the manner and
aforementioned criteria need not be present. means to be used in reaching that end.
If the contractor enters into an arrangement The allegation of the petitioner that Grigio is
characterized by any one of the criteria an independent job contractor, and, therefore, this
provided, this would be a clear case of case is one of permissible job contracting, is without
"labor-only contracting." The clear phrasing basis. In this case, the respondents' work, as
of Section 5 of the Rules Implementing warehouse checkers, is directly related to the
Articles 106 to 109 of the Labor principal business of the petitioner. Petitioner also
Code, as amended, support this exercises the right to control and determines not only
interpretation. the end to be achieved, but also the manner and
Section 5. Prohibition means to be used in reaching that end. Lastly,
against labor-only contracting. petitioner failed to sufficiently prove that Grigio had
Labor-only contracting is hereby "substantial capital or investment."
declared prohibited. For this The respondents, as checkers, were
purpose, labor-only contracting employed to check and inspect these cargoes, a task
shall refer to an arrangement where which is clearly necessary for the petitioner's
the contractor or subcontractor business of forwarding and distributing of cargoes.
merely recruits, supplies or places The petitioner did not dispute the fact that the
workers to perform a job, work or respondents were hired as checkers as early as 1992.
service for a principal, and any of The fact that they were employed before the Written
the following elements are is Contract of Services took effect on 24 February 1994,
present: and continued with their jobs until 1996, after the
said contract had already expired on 24 February
i) The contractor or 1995, 29 indicates that the respondents' work was
subcontractor does not have indeed necessary for the petitioner's business. In a
substantial capital or similar case, Guarin v. National Labor Relations
investment which relates to the Commission, the workers' contracts were repeatedly
job, work or service to be renewed to perform services necessary for the
performed and the employees employer's business. Thus, the Court described the
recruited, supplied or placed arrangement as "labor-only" contracting:
by such contractor or The jobs assigned to the petitioners as
subcontractor are performing mechanics, janitors, gardeners, firemen and
activities which are directly grasscutters were directly related to the business of
related to the main business of Novelty as a garment manufacturer. In the case of
the principal; or Philippine Bank of Communications vs. NLRC, 146
ii) the contractor does not SCRA 347, we ruled that the work of a messenger is
exercise the right to control directly related to a bank's operations. In its
over the performance of the Comment, Novelty contends that the services which
work of the contractual are directly related to manufacturing garments are
employee. sewing, textile cutting, designs, dying, quality
The foregoing provisions shall be control, personnel, administration, accounting,
without prejudice to the application of finance, customs, delivery and similar other
activities; and that allegedly, "it is only by stretching
the imagination that one may conclude that the misdelivered to consignee's port of destination. Any
services of janitors, janitresses, firemen, grasscutters, discrepancy shall be reported immediately to AHI's
mechanics and helpers are directly related to the Logistic Manager, Mr. Andy Valeroso.
business of manufacturing garments" (p. 78, Rollo). The control exercised by petitioner's
Not so, for the work of gardeners in maintaining supervisors over the performance of respondents was
clean and well-kept grounds around the factory, to such extent that petitioner's Warehouse Supervisor,
mechanics to keep the machines functioning properly, Roger Borromeo, confidently gave an evaluation of
and firemen to look out for fires, are directly related the performance of respondent MonaoraiDimapatoi,
to the daily operations of a garment factory. That fact who likewise felt obliged to obtain such Certification
is confirmed by Novelty's rehiring the workers or from Borromeo.
renewing the contract with Lipercon every year from Petitioner's control over the respondents is
1983 to 1986, a period of three (3) years. evident. And it is this right to control the employee,
As Lipercon was a "labor-only" contractor, not only as to the result of the work to be done, but
the workers it supplied Novelty became regular also as to the means and methods by which the same
employees of the latter.Where the employees are is to be accomplished, that constitutes the most
tasked to undertake activities usually desirable or important index of the existence of the employer-
necessary in the usual business of the employer, the employee relationship.
contractor is considered as a "labor-only" contractor Lastly, the law casts the burden on the
and such employees are considered as regular contractor to prove that it has substantial capital,
employees of the employer. investment, tools, etc. Employees, on the other hand,
In addition, Grigio did not undertake the need not prove that the contractor does not have
performance of its service contract according to its substantial capital, investment, and tools to engage in
own manner and method, free from the control and job-contracting. In this case, neither Grigio nor the
supervision of its principal. The work activities, work petitioner was able to present any proof that Grigio
shifts, and schedules of the respondents, including the had substantial capital. There was no evidence
time allowed for "recess" were set under the Written pertaining to its capitalization nor its investment in
Contract of Services. This clearly indicates that these tools, equipment or implements actually used in the
matters, which consist of the means and methods by performance or completion of the job, work, or
which the work is to be accomplished, were not service that it was contracted to render. Grigio was
within the absolute control of Grigio. By stipulating merely expected to supply petitioner with manpower
these matters in a contract, Grigio is constrained to to carry out work necessary for its business, to be
follow these provisions and would no longer be able carried out in the manner which petitioner provided
to exercise the freedom to alter these work shifts and in the contract.
schedules at its own convenience. Such being the Thus, Grigio is obviously a "labor-only"
case, Grigio cannot be considered as an independent contractor since it did not have substantial capital or
job contractor. investment which relates to the service performed;
Petitioner's allegation that Grigio retained the respondents performed activities which were
control over the respondents by providing supervisors directly related to the main business of the petitioner;
to monitor the performance of the respondents cannot and Grigio did not exercise control over the
be given much weight. Instead of exercising their performance of the work of the respondents.
own discretion or referring the matter to the officers Consequently, the petitioner is considered as the
of Grigio, Grigio's supervisors were obligated to refer employer of the respondents.
to petitioner's supervisors any discrepancy in the In prohibiting "labor-only" contracting and
performance of the respondents with their specified creating an employer-employee relationship between
duties. The Written Contract of Services provided the principal and the supposed contractor's
that: employees, the law intends to prevent employers
5.c. That the GRIGIO personnel, particularly the from circumventing labor laws intended to protect
supervisors, shall perform the following: employees. In the case of Aurora Land Projects Corp.
The Supervisor for the warehouse operation v. National Labor Relations Commission, this Court
shall monitor the performance and productivity of all pronounced:
the checkers, jacklifters, stuffers/strippers, forklift The question as to whether an employer-
operators, drivers, and helpers. He shall coordinate employee relationship exists in a certain situation
with AHI's supervisors regarding the operations at the continues to bedevil the courts. Some businessmen
Warehouse to ensure safety at the place of work. try to avoid the bringing about of an employer-
He shall see to it that the cargoes are not overlanded, employee relationship in their enterprises because
shortlanded, delivered at a wrong destination, or that judicial relation spawns obligations connected
with workmen's compensation, social security, On August 9, 1994, LSWA filed a Third-
medicare, minimum wage, termination pay, and Party Complaint against GSIS for underpayment of
unionism. In light of this observation, it behooves complainants' wages.
this Court to be ever vigilant in checking the In its Position Paper, GSIS alleged that the
unscrupulous efforts of some of our entrepreneurs, Third-Party Complaint states no cause of action
primarily aimed at maximizing their return on against it; that LSWA obligated itself in the Security
investments at the expense of the lowly workingman. Service Contract to be solely liable for the
enforcement of and compliance with all existing
labor laws, rules and regulations; that the GSIS Board
65. GSIS vs. NLRC, G.R. No. 157647, October 15, of Trustees approved the upward adjustment on a
2007, citing Rosewood Processing vs. NLRC, 290 month-to-month basis, at P4,200 per guard per
SCRA 408 month, effective January 8, 1991 to May 31, 1991,
under Board Resolution No. 207 dated May 24, 1991,
Facts: which was incorporated in the Security Service
Tomas Lanting, doing business under the Contract; that GSIS fully paid the services of the
name and style of Lanting Security and Watchman security guards as agreed upon in the Security
Agency (LSWA) entered into a Security Service Service Contract.
Contract to provide security guards to the properties
of the Government Service Insurance System (GSIS) Issues: Whether GSIS is solidarily liable for
at the contract rate of P3,000.00 per guard per month. payment of complainants-respondnents' salary
During the effectivity of the contract, LSWA differentials.
requested the GSIS for an upward adjustment of the
contract rate in view of Section 7 of Wage Order No. Ruling:
1 and Section 3 of Wage Order No. 2, which were Yes. Articles 106 and 107 of the Labor Code
issued by the Regional Tripartite Wages and provide:
Productivity Board-NCR pursuant to Republic Act ART. 106. Contractor or
No. 6727, otherwise known as the Wage subcontractor. Whenever an
Rationalization Act. employer enters into contract with
Acting on the request of LSWA, the GSIS, another person for the performance
through its Board of Trustees and under Board of the former's work, the employees
Resolution No. 207, dated May 24, 1991, approved of the contractor and of the latter's
the upward adjustments of the contract price from subcontractor, if any, shall be paid
P3,000.00 to P3,716.07 per guard, per month in accordance with the provisions
effective November 1, 1990 to January 7, 1991, and of this Code.
P4,200.00 effective January 8, 1991 to May 31, 1991. In the event that the contractor or
LSWA assigned security guards Daniel Fanila, Hector subcontractor fails to pay the wage of his employees
Moreno, IsauroFerrer, Rubin Wilfredo, Jesus Delima in accordance with this Code, the employer shall be
Jr., Maria Legaspi, Santiago Noto Jr., and Virgilio jointly and severally liable with his contractor or
Soriano (hereafter complainants) to guard one of subcontractor to such employees to the extent of the
GSIS's properties. work performed under the contract, in the same
On March 15, 1993, GSIS terminated the manner and extent that he is liable to employees
Security Service Contract with LSWA. All the directly employed by him.
complainants, except Virgilio Soriano, were absorbed ART. 107 Indirect
by the incoming security agency. On March 7, 1994, employer. The provisions of the
complainants filed separate complaints against LSWA immediately preceding Article shall
for underpayment of wages and non-payment of labor likewise apply to any person,
standard benefits from March 1991 to March 15, partnership, association or
1993. Virgilio Soriano also complained of illegal corporation which, not being an
dismissal. employer, contracts with an
In its Position Paper, LSWA alleged that independent contractor for the
complainants were estopped from claiming that they performance of any work, task, job
were underpaid because they were informed that the or project.
pay and benefits given to them were based on the In this case, the GSIS cannot evade liability
contract rate of P103.00 per eight hours of work or by claiming that it had fully paid complainants'
about P3,100.00 per month. salaries by incorporating in the Security Service
Contract the salary rate increases mandated by Wage
Order Nos. 1 and 2 by increasing the contract price be entitled only to such rights and privileges provided
from P3,000.00 to P3,176.07 per guard per month in its by-laws.
effective November 1, 1990 to January 7, 1991, and
P4,200.00 effective January 8, 1991 to May 31, 1991. In the discharge of the aforesaid primary objectives,
In Rosewood Processing, Inc. v. National respondent cooperative entered into several Service
Labor Relations Commission, 25 the Court explained
Contracts with Stanfilco - a division of DOLE
the rationale for the joint and several liability of the
employer, thus: Philippines, Inc. and a company based in Bukidnon
The joint and several liability of the
employer or principal was enacted to ensure The owners-members do not receive compensation or
compliance with the provisions of the Code, wages from the respondent cooperative. Instead, they
principally those on statutory minimum wage. The receive a share in the service surplus [10] which the
contractor or subcontractor is made liable by virtue of respondent cooperative earns from different areas of
his or her status as a direct employer, and the trade it engages in, such as the income derived from
principal as the indirect employer of the contractor's the said Service Contracts with Stanfilco. The
employees. This liability facilitates, if not guarantees,
owners-members get their income from the service
payment of the workers' compensation, thus, giving
the workers ample protection as mandated by the surplus generated by the quality and amount of
1987 Constitution. This is not unduly burdensome to services they rendered, which is determined by the
the employer. Should the indirect employer be Board of Directors of the respondent cooperative.
constrained to pay the workers, it can recover
whatever amount it had paid in accordance with the In order to enjoy the benefits under the Social
terms of the service contract between itself and the
contractor. Security Law of 1997, the owners-members of the
Thus, the Court does not agree with the respondent cooperative, who were assigned to
GSIS's claim that a double burden would be imposed
upon the latter because it would be paying twice for Stanfilco requested the services of the latter to
complainants' services. Such fears are unfounded. register them with petitioner SSS as self-employed
Under Article 1217 of the Civil Code, if the GSIS
should pay the money claims of complainants, it has and to remit their contributions as such. Also, to
the right to recover from LSWA whatever amount it comply with Section 19-A of Republic Act No. 1161,
has paid in accordance with the terms of the service
as amended by Republic Act No. 8282, the SSS
contract between the LSWA and the GSIS.
Joint and solidary liability is simply meant contributions of the said owners-members were equal
to assure aggrieved workers of immediate and to the share of both the employer and the employee.
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. SSS said that it is respondent who should register
their owner-members to the SSS as they are the ones
employing the said owner-members.
66. Republic of the Phils/SSC/SSS vs. Asiapro petitioner SSS, on 12 June 2003, filed a
Cooperative, G.R. No. 172101, November 23, 2007 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
Facts: respondent cooperatives owners-members as
covered employees under the compulsory coverage
Respondent Asiapro, as a cooperative, is composed of
of SSS and to remit the necessary contributions in
owners-members. Under its by-laws, owners-
accordance with the Social Security Law of 1997
members are of two categories, to wit: (1) regular
member, who is entitled to all the rights and Respondent cooperative filed its Answer with Motion
privileges of membership; and (2) associate member, to Dismiss alleging that no employer-employee
who has no right to vote and be voted upon and shall
(c) The agreement between the principal and performing jobs that were not directly related to
contractor or subcontractor assures the contractual respondents main line of business. Respondent is
employees entitlement to all labor and occupational engaged in glass manufacturing. One of the
safety and health standards, free exercise of the right petitioners served as a quality controller, while the
to self-organization, security of tenure, and social and rest were glass cutters. The only excuse offered by
welfare benefits. respondent - that petitioners services were required
only when there was an increase in the markets
On the other hand, labor-only contracting, a demand with which respondent could not cope - only
prohibited act, is an arrangement in which the prove even more that the services rendered by
contractor or subcontractor merely recruits, supplies petitioners were indeed part of the main business of
or places workers to perform a job, work or service respondent. It would mean that petitioners
for a principal. In labor-only contracting, the supplemented the regular workforce when the latter
following elements are present: could not comply with the markets demand;
necessarily, therefore, petitioners performed the same
(a) The contractor or subcontractor does not have
functions as the regular workforce. The
substantial capital or investment to actually perform
indispensability of petitioners services was fortified
the job, work or service under its own account and
by the length and continuity of their performance,
responsibility;
lasting for periods ranging from three to 11 years.
(b) The employees recruited, supplied or placed by
More importantly, the Court finds that the crucial
such contractor or subcontractor is performing
element of control over petitioners rested in
activities which are directly related to the main
respondent. The power of control refers to the
business of the principal.
authority of the employer to control the employee not
In labor-only contracting, the statutes create an only with regard to the result of work to be done, but
employer-employee relationship for a comprehensive also to the means and methods by which the work is
purpose: to prevent circumvention of labor laws. The to be accomplished. It should be borne in mind that
contractor is considered as merely the agent of the the power of control refers merely to the existence of
principal employer and the latter is responsible to the the power and not to the actual exercise thereof. It is
employees of the labor-only contractor as if such not essential for the employer to actually supervise
employees are directly employed by the principal the performance of duties of the employee; it is
employer. Therefore, if SSASI was a labor-only enough that the former has a right to wield the power.
contractor, then respondent shall be considered as the
Petitioners followed the work schedule prepared by
employer of petitioners who must bear the liability
respondent. They were required to observe all rules
for the dismissal of the latter, if any.
and regulations of the respondent pertaining to,
An important element of legitimate job contracting is among other things, the quality of job performance,
that the contractor has substantial capital or regularity of job output, and the manner and method
investment, which respondent failed to prove. There of accomplishing the jobs. Other than being the one
is a dearth of evidence to prove that SSASI possessed who hired petitioners, there was absolute lack of
substantial capital or investment when respondent evidence that SSASI exercised control over them or
began contractual relations with it more than a their work.
decade before 2003. The Court did not find a single
The fact that it was SSASI which dismissed
financial statement or record to attest to the economic
petitioners from employment is irrelevant. It is hardly
status and financial capacity of SSASI to venture into
proof of control, since it was demonstrated only at
and sustain its own business independent from
the end of petitioners employment. What is more, the
petitioner.
dismissal of petitioners by SSASI was a mere result
Furthermore, the Court is unconvinced by of the termination by respondent of its contractual
respondents argument that petitioners were relations with SSASI.
SSASI is a labor-only contractor; hence, it is petitioners daily time records (DTR) and uniforms,
considered as the agent of respondent. Respondent is and exercised direct control and supervision over the
deemed by law as the employer of petitioners. petitioners and that therefore HI has every right to
terminate their services legally. E-PCIBank could not
Equally unavailing is respondents stance that its be held liable for whatever misdeed HI had
committed against its employees.
relationship with petitioners should be governed by
HI, on the other hand, asserted that it was an
the Accreditation Agreement stipulating that independent job contractor engaged in the business of
petitioners were to remain employees of SSASI and providing janitorial and related services to business
shall not become regular employees of the establishments, and E-PCIBank was one of its
respondent. A party cannot dictate, by the mere clients. Petitioners were its employees, part of its
expedient of a unilateral declaration in a contract, the pool of janitors/messengers assigned to E-
character of its business, i.e., whether as labor-only PCIBank. The Contract for Services between HI and
E-PCIBank expired on 15 July 2000. E-PCIBank no
contractor or as job contractor, it being crucial that its
longer renewed said contract with HI and, instead,
character be measured in terms of and determined by bidded out its janitorial requirements to two other job
the criteria set by statute. contractors, Able Services and Puritan. HI
designated petitioners to new work assignments, but
68. ROLANDO SASAN, SR., vs NATIONAL the latter refused to comply with the
LABOR RELATIONS COMMISSION same. Petitioners were not dismissed by HI, whether
actually or constructively, thus, petitioners
Assailed in this Petition for Review under complaints before the NLRC were without basis.
Rule 45 of the Rules of Court are the On 7 January 2002, on the basis of the
Decision[1] dated 24 April 2006 of the Court of parties position papers and documentary evidence,
Appeals in CA-G.R. SP No. 79912, which affirmed Labor Arbiter Gutierrez rendered a Decision finding
the Decision dated 22 January 2003 of the National that HI was not a legitimate job contractor on the
Labor Relations Commission (NLRC) in NLRC Case ground that it did not possess the required substantial
No. V-000241-2002 finding that Helpmate, Inc. (HI) capital or investment to actually perform the job,
is a legitimate independent job contractor and that the work, or service under its own account and
petitioners were not illegally dismissed from work responsibility as required under the Labor Code. HI
Respondent Equitable-PCI Bank (E- is therefore a labor-only contractor and the real
PCIBank), a banking entity duly organized and employer of petitioners is E-PCIBank which is held
existing under and by virtue of Philippine laws, liable to petitioners.
entered into a Contract for Services with HI, a Aggrieved by the decision of Labor Arbiter
domestic corporation primarily engaged in the Gutierrez, respondents E-PCIBank and HI appealed
business of providing janitorial and messengerial the same to the NLRC, 4th Division, stationed
services. The contract was impliedly renewed every in Cebu City. The NLRC promulgated its Decision
year after year. on 22 January 2003 modifying the ruling of Labor
July 23, 2001, petitioners filed with the Arbiter Gutierrez. The NLRC took into
Arbitration Branch of the NLRC in Cebu City against consideration the documentary evidence presented by
HI and E- PCIBANK for illegal dismissal with HI for the first time on appeal and, on the basis
claims for separation pay, service incentive leave pay, thereof, declared HI as a highly capitalized venture
allowances, damages, attorneys fees and costs. with sufficient capitalization, which cannot be
Position papers were submitted. Petitioners considered engaged in labor-only contracting.
claimed that they had become regular employees of Petitioners moved for a motion for recon
E-PCIbank with respect to activities for which they was denied by NLRC.In the CA, it affirmed the
were employed and that the bank had direct control findings of the NLRC that HI was a legitimate job
and supervision over the means and methods by contractor and that it did not illegally dismiss
which they were to perform their jobs and their petitioners because they were offered new work
dismissal by HI was null and void since they were assignments to various establishments but they
regular employees of E-PCIBANK. refused to.
PCI Bank said that it entered into a Contract Issue:
for Services with HI, an independent job contractor A) Whether HI is a labor-only contactor?
which hired and assigned petitioners to the bank to
perform janitorial and messengerial services thereat.
It was HI that paid petitioners wages, monitored
wit, the selection and engagement of the employee is dismissed for lack of merit, or in the
shown by the fact that it was HI which selected and alternative, the case be remanded for formal
engaged the services of petitioners as its employees. hearing on the merits and to implead D.L.
On the second requisite regarding the Admark as a party-respondent.The NLRC
payment of wages, it was HI who paid granted the appeal and remanded the case
petitioners their wages and who provided their daily for further hearings on the factual issues.
time records and uniforms and other materials The case was remanded to Labor
necessary for the work they performed. Therefore, it Arbiter, who, after finding that Neri is not
is HI who is responsible for petitioners claims for an employee of petitioner, but rather of
wages and other employees benefits. D.L. Admark, an independent labor
As to the third requisite on the power to contractor, dismissed the complaint. A
control the employees conduct, and the fourth memorandum on appeal was nominally filed
requisite regarding the power of dismissal, again E- by all the complainants; the NLRC ruled in
PCIBank did not have the power to control complainants' favor and reversed and set
petitioners with respect to the means and methods by aside the labor arbiter's decision. According
which their work was to be accomplished. to the NLRC, the pieces of evidence on
Considering the foregoing, plus taking record established the employer-employee
judicial notice of the general practice in private, as relationship between Purefoods and Neri
well as in government institutions and industries, of and the other complainants. Purefoods
hiring an independent contractor to perform special moved for the reconsideration of the
services, ranging from janitorial, security and even decision but its motion was denied for lack
technical services, we can only conclude that HI is a of merit. Hence, its recourse to the Court of
legitimate job contractor. As such legitimate job Appeals via a petition for certiorari.
contractor, the law creates an employer-employee The Court of Appeals, relying on
relationship between HI and petitioners which the case of Escario v. NLRC, held that D.L.
renders HI liable for the latters claims. Admark is a legitimate independent
contractor. However, it ruled that
complainants are regular employees of
69. Purefoods Corp. vs. NLRC et al., G.R. No.
Purefoods. Citing Art. 280 of the Labor
172241, November 20, 2008 Code, the appellate court found that
complainants were engaged to perform
activities which are usually necessary or
FACTS: desirable in the usual business or trade of
Lolita Neri (Neri) originally filed a Purefoods, and that they were under the
claim for nonpayment of additional wage control and supervision of Purefoods'
increase, regularization, nonpayment of supervisors, and not of D.L. Admark's. It
service incentive leave, underpayment of noted that in the Promotions Agreements
13th month pay, and nonpayment of premium between D.L. Admark and Purefoods, there
pay for holiday and holiday pay against was no mention of the list of D.L. Admark
Purefoods Corporation (Purefoods). By July employees who will handle particular
4, 1992, however, Neri was dismissed from promotions for petitioner, and that
her work as a Deli-Attendant. Subsequently, complainants' periods of employment are
or on 13 July 1992, eleven (11) other not fully covered by the Promotions
complainantsjoined forces with Neri and Agreements.
together they filed an amended complaint,
with Neri charging Purefoods with illegal Issue: Whether or not Neri and the other
dismissal.All the other complainants, save complainants are employees of PUREFOODS or
for Neri, were still working for Purefoods at A.D. ADMARKS
the time of the filing of the amended
complaint. On August 31, 1993, Labor Ruling:
declared Neri and the complainants as The Court agrees with Purefoods'
Purefoods' regular employees; and Neri as argument that Art. 280 of the Labor
having been illegally dismissed and entitled Codefinds no application in a trilateral
to reinstatement with payment of relationship involving a principal, an
backwages. Purefoods filed a partial appeal, independent job contractor, and the latter's
praying that the claims of complainants be employees. Indeed, the Court has ruled that
said provision is not the yardstick for Admark. However, they also averred that
determining the existence of an employment they were under the control and supervision
relationship because it merely distinguishes of petitioner's employeessalesmen, poultry
between two kinds of employees, i.e., sales managers, deli supervisorswho give
regular employees and casual employees, for them work orders and to whom they submit
purposes of determining the right of an weekly inventory reports and monthly
employee to certain benefits, to join or form competitive sales report. In support of these
a union, or to security of tenure; it does not statements, Neri appended several
apply where the existence of an employment documents (various Identification Cards,
relationship is in dispute. It is therefore Certification from Rustan's Supermarkets
erroneous on the part of the Court of stating that respondent Neri is from
Appeals to rely on Art. 280 in determining Purefoods, Memoranda to respondent Neri
whether an employer-employee relationship written by a supervisor from
exists between respondent Neri and Purefoods, letters from Purefoods
Purefoods. area sales managers introducing
Permissible job contracting or complainants as Purefoods Merchandisers).
subcontracting refers to an arrangement Purefoods, meanwhile, claims that these
whereby a principal agrees to put out or documents must be taken in the context of
farm out with the contractor or subcontractor the performance of the service contracted
the performance or completion of a specific outpromotion of its products.
job, work or service within a definite or In the first place, D.L. Admark's
predetermined period regardless of whether status as a legitimate independent contractor
such job, work or service is to be performed has already been established in Escario v.
or completed within or outside the premises NLRC. In the said case, complainants,
of the principal. In this arrangement, the through D.L. Admark, worked as
following conditions must be met: (a)the merchandisers for California Manufacturing
contractor carries on a distinct and Corporation (CMC). They filed a case
independent business and undertakes the before the labor arbiter for the regularization
contract work on his account under his own of their employment status with CMC, and
responsibility according to his own manner while the case was pending, D.L. Admark
and method, free from the control and sent termination letters to complainants. The
direction of his employer or principal in all complainants thereafter amended their
matters connected with the performance of complaint to include illegal dismissal. The
his work except as to the results thereof; Court considered the following
(b)the contractor has substantial capital or circumstances as tending to establish D.L.
investment; and(c)the agreement between Admark's status as a legitimate job
the principal and contractor or contractor:
subcontractor assures the contractual 1) The SEC registration certificate
employees' entitlement to all labor and of D.L. Admark states that it is a firm
occupational safety and health standards, engaged in promotional, advertising,
free exercise of the right to self- marketing and merchandising activities.
organization, security of tenure, and social 2) The service contract between
welfare benefits. CMC and D.L. Admark clearly provides that
To support its position that the agreement is for the supply of sales
respondent is not its employee, Purefoods promoting merchandising services rather
relies on the following: (i) the Promotions than one of manpower placement.
Agreements it entered into with D.L. 3) D.L. Admark was actually
Admark; (ii) Department Order No. 10 engaged in several activities, such as
(Series of 1997) which defines legitimate advertising, publication, promotions,
contracting or subcontracting; and (iii) marketing and merchandising. It had several
Escario v. NLRC wherein the Court declared merchandising contracts with companies
D.L. Admark as a legitimate labor like Purefoods, Corona Supply, Nabisco
contractor. Biscuits, and Licron. It was likewise
On the other hand, early on, Neri engaged in the publication business as
and the rest of the complainants admitted evidenced by its magazine the
that they worked for petitioner through D.L. "Phenomenon."
ATTENDANTS 12.00 PESOS from employment. Thus, Oabel converted her petition
ADJUSTMENT JAN 30, 1991 TO JUNE into a complaint for illegal dismissal.
22, 1992," signed and received by Neri, is
proof that Purefoods never considered Neri LA dismissed the complaint claiming that Oabel
as its own employee, but rather as one of never disputed the fact that her work with petitioner
D.L. Admark's deli attendants.
was on a per function basis or a need basis thus
We also note that Neri herself
admitted in her SinumpaangSalaysay and in Oabel could not even be considered as a casual
the hearings that she applied with D.L. employee nor a provisional employee. Maranaw
Admark and that she worked for Purefoods consider Oabel, at most, as a project employee
through D.L. Admark. Neri was aware from which does not ripen into a regular employee.
the start that D.L. Admark was her employer
and not Purefoods. She had kept her contract Oabel appealed before the NLRC. NLRC reversed
with D.L. Admark, and inquired about her the ruling of LA and held that MANRED is a labor-
employment status with D.L. Admark. It only contractor and Oabel was illegaly dismissed
was D.L. Admark, as her employer, which
for it was done without a valid or just cause.
had the final say in, and which actually
effected, her termination. NLRC grounded these findings on the fat that:
In view of the foregoing, we hold
that Neri is not an employee of Purefoods, 1. Under the terms of the service contract,
but that of D.L. Admark. In the absence MANRED shall provide Maranaw not
of employer-employee relations between specific jobs or services but personnel; and
Neri and Purefoods, the complaint for 2. That MANDRED had insufficient
illegal dismissal and other monetary capitalization and was not sufficiently
claims must fail. equipped to provide specific jobs; and
3. That the activities performed by Oabel was
70. MARANAW HOTELS and RESPORT CORP. directly related to and usually necessary or
vs. CA desirable in the business of Maranaw.
FACTS: Maranaw then filed a petition before the CA. CA
dismissed the petition on account of the failure of
Private respondent Sheryl Oabel filed a complaint
Maranaw to append the board resolution
for regularization, subsequently converted into
authorizing the counsel for petitioner to file the
one for illegal dismissal before LA Madjayran H.
petition before the CA.
Ajan.
In the present petition, petitioner invokes,
Oabel was initially hired by Maranaw Hotels as an
substantial justice as justification for a reversal of
extra beverage attendant on April 24, 1995. This
the resolution of the CA. Further, Maranaw contends
lasted until February 7, 1997. Oabel worked in
that the filing of a MR with the certificate of non-
Century Park Hotel, an establishment owned by the
forum shopping attached constitutes substantial
petitioner. Petitioner then contracted with Manila
compliance with the requirement.
Resource Devt Corp. (MANRED). Subsequently,
Oabel was transferred to MANRED with the latter ISSUE:
deporting itself as her employer. MANRED has
intervened in all stages of the proceedings and has WON there was substantial compliance with respect
consistently claimed to be the employer of Oabel. on the certificate of non-forum shopping. Further,
Oabel performed the following functions: Secretary WON there exists an EE-ER relationship between
Public Relations, Gift Shop Attendant, Waitress, and Oabel and Maranaw.
Shop Attendant from 1997 1998.
Specific authorization, the Court held, could only an ever present need for individuals to perform
come in the form of a board resolution issued by the certain tasks necessary in petitioners business. Thus,
Board of Directors that specifically authorizes the although the tasks themselves may vary, the need for
counsel to institute the petition and execute the sufficient manpower to carry them out does not.
certification, to make his actions binding on his Thus, in any event, the petitioner determines the
principal, i.e.,the corporation. nature of the tasks to be performed by Oabel.
Therefore, in the process, exercising control.
Art. 280. Regular and casual employment.
The provisions of written agreement to the DENIED.
contrary notwithstanding and regardless of the
oral agreement of the parties, an employment 71. Coca-Cola Bottlers Phils., Inc. vs. Alan M.
Agito, et al.
shall be deemed to be regular where the
[GR No. 179546 February 13, 2009]
employee has been engaged to perform
activities which are usually necessary or FACTS:
desirable in the usual business or trade of the
employer, except where the employment has Coca-Cola Bottlers Phils. Inc.
been fixed for a specific project or undertaking (COKE), the petitioner herein is a domestic
the completion or termination of which has corporation engaged in manufacturing,
bottling and distributing soft drink
been determined at the time of the engagement
beverages and other allied products.
of the employee or where the work or service to Respondents were salesmen assigned at
be performed is seasonal in nature and the Coke Lagro Sales Office for years but were
employment is for the duration of the season. not regularized. Coke averred that
respondents were employees of Interserve
An employment shall be deemed to be casual who were tasked to perform contracted
if it is not covered by the preceding services in accordance with the provisions of
paragraph: Provided, That any employee the Contract of Services executed between
who has rendered at least one year of service, Coke and Interserve on 23 March 2002. Said
whether such service is continuous or Contract constituted legitimate job
contracting, given that the latter was a bona
broken, shall be considered a regular
fide independent contractor with substantial
employee with respect to the activity in capital or investment in the form of tools,
which he is employed and his employment equipment, and machinery necessary in the
shall continue while such activity exists. conduct of its business.
72.[G.R. No. 171814. May 8, 2009.] Gamo and petitioner failed to agree on a payment
SOUTH DAVAO scheme, thus, petitioner did not renew the "contract"
DEVELOPMENT COMPANY, of Gamo. Gamo and the copra workers alleged that
INC. (NOW SODACO they were illegally dismissed.
AGRICULTURAL On the other hand, respondent Eleonor Cosep
CORPORATION) AND/OR (Eleonor) was employed as a mango classifier in the
MALONE PACQUIAO AND packing house of petitioner's mango farm in San
VICTOR A. Isidro, Davao Oriental. Sometime in October 1999,
CONSUNJI, petitioners, vs. she did not report for work as she had wanted to raise
SERGIO L. GAMO, and sell pigs instead. Petitioner, through Malone
ERNESTO BELLEZA, FELIX Pacquiao, tried to convince Eleonor to report for
TERONA, CARLOS ROJAS, work but to no avail
MAXIMO MALINAO, On 22 March 2000, respondents filed a complaint for
VIRGILIO COSEP, illegal dismissal against petitioner. They alleged that
ELEONOR COSEP, MAXIMO sometime in December 1999, petitioner verbally
TOLDA, NELSON BAGAAN, terminated them en masse.
and TRADE UNION OF THE Issues:
PHILIPPINES and ALLIED (1) whether the Court of Appeals failed to take
SERVICES judicial notice of the accepted practice of
(TUPAS), respondents. independent contractors in the coconut industry; (2)
Facts: whether there is a valid job contracting between
Petitioner South Davao Development Company petitioner and Gamo; and (3) whether Eleonor had
(petitioner or petitioner corporation) is the operator of effectively abandoned her work.
a coconut and mango farm in San Isidro, Davao Held:
Oriental and Inawayan/Baracatan, Davao del Sur. On The labor arbiter took judicial notice of the alleged
August 1963 petitioner hired respondent Sergio L. prevailing business practices in the coconut industry
Gamo (Gamo) as a foreman. Sometime in 1987, that copra making activities are done quarterly; that
petitioner appointed Gamo as a copra maker the workers can contract with other farms; and that
contractor. Respondents Ernesto Belleza, Carlos the workers are independent from the land owner on
Rojas, Maximo Malinao were all employees in all work aspects. Petitioner wants this Court to take
petitioner's coconut farm, while respondents Felix judicial notice of the current business practice in the
Terona, Virgilio Cosep, Maximo Tolda, and Nelson coconut industry which allegedly treats copraceros as
Bagaan were assigned to petitioner's mango farm. All independent contractors. In Expertravel & Tours, Inc.
of the abovenamed respondents (copra workers) were v. Court of Appeals, we held, thus:
later transferred by petitioner to Gamo as the Generally speaking, matters of
latter's copraceros. From 1987 to 1999, Gamo and judicial notice have three
petitioner entered into a profit-sharing agreement material requisites: (1) the matter
wherein 70% of the net proceeds of the sale of copra must be one of common and
went to petitioner and 30% to Gamo. The copra general knowledge; (2) it must be
workers were paid by Gamo from his 30% share. well and authoritatively settled
Petitioner wanted to standardize payments to its and not doubtful or uncertain;
"contractors" in its coconut farms. On 2 October and (3) it must be known to be
1999, petitioner proposed a new payment scheme to within the limits of the
Gamo. The new scheme provided a specific price for jurisdiction of the court. The
each copra making activity. Gamo submitted his principal guide in determining
counter proposal. Petitioner did not accept Gamo's what facts may be assumed to be
counter proposal since it was higher by at least fifty judicially known is that of
percent (50%) from its original offer. Without notoriety. Hence, it can be said
agreeing to the new payment scheme, Gamo and his that judicial notice is limited to
copra workers started to do harvesting work. facts evidenced by public records
Petitioner told them to stop. Eventually, petitioner and facts of general notoriety.
and Gamo agreed that the latter may continue with Moreover, a judicially noticed
the harvest provided that it would be his last fact must be one not subject to a
"contract" with petitioner. Gamo suggested to reasonable dispute in that it is
petitioner to look for a new "contractor" since he was either: (1) generally known
not amenable to the new payment scheme. within the territorial jurisdiction
of the trial court; or (2) capable an independent business and undertakes the contract
of accurate and ready work on his own account under his own
determination by resorting to responsibility according to his own manner and
sources whose accuracy cannot method, free from the control and direction of his
reasonably be questionable. employer or principal in all matters connected with
Things of "common knowledge", the performance of the work except to the result
of which courts take judicial thereof; and second, the contractor has substantial
matters coming to the knowledge capital or investments in the form of tools,
of men generally in the course of equipment, machineries, work premises and other
the ordinary experiences of life, materials which are necessary in the conduct of his
or they may be matters which are business.
generally accepted by mankind The Implementing Rules and Regulation of the Labor
as true and are capable of ready Code defines investment as tools, equipment,
and unquestioned demonstration. implements, machineries and work premises, actually
Thus, facts which are universally and directly used by the contractor or subcontractor
known, and which may be found in the performance or completion of the job, work, or
in encyclopedias, dictionaries or service contracted out. The investment must be
other publications, are judicially sufficient to carry out the job at hand.
noticed, provided, they are of In the case at bar, Gamo and the copra workers did
such universal notoriety and so not exercise independent judgment in the
generally understood that they performance of their tasks. The tools used by Gamo
may be regarded as forming part and his copra workers like the karit, bolo, pangbunot,
of the common knowledge of panglugit and pangtapok are not sufficient to enable
every person. As the common them to complete the job. Reliance on these
knowledge of man ranges far and primitive tools is not enough. In fact, the
wide, a wide variety of particular accomplishment of their task required more
facts have been judicially noticed expensive machineries and equipment, like the trucks
as being matters of common to haul the harvests and the drying facility, which
knowledge. But a court cannot petitioner corporation owns.
take judicial notice of any fact In order to determine the existence of an employer-
which, in part, is dependent on employee relationship, the Court has frequently
the existence or non-existence of applied the four-fold test: (1) the selection and
a fact of which the court has no engagement of the employee; (2) the payment of
constructive knowledge. wages; (3) the power of dismissal; and (4) the power
An invocation that the Court take judicial notice of to control the employee's conduct, or the so called
certain facts should satisfy the requisites set forth by "control test", which is considered the most important
case law. A mere prayer for its application shall not element. From the time they were hired by petitioner
suffice. Thus, in this case the Court cannot take corporation up to the time that they were reassigned
judicial notice of the alleged business practices in the to work under Gamo's supervision, their status as
copra industry since none of the material requisites of petitioner corporation's employees did not cease.
matters of judicial notice is present in the instant Likewise, payment of their wages was merely
petition. The record is bereft of any indication that coursed through Gamo. As to the most determinative
the matter is of common knowledge to the public and test the power of control, it is sufficient that the
that it has the characteristic of notoriety, except power to control the manner of doing the work exists,
petitioners' self-serving claim. CaASIc it does not require the actual exercise of such
A related issue is whether Gamo is an independent power. In this case, it was in the exercise of its
contractor. In Escario v. NLRC, we ruled that there is power of control when petitioner corporation
permissible job contracting when a principal agrees transferred the copra workers from their previous
to put out or farm out with a contractor or a assignments to work as copraceros. It was also in the
subcontractor the performance or completion of a exercise of the same power that petitioner corporation
specific job, work or service within a definite or put Gamo in charge of the copra workers although
predetermined period, regardless of whether such job under a different payment scheme. Thus, it is clear
or work service is to be performed within or outside that an employer-employee relationship has existed
the premises of the principal. To establish the between petitioner corporation and respondents since
existence of an independent contractor, we apply the the beginning and such relationship did not cease
following conditions: first, the contractor carries on
despite their reassignments and the change of Felicano, Nole E. Fermilan, Joselito B. Rendon,
payment scheme. Cristeta D. Caa, Evelyn D. Arcenal and Jeorge
It is well settled that abandonment as a just and valid M. Nono vs. Bobongon Banana Growers Multi-
ground for dismissal requires the deliberate and
Purpose Cooperative, Timog Agricultural
unjustified refusal of the employee to return for work.
Two elements must be present, namely: (1) the failure Corporation, Diamond Farms, Inc., and Dole Asia
to report for work or absence without valid or Philippines, Respondents.
justifiable reason, and (2) a clear intention to sever
the employer-employee relationship. The second FACTS:
element is more determinative of the intent and must
be evinced by overt acts. Mere absence, not being a. Origin of Case
sufficient, the burden of proof rests upon the
employer to show that the employee clearly and The case originated from three separate
deliberately intended to discontinue her employment complaints for illegal dismissal filed by
without any intention of returning. 28 In Samarca v. petitioners, individually and collectively,
Arc-Men Industries, Inc., we held that abandonment with the National Labor Relations
is a matter of intention and cannot lightly be Commission against the respondents
presumed from certain equivocal acts.
including respondent Dole Asia Philippines
To constitute abandonment, there must be clear proof
of deliberate and unjustified intent to sever the as it then supposedly owned Timog
employer-employee relationship. Clearly, the Agricultural Corporation (TACOR), for
operative act is still the employee's ultimate act of unpaid salaries, overtime pay, 13th month
putting an end to his employment. 29 However, an pay, service incentive leave pay, damages,
employee who takes steps to protest her layoff cannot and attorneys fees.
be said to have abandoned her work because a charge
of abandonment is totally inconsistent with the Petitioners Traveno, et. al. were hired by
immediate filing of a complaint for illegal dismissal,
TACOR and Diamond Farms (DFI) to work
more so when it includes a prayer for
reinstatement. 30When Eleonor filed the illegal at a Banana Plantation in Bobongon, Sto.
dismissal complaint, it totally negated petitioner's Tomas, Davao del Norte, where they helped
theory of abandonment. to prepare the lands for the planting of
Also, to effectively dismiss an employee for banana.
abandonment, the employer must comply with the
due process requirement of sending notices to the While petitioners worked under the direct
employee. In Brahm Industries, Inc. v. NLRC, 31 we control of supervisors from TACOR and
ruled that this requirement is not a mere formality
DFI, these companies made it appear that
that may be dispensed with at will. Its disregard is a
matter of serious concern since it constitutes a they were hired through independent
safeguard of the highest order in response to man's contractors including individuals,
innate sense of justice. 32 Petitioner was not able to unregistered associations and cooperatives,
send the necessary notice requirement to Eleonor. such as the other respondent Bobongon
Petitioner's belated claim that it was not able to send Banana Growers Multi-purpose
the notice of infraction prior to the filing of the illegal Cooperative.
dismissal case cannot simply unacceptable. 33 Based
on the foregoing, Eleonor did not abandon her work. Sometime in 2000, the respondents began
WHEREFORE, the petition is DENIED. The
harassing the respondents in order to ease
Decision of the Court of Appeals is AFFIRMED.
them out of their jobs. They unilaterally
73. G.R. No. 164205 September 3, 2009 changed their compensation package from
being based on a daily rate to a pakyawan
Oldarico S. Traveo, Rovel A. Genelsa, Ruel U.
rate and then soon after, they stopped paying
Villarmente, Alfredo A. Panilagao, Carmen P.
their salaries which prompted the petitioners
Danila, Elizabeth B. Macalino, Ramil P. Albito,
to also stop working.
Reynaldo A. Ladrillo, Lucas G. Tamayo, Diosdado
A. Amorin, Rodino C. Vasquez, Gloria A.
ISSUE/S:
74. Raul G. Locsin & Eddie Tomaquin v. PLDT,
The case is anchored on the issue of whether or not
DFI (with which TACOR had been merged) and Dole G.R. No. 185251
should be held solidarily liable with the Cooperative
for petitioners illegal dismissal and money claims.
Facts
RULING:
However, despite the termination of the owners or managers have severed ties with
Agreement, petitioner continued to secure the to continue to stay within the business
premises of the office because they were allegedly premises. Moreover, from the foregoing
told to maintain their posts. Then, on September 30, circumstances, it can be assumed that
2002, petitioners services were terminated. petitioners remained at their post under the
instructions of respondent. We can further
Petitioners sought recourse to the Labor
conclude that respondent dictated upon
Arbiter for illegal dismissal and recover of money
petitioners that the latter perform their
claims, such remedy was thereby granted, finding
regular duties to secure the premises during
PLDT liable for the dismissal. PLDT raised its appeal
operating hours. This, to our mind and under
first to the NLRC and then consequently to the CA
the circumstances, is sufficient to establish
asking for the nullification of the Resolution issued
the existence of an employer-employee
by the NLRC as well as the Labor Arbiters Decision.
relationship.
The CA ruled that SSCP was not a labor-only
contractor and was an independent contractor having While there is no legal relationship
substantial capital to operate and conduct its own with the SSCP because of the termination of
business. Furthermore, the agreement stipulates the Agreement, petitioners continued to hold
against an employer-employee relationship. post, indicating that the element of control is
exercised by the respondent over petitioners.
Issue: Whether or not Promm-Gem and SAPS are merely recruits, supplies or places workers to
labor-only contractors perform a job, work or service for a principal, and
any of the following elements are present:
Ruling: i) The contractor or subcontractor does not have
Promm-Gem is an independent contractor however, substantial capital or investment which relates to the
SAPS is a labor-only contractor. job, work or service to be performed and the
The pertinent Labor Code provision on the matter employees recruited, supplied or placed by such
states: contractor or subcontractor are performing activities
ART. 106. Contractor or subcontractor. Whenever which are directly related to the main business of the
an employer enters into a contract with another principal; or
person for the performance of the formers work, the ii) [T]he contractor does not exercise the right to
employees of the contractor and of the latters control over the performance of the work of the
subcontractor, if any, shall be paid in accordance with contractual employee.
the provisions of this Code. The foregoing provisions shall be without prejudice
In the event that the contractor or subcontractor fails to the application of Article 248 (c) of the Labor
to pay the wages of his employees in accordance with Code, as amended.
this Code, the employer shall be jointly and severally "Substantial capital or investment" refers to capital
liable with his contractor or subcontractor to such stocks and subscribed capitalization in the case of
employees to the extent of the work performed under corporations, tools, equipment, implements,
the contract, in the same manner and extent that he is machineries and work premises, actually and directly
liable to employees directly employed by him. used by the contractor or subcontractor in the
There is "labor-only" contracting where the person performance or completion of the job, work or
supplying workers to an employer does not have service contracted out.
substantial capital or investment in the form of tools, The "right to control" shall refer to the right reserved
equipment, machineries, work premises, among to the person for whom the services of the contractual
others, and the workers recruited and placed by such workers are performed, to determine not only the end
person are performing activities which are directly to be achieved, but also the manner and means to be
related to the principal business of such employer. In used in reaching that end.
such cases, the person or intermediary shall be Clearly, the law and its implementing rules allow
considered merely as an agent of the employer who contracting arrangements for the performance of
shall be responsible to the workers in the same specific jobs, works or services. Indeed, it is
manner and extent as if the latter were directly management prerogative to farm out any of its
employed by him. activities, regardless of whether such activity is
Rule VIII-A, Book III of the Omnibus Rules peripheral or core in nature. However, in order for
Implementing the Labor Code, as amended by such outsourcing to be valid, it must be made to an
Department Order No. 18-02, distinguishes between independent contractor because the current labor
legitimate and labor-only contracting: rules expressly prohibit labor-only contracting.
Section 3. Trilateral Relationship in Contracting In the instant case, the financial statements of
Arrangements. In legitimate contracting, there exists Promm-Gem show that it has authorized capital stock
a trilateral relationship under which there is a of P1 million and a paid-in capital, or capital
contract for a specific job, work or service between available for operations, of P500,000.00 as of 1990.
the principal and the contractor or subcontractor, and It also has long term assets worth P432,895.28 and
a contract of employment between the contractor or current assets of P719,042.32. Promm-Gem has also
subcontractor and its workers. Hence, there are three proven that it maintained its own warehouse and
parties involved in these arrangements, the principal office space with a floor area of 870 square meters. It
which decides to farm out a job or service to a also had under its name three registered vehicles
contractor or subcontractor, the contractor or which were used for its promotional / merchandising
subcontractor which has the capacity to business. Promm-Gem also has other clients aside
independently undertake the performance of the job, from P&G. Under the circumstances, we find that
work or service, and the contractual workers engaged Promm-Gem has substantial investment which relates
by the contractor or subcontractor to accomplish the to the work to be performed. These factors negate the
job, work or service. existence of the element specified in Section 5(i) of
Section 5. Prohibition against labor-only contracting. DOLE Department Order No. 18-02. The records
Labor-only contracting is hereby declared prohibited. also show that Promm-Gem supplied its complainant-
For this purpose, labor-only contracting shall refer to workers with the relevant materials, such as markers,
an arrangement where the contractor or subcontractor tapes, liners and cutters, necessary for them to
perform their work. Promm-Gem also issued related to the principal business of P&G, we find that
uniforms to them. It is also relevant to mention that the former is engaged in "labor-only contracting".
Promm-Gem already considered the complainants
working under it as its regular, not merely contractual "Where labor-only contracting exists, the Labor
or project, employees. This circumstance negates the Code itself establishes an employer-employee
existence of element (ii) as stated in Section 5 of relationship between the employer and the employees
DOLE Department Order No. 18-02, which speaks of of the labor-only contractor." The statute establishes
contractual employees. This, furthermore, negates this relationship for a comprehensive purpose: to
on the part of Promm-Gem bad faith and intent to prevent a circumvention of labor laws. The contractor
circumvent labor laws which factors have often been is considered merely an agent of the principal
tipping points that lead the Court to strike down the employer and the latter is responsible to the
employment practice or agreement concerned as employees of the labor-only contractor as if such
contrary to public policy, morals, good customs or employees had been directly employed by the
public order. principal employer.
Under the circumstances, Promm-Gem cannot be Consequently, petitioners recruited and supplied by
considered as a labor-only contractor. We find that it SAPS -- which engaged in labor-only contracting --
is a legitimate independent contractor. are considered as the employees of P&G while those
On the other hand, the Articles of Incorporation of having worked under, and been dismissed by Promm-
SAPS shows that it has a paid-in capital of only Gem, are considered the employees of Promm-Gem,
P31,250.00. There is no other evidence presented to not of P&G.
show how much its working capital and assets are.
Furthermore, there is no showing of substantial 76. SAN MIGUEL
investment in tools, equipment or other assets. CORPORATION vs. VICENTE
In Vinoya v. National Labor Relations Commission, B. SEMILLANO
the Court held that "[w]ith the current economic FACTS:
atmosphere in the country, the paid-in capitalization AMPCO hired the services of
of PMCI amounting to P75,000.00 cannot be Vicente Semillano, Nelson
considered as substantial capital and, as such, PMCI Mondejar, Jovito Remada and Alex
cannot qualify as an independent Hawod, herein respondents. All of
contractor."Applying the same rationale to the present them were assigned to work in
case, it is clear that SAPS having a paid-in capital SMC's Bottling Plant situated at
of only P31,250 - has no substantial capital. SAPS Brgy. Granada Sta. Fe, Bacolod
lack of substantial capital is underlined by the records City, in order to perform the
which show that its payroll for its merchandisers following tasks: segregating
alone for one month would already total P44,561.00. bottles, removing dirt therefrom,
It had 6-month contracts with P&G. Yet SAPS failed filing them in designated places,
to show that it could complete the 6-month contracts loading and unloading the bottles to
using its own capital and investment. Its capital is not and from the delivery trucks, and
even sufficient for one months payroll. SAPS failed performing other tasks as may be
to show that its paid-in capital of P31,250.00 is ordered by SMC's officers. They
sufficient for the period required for it to generate its were required to work inside the
needed revenue to sustain its operations premises of SMC using SMCs
independently. Substantial capital refers to equipment. They rendered service
capitalization used in the performance or completion with SMC for more than 6 months.
of the job, work or service contracted out. In the Subsequently, SMC entered into a
present case, SAPS has failed to show substantial Contract of Services with AMPCO
capital. designating the latter as the
Furthermore, the petitioners have been charged with employer of Vicente, et al., As a
the merchandising and promotion of the products of result, Vicente et al., failed to claim
P&G, an activity that has already been considered by the rights and benefits ordinarily
the Court as doubtlessly directly related to the accorded a regular employee of
manufacturing business, which is the principal SMC. In fact, they were not paid
business of P&G. Considering that SAPS has no their 13th month pay. They were
substantial capital or investment and the workers it not allowed to enter the premises of
recruited are performing activities which are directly SMC. The project manager of
AMPCO, Merlyn Polidario, told
them to wait for further instructions In its Comment, respondent AMPCO essentially
from the SMC's supervisor. Vicente advanced the same arguments in support of its claim
et al., waited for one month, as a legitimate job contractor.
unfortunately, they never heard a ISSUE:
word from SMC. WON AMPCO is a legitimate job contractor
Consequently, Vicente et al., as RULING:
complainants, filed a complaint for NO, AMPCO is a labor-only contractor.
illegal dismissal with the Labor The test to determine the existence of independent
Arbiter against AMPCO, Merlyn V. contractorship is whether or not the one claiming to
Polidario, SMC and Rufino I. Yatar, be an independent contractor has contracted to do the
SMC Plant Manager, as work according to his own methods and without
respondents. Complainants assert being subject to the control of the employer, except
that they are regular employees of only as to the results of the work.
SMC. However, SMC utilized Although there may be indications of an independent
AMPCO making it appear that the contractor arrangement between petitioner and
latter was their employer, so that AMPCO, the most determinant of factors exists
SMC may evade the responsibility which indicate otherwise.
of paying the benefits due them AMPCO's main business activity is trading,
under the law. maintaining a store catering to members and the
The Labor Arbiter rendered public. Its job contracting with SMC is only a minor
judgment declaring Vicente, et al. activity or sideline. The component of AMPCO's
as regular employees of San substantial capital are in fact invested and used in the
Miguel Corporation. Initially, the trading business.
NLRC Fourth Division affirmed AMPCO does not have substantial equipment, tools,
with modifications the findings of machineries, and supplies actually and directly used
the LA but in a Resolution, the by it in the performance or completion of the
NLRC reversed its earlier ruling. It segregation and piling job. There is nothing in
absolved petitioner from liability AMPCO's list of fixed assets, machineries, tools, and
and instead held AMPCO, as equipment which it could have used, actually and
employer of respondents, as an directly, in the performance or completion of its
independent contractor. contracted job, work or service with petitioner. Thus,
The Court of Appeals overturned the Commissions there can be no other logical conclusion but that the
finding that petitioner SMC wielded the power of tools and equipment utilized by respondents are
control over respondent and the power of dismissal owned by petitioner SMC. It is likewise noteworthy
and that AMPCO was a labor-only contractor since "a that neither petitioner nor AMPCO has shown that
capital of nearly one million pesos" was insufficient the latter had clients other than petitioner. Therefore,
for it to qualify as an independent contractor. AMPCO has no independent business.
SMC filed a motion for reconsideration but was In connection therewith, DOLE Department Order
denied. Hence, this petition for review on certiorari. No. 10 also states that an independent contractor
Petitioner SMC argues that the CA wrongly assumed carries on an independent business and undertakes
that it exercised power of control over the the contract work on his own account, under his own
respondents just because they performed their work responsibility, according to his own manner and
within SMC's premises. In advocacy of its claim that method, and free from the control and direction of his
AMPCO is an independent contractor, petitioner employer or principal in all matters connected with
relies on the provisions of the service contract the performance of the work except as to the results
between petitioner and AMPCO, wherein the latter thereof. This embodies what has long been
undertook to provide the materials, tools and jurisprudentially recognized as the control test to
equipment to accomplish the services contracted out determine the existence of employer-employee
by petitioner. The same contract provides that relationship.
AMPCO shall have exclusive discretion in the In the case at bench, petitioner failed to show how
selection, engagement and discharge of its AMPCO took "entire charge, control and supervision
employees/personnel or otherwise in the direction of the work and service agreed upon."
and control thereof. Petitioner also adds that AMPCO Moreover, the Court was not convinced that AMPCO
determines the wages of its employees/personnel who wielded "exclusive discretion in the discharge" of
shall be within its full control. respondents. AMPCO's project manager, even told
respondents to "wait for further instructions from the
SMC's supervisor" after they were prevented from Morong, Pililla, Rodriguez, Tanay, Taytay,
entering petitioner SMC's premises. Teresa, and San Mateo.3
Despite the fact that the service contracts contain On November 21, 1997, before the
stipulations which are earmarks of independent expiration of the contract of services, the
contractorship, they do not make it legally so. The 121 bill collectors formed a corporation duly
language of a contract is neither determinative nor registered with the Securities and Exchange
conclusive of the relationship between the parties. Commission (SEC) as the "Association
Petitioner SMC and AMPCO cannot dictate, by a Collectors Group, Inc." (ACGI). ACGI was
declaration in a contract, the character of AMPCO's one of the entities engaged by Manila Water
business, that is, whether as labor-only contractor, or for its courier service. However, Manila
job contractor. AMPCO's character should be Water contracted ACGI for collection
measured in terms of, and determined by, the criteria services only in its Balara Branch.6
set by statute. At a closer look, AMPCO's actual In December 1997, Manila Water
status and participation regarding respondents' entered into a service agreement with
employment clearly belie the contents of the written respondent First Classic Courier Services,
service contract. Inc. (FCCSI) also for its courier needs. The
Petitioner cannot rely either on AMPCO's Certificate service agreements between Manila Water
of Registration as an Independent Contractor issued and FCCSI covered the periods 1997 to
by the proper Regional Office of the DOLE to prove 1999 and 2000 to 2002.7 Earlier, in a
its claim. It is not conclusive evidence of such status. memorandum dated November 28, 1997,
The fact of registration simply prevents the legal FCCSI gave a deadline for the bill collectors
presumption of being a mere labor-only contractor who were members of ACGI to submit
from arising. In distinguishing between permissible applications and letters of intent to transfer
job contracting and prohibited labor-only contracting, to FCCSI. The individual respondents in this
the totality of the facts and the surrounding case were among the bill collectors who
circumstances of the case are to be considered. joined FCCSI and were hired effective
Thus, petitioner SMC, as principal employer, is December 1, 1997.8
solidarily liable with AMPCO, the labor-only On various dates between May and
contractor, for all the rightful claims of respondents. October 2002, individual respondents were
Under this set-up, AMPCO, as the "labor-only" terminated from employment. Manila Water
contractor, is deemed an agent of the principal no longer renewed its contract with FCCSI
(SMC). The law makes the principal responsible over because it decided to implement a
the employees of the "labor-only" contractor as if the "collectorless" scheme whereby Manila
principal itself directly hired the employees. Water customers would instead remit
payments through "Bayad Centers."9 The
aggrieved bill collectors individually filed
77.Manila Water Company Inc. vs Dalumpines complaints for illegal dismissal, unfair labor
practice, damages, and attorneys fees, with
Facts: prayer for reinstatement and backwages
By virtue of Republic Act No. against petitioner Manila Water and
8041, otherwise known as the "National respondent FCCSI. The complaints were
Water Crisis Act of 1995," the Metropolitan consolidated and jointly heard.
Waterworks and Sewerage System (MWSS) Petitioner Manila Water, for its
was given the authority to enter into part, denied that there was an employer-
concession agreements allowing the private employee relationship between its company
sector in its operations. Petitioner Manila and respondent bill collectors. Based on the
Water Company, Inc. (Manila Water) was agreement between FCCSI and Manila
one of two private concessionaires Water, respondent bill collectors are the
contracted by the MWSS to manage the employees of the former, as it is the former
water distribution system in the east zone of that has the right to select/hire, discipline,
Metro Manila. The east service area supervise, and control. FCCSI has a separate
included the following towns and cities: and distinct legal personality from Manila
Mandaluyong, Marikina, Pasig, Pateros, San Water, and it was duly registered as an
Juan, Taguig, Makati, parts of Quezon City independent contractor before the DOLE.
and Manila, Angono, Antipolo, Baras, Issues:
Binangonan, Cainta, Cardona, Jala-Jala,
WON FCCSI was a labor-only contractor and that 78. Teng vs. Pahagac, G.R. No. 169704,
respondent bill collectors are employees of petitioner November 17, 2010
Manila Water
Held:
Yes. FCCSI was a labor-only contractor and that
respondent bill collectors are employees of petitioner Facts:
Manila Water. Albert Teng Fish Trading is
"Contracting" or "subcontracting" engaged in deep sea fishing and, for this
refers to an arrangement whereby a principal purpose, owns boats (basnig), equipment,
agrees to put out or farm out with a and other fishing paraphernalia. As owner of
contractor or subcontractor the performance the business, Teng claims that he
or completion of a specific job, work, or customarily enters into joint venture
service within a definite or predetermined agreements with master fishermen
period, regardless of whether such job, (maestros) who are skilled and are experts in
work, or service is to be performed or deep sea fishing; they take charge of the
completed within or outside the premises of management of each fishing venture,
the principal. including the hiring of the members of its
Department Order No. 18-02, complement. He avers that the maestros
Series of 2002, enunciates that labor-only hired the respondent workers as checkers to
contracting refers to an arrangement where determine the volume of the fish caught in
the contractor or subcontractor merely every fishing voyage.
recruits, supplies, or places workers to On February 20, 2003, the
perform a job, work, or service for a respondent workers filed a complaint for
principal, and any of the following elements illegal dismissal against Albert Teng Fish
are present: (i) the contractor or Trading, Teng, and Chua before the NCMB,
subcontractor does not have substantial Region Branch No. IX, Zamboanga City.
capital or investment which relates to the
job, work, or service to be performed and
the employees recruited, supplied, or placed Issues:
by such contractor or subcontractor are 1. WON the VAs decision is not subject to a
performing activities which are directly motion for reconsideration.
related to the main business of the principal; 2. WON an employer-employee relationship
or (ii) the contractor does not exercise the existed between Teng and the respondent
right to control the performance of the work workers.
of the contractual employee.
FCCSI has no sufficient investment
in the form of tools, equipment and Held: The petition is denied.
machinery to undertake contract services for 1. Article 262-A of the Labor Code does not
Manila Water involving a fleet of around prohibit the filing of a motion for
100 collectors assigned to several branches reconsideration.
and covering the service area of Manila On March 21, 1989, Republic Act
Water customers spread out in several No. 6715 took effect, amending, among
cities/towns of the East Zone. The only others, Article 263 of the Labor Code which
rational conclusion is that it is Manila Water was originally worded as:
that provides most if not all the logistics and Art. 263 x x x Voluntary arbitration
equipment including service vehicles in the awards or decisions shall be final,
performance of the contracted service, unappealable, and executory.
notwithstanding that the contract between As amended, Article 263 is now Article
FCCSI and Manila Water states that it is the 262-A, which states:
Contractor which shall furnish at its own Art. 262-A. x x x [T]he award or
expense all materials, tools and equipment decision x x x shall contain the facts
needed to perform the tasks of collectors. and the law on which it is based. It
shall be final and executory after ten
(10) calendar days from receipt of the
copy of the award or decision by the
parties.
activities which are directly related to the In February 1993, DNL Security informed
main business of the principal; or respondents that its service contract with petitioner
(ii) The contractor does not was terminated. This notwithstanding, DNL Security
exercise the right to control over the
instructed respondents to continue reporting for work
performance of the work of the contractual
employee. to petitioner. Respondents worked as instructed until
In the present case, the maestros April 20, 1993, but without receiving their wages;
did not have any substantial capital or after which, they were terminated from
investment. Teng admitted that he solely employment.4
provided the capital and equipment, while
the maestros supplied the workers. The On June 15, 1995, respondents filed with the
power of control over the respondent National Labor Relations Commission (NLRC),
workers was lodged not with the maestros Regional Arbitration Branch No. VIII, Tacloban City,
but with Teng. As checkers, the respondent
a complaint against DNL Security and petitioner for
workers main tasks were to count and
classify the fish caught and report them to illegal dismissal, separation pay, salary differential,
Teng. They performed tasks that were 13th month pay, and payment of unpaid salary.
necessary and desirable in Tengs fishing
business. Taken together, these incidents
confirm the existence of a labor-only
contracting which is prohibited in our Issue: WON GSIS is jointly and severally liable with
jurisdiction, as it is considered to be the DNL Security Agency for payment of the
employers attempt to evade obligations unsubstantiated amounts of Salary Differentials and
afforded by law to employees. the 13th Month Pay to the private respondent security
Accordingly, we hold that guards.
employer-employee ties exist between Teng
and the respondent workers. A finding that
the maestros are labor-only contractors is
equivalent to a finding that an employer- Held:
employee relationship exists between Teng
and the respondent workers. As regular The fact that there is no actual and direct employer-
employees, the respondent workers are
entitled to all the benefits and rights employee relationship between petitioner and
appurtenant to regular employment. respondents does not absolve the former from
liability for the latters monetary claims. When
79. GSIS vs. NLRC, et. al., G.R. No. 180045, Nov. petitioner contracted DNL Securitys services,
17, 2010 petitioner became an indirect employer of
respondents, pursuant to Article 107 of the Labor
Facts: Code, which reads:
Respondents Dionisio Banlasan, Alfredo T. Tafalla, ART. 107. Indirect employer. The provisions of the
Telesforo D. Rubia, Rogelio A. Alvarez, Dominador immediately preceding Article shall likewise apply to
A. Escobal, and Rosauro Panis were employed as any person, partnership, association or corporation
security guards by DNL Security Agency (DNL which, not being an employer, contracts with an
Security). By virtue of the service contract entered independent contractor for the performance of any
into by DNL Security and petitioner Government work, task, job or project.
Service Insurance System on May 1, 1978,
respondents were assigned to petitioners Tacloban After DNL Security failed to pay respondents the
City office, each receiving a monthly income correct wages and other monetary benefits, petitioner,
ofP1,400.00. Sometime in July 1989, petitioner as principal, became jointly and severally liable, as
voluntarily increased respondents monthly salary to provided in Articles 106 and 109 of the Labor Code,
P3,000.00.3 which state:
ART. 106. Contractor or subcontractor. Whenever can protect itself from irresponsible contractors by
an employer enters into a contract with another withholding payment of such sums that are due the
person for the performance of the formers work, the employees and by paying the employees directly, or
employees of the contractor and of the latters by requiring a bond from the contractor or
subcontractor, if any, shall be paid in accordance with subcontractor for this purpose.
the provisions of this Code.
Petitioners liability, however, cannot extend to the
In the event that the contractor or subcontractor fails payment of separation pay. An order to pay
to pay the wages of his employees in accordance with separation pay is invested with a punitive character,
this Code, the employer shall be jointly and severally such that an indirect employer should not be made
liable with his contractor or subcontractor to such liable without a finding that it had conspired in the
employees to the extent of the work performed under illegal dismissal of the employees.
the contract, in the same manner and extent that he is
liable to employees directly employed by him. x x x. Lastly, we do not agree with petitioner that the
enforcement of the decision is impossible because its
xxxx charter unequivocally exempts it from execution.
ART. 109. Solidary liability. The provisions of To be sure, petitioners charter should not be used to
existing laws to the contrary notwithstanding, every evade its liabilities to its employees, even to its
employer or indirect employer shall be held indirect employees, as mandated by the Labor Code.
responsible with his contractor or subcontractor for
any violation of any provision of this Code. For 80. Marialy Sy, et al. vs. Fairland Knitcraft Co.,
purposes of determining the extent of their civil Inc.,
liability under this Chapter, they shall be considered
x--------------------------------------x (consolidated
as direct employers.
with)
This statutory scheme is designed to give the workers
Susan T. De Leon vs. Fairland Knitcraft Co., Inc.,
ample protection, consonant with labor and social
et al.
justice provisions of the 1987 Constitution.
Facts:
Petitioners liability covers the payment of
respondents salary differential and 13th month pay Fairland is a domestic corporation engaged in
during the time they worked for petitioner. In garments business, while Susan de Leon (Susan) is
addition, petitioner is solidarily liable with DNL the owner/proprietress of Weesan
Security for respondents unpaid wages from Garments (Weesan).
February 1993 until April 20, 1993. While it is true
that respondents continued working for petitioner On the other hand, the complaining workers, Marialy
after the expiration of their contract, based on the Sy and 33 others (the workers) are sewers, trimmers,
instruction of DNL Security, petitioner did not object helpers, a guard and a secretary who were hired by
to such assignment and allowed respondents to render Weesan.
service. Thus, petitioner impliedly approved the
extension of respondents services. Accordingly, The workers filed separate complaints for
petitioner is bound by the provisions of the Labor underpayment and/or non-payment of wages,
Code on indirect employment. Petitioner cannot be overtime pay, premium pay, 13th month pay and other
allowed to deny its obligation to respondents after it monetary benefits against Susan/Weesan. These
had benefited from their services. So long as the complaints were then consolidated by the Arbitration
work, task, job, or project has been performed for Branch of the NLRC in January 2003.
petitioners benefit or on its behalf, the liability
February 5, 2003, Weesan filed before the
accrues for such services. The principal is made
Department of Labor and Employment-National
liable to its indirect employees because, after all, it
Capital Region (DOLE-NCR) a report on its On MR, Fairland moved also for the voluntary
temporary closure for a period of not less than six inhibition of Justices Leagogo and Maambong. The
months. On the same day, the workers were not CA granted the motion for voluntary inhibition and
anymore allowed to work. So on February 18, 2003 transferred the case from the First Division to the
they filed an Amended Complaint, and on March 13, Ninth Division. The Ninth Division reversed the
2003, another pleading entitled Amended Complaints earlier denial of Fairlands petition It held that the
and Position Paper for Complainants, to include the labor tribunals did not acquire jurisdiction over the
charge of illegal dismissal and impleaded Fairland person of Fairland, and even assuming they did,
and its manager, Debbie Manduabas (Debbie), as Fairland is not liable to the workers since Weesan is
additional respondents. not a mere labor-only contractor but a bona fide
independent contractor. The Special Ninth Division
At the Hearings set by the Labor Arbiter Ramon thus annulled and set aside the assailed NLRC
Valentin Reyes, Atty. Antonio Geronimo represented Decision and Resolution insofar as Fairland is
both Susan/Weesan and Fairland. He submitted 2 concerned and excluded the latter therefrom.
position papers for the two entities. The workers filed
a Reply, to which Atty. Geronimo also submitted a Workers appealed this decision to the Supreme Court.
Consolidated Reply by Susan/Weesan and Fairland.
Workers answered back through a Rejoinder. CAs decision on Susans petition:
The Labor Arbiter dismissed the case for lack of Susans petition was denied due course and dismissed
merit, but ordered the respondent companies to pay for lack of merit. The CA affirmed the NLRC ruling
each complainant P5,000.00 by way of financial with respect to Susan.
assistance.
Her MR was denied by the CA.
The NLRC granted the workers appeal and set aside
Before the Supreme Court:
the Labor Arbiters decision. The Commission
declared the dismissal of the workers as illegal and Susan filed a petition for review on certiorari with the
ordered reinstatement, will full backwages from SC, which was dismissed by the Supreme Court on
February 5, 2003 and payment all the unpaid benefits technicality and for failure to sufficiently show any
to be paid solidarily by Susan/Weesan and Fairland. reversible error in the assailed judgment. Susan filed
an appeal but before it could be resolved, the
Atty. Geronimo filed a Motion for Reconsideration.
Supreme Court consolidated Susans case with that
However, Fairland filed another Motion for
the workers.
Reconsideration through Atty. Melina O. Tecson
(Atty. Tecson) assailing the jurisdiction of the Labor The Supreme Court granted Susans Motion for
Arbiter and the NLRC over it, claiming that it was Reconsideration and reinstated her petition for review
never summoned to appear, attend or participate in all on certiorari.
the proceedings conducted therein. It also denied that
it engaged the services of Atty. Geronimo. These Issues:
MRs were denied by the NLRC.
1. Whether or not Susan/Weesan is a labor-only
Thus, Fairland and Susan/Weesan filed their petitions contracting agent acting as an agent of Fairland?
for certiorari before the Court of Appeals.
2. Whether or not the individual private respondents
CAs decision on Fairlands petition: (Sy, et al.) were illegal dismissed?
Hence, the Court finds that Susan failed to prove that raised the presumption that he is authorized to appear
the suspension of operations of Weesan was bona for them. As held in Santos, it is unlikely that Atty.
fide and that it complied with the mandatory Geronimo would have been so irresponsible as to
requirement of notice under the law. Susan likewise represent Fairland and Debbie if he were not in fact
failed to discharge her burden of proving that the authorized. As an officer of the Court, Atty.
termination of the workers was for a lawful cause. Geronimo is presumed to have acted with due
Therefore, the NLRC and the CA, in CA-G.R. SP No. propriety. Moreover, [i]t strains credulity that a
93860, did not err in their findings that the workers counsel who has no personal interest in the case
were illegally dismissed by Susan/Weesan. would fight for and defend a case with persistence
and vigor if he has not been authorized or employed
The court also ruled that Fairlands claim of by the party concerned.
prescription does not deserve consideration. Fairland
says that they only engaged Weesans services 1996
to 1997, but in January 31, 2003, Fairland wrote The presumption of authority of counsel to
Weesan requesting for the sewing machines back. appear on behalf of a client is found both in the Rules
of Court and in the New Rules of Procedure of the
NLRC.
G.R. No. 182915 (Sy vs. Fairland)
Sec. 8, Rule III of the New Rules of
It is basic that the Labor Arbiter cannot acquire Procedure of the NLRC, which is the rules
jurisdiction over the person of the respondent without prevailing at that time, states in part:
the latter being served with summons. However, if
there is no valid service of summons, the court can SECTION 8. APPEARANCES. - An
still acquire jurisdiction over the person of the attorney appearing for a party is presumed to
defendant by virtue of the latters voluntary be properly authorized for that purpose.
appearance. Although not served with summons, However, he shall be required to indicate in
jurisdiction over Fairland and Debbie was acquired his pleadings his PTR and IBP numbers for
through their voluntary appearance. When the the current year.
workers complaint was before the Labor Arbiter, it is
confirmed that Fairland and Debbie were never As Atty. Geronimo consistently indicated his PTR
summoned. and IBP numbers in the pleadings he filed, there is no
reason for the Labor Arbiter not to extend to Atty.
The crucial question now is: Did Fairland Geronimo the presumption that he is authorized to
and Debbie voluntarily appear before the Labor represent Fairland.
Arbiter as to submit themselves to its jurisdiction?
Moreover, the fact that Debbie signed the verification
Fairland argued before the CA that it did not attached to the position paper filed by Atty.
engage Atty. Geronimo as its counsel. However, the Geronimo, without a secretarys certificate or board
Court held in Santos v. National Labor Relations resolution attached thereto, is not sufficient reason for
Commission viz: the Labor Arbiter to be on his guard and require Atty.
Geronimo to prove his authority. Debbie, as General
Moreover, jurisdiction over the Manager of Fairland is one of the officials of the
person of the defendant in civil cases is company who can sign the verification without need
acquired not only by service of summons of a board resolution because as such, she is in a
but also by voluntary appearance in court position to verify the allegations in the petition.
and submission to its
authority. Appearance by a legal advocate Suffice it to say that an attorneys presumption of
is such voluntary submission to a courts authority is a strong one. A mere denial by a party
jurisdiction. It may be made not only by that he authorized an attorney to appear for him, in
actual physical appearance but likewise by the absence of a compelling reason, is insufficient to
the submission of pleadings in compliance overcome the presumption, especially when the
with the order of the court or tribunal. denial comes after the rendition of an adverse
judgment, such as in the present case.
The fact that Atty. Geronimo entered his
appearance for Fairland and Debbie and that he
actively defended them before the Labor Arbiter
indirect employer of the workers and liable to the Assuming jurisdiction over the labor dispute. During
latter for their unpaid money claims. the pendency of the controversy, Digitel Service, Inc.
(Digiserv), a non-profit enterprise engaged in call
center servicing, filed with the DOLE an
Establishment Termination Report stating that it will
83. D I G I T A L
cease its business operation. The closure affected at
TELECOMMUNICATIONS
least 100 employees, 42 of whom are members of the
PHIL., INC. VS. DIGITEL
herein respondent Union. Alleging that the affected
EMPLOYEES UNION (G.R.
employees are its members and in reaction to
NOS. 184903, 10OCT2012)
Digiservs action, Esplana and his group filed another
Notice of Strike for union busting, illegal lock-out,
and violation of the assumption order. On 23 May
FACTS: 2005, the Labor Secretary ordered the second notice
of strike subsumed by the previous Assumption
By virtue of a certification election, Digitel Order.
Employees Union (Union) became the exclusive
bargaining agent of all rank and file employees of
Digitel in 1994. The Union and Digitel then
commenced collective bargaining negotiations which Meanwhile, on 14 March 2005, Digitel filed
resulted in a bargaining deadlock. The Union a petition with the Bureau of Labor Relations (BLR)
threatened to go on strike, but then the Labor seeking cancellation of the Unions registration. In a
Secretary assumed jurisdiction over the dispute and Decision dated 11 May 2005, the Regional Director
eventually directed the parties to execute a CBA. of the DOLE dismissed the petition forcancellation of
union registration for lack of merit. The appeal filed
by Digitel with the BLR was eventually dismissed for
lackof merit in a Resolution dated 9 March 2007. In
However, no CBA was forged between Digitel and an Order dated 13 July 2005, the Secretary of Labor
the Union. Some Union members abandoned their directed Digitel to commence the CBA negotiation
employment with Digitel. The Union later with theUnion and certified for compulsory
became dormant. Ten (10) years thereafter or on 28 arbitration before the NLRC the issue of unfair labor
September 2004, Digitel received from Esplana, who practice.In accordance with the 13 July 2005 Order of
was President of the Union, a letter containing the list the Secretary of Labor, the unfair labor practice issue
of officers, CBA proposals and ground rules. was certified forcompulsory arbitration before the
NLRC. On 31 January 2006, NLRC rendered a
Decision dismissing the unfair labor practicecharge
Digitel was reluctant to negotiate with the Union and against Digitel but declaring the dismissal of the 13
demanded that the latter Union show compliance employees of Digiserv as illegal and ordering their
with the provisions of the Unions Constitution and reinstatement.
By -laws on union membership and election
of officers. On 4 November 2004, Esplana and his
group filed a case for Preventive Mediation before The Union manifested that out of 42 employees, only
the National Conciliation and Mediation Board based 13 remained, as most had already accepted separation
on Digitels violation of the duty to bargain. On 25 pay.In view of this unfavorable decision, Digitel filed
November 2004, Esplana filed a notice of strike. On a petition on 9 June 2006 before the Court of
10 March 2005, the then Labor Secretary issued an Appeals, challenging theabove NLRC Decision and
Order. Resolution and arguing mainly that Digiserv
employees are not employees of Digitel.On 18 June
2008, CA partially granted the case for ULP, thus
modifying the assailed NLRC dispositions. The
CAlikewise sustained the finding that Digiserv is directly related to the business of Digitel. It is
engaged in labor-only contracting and that its undisputed that as early as March 1994, the affected
employees are actually employeesof Digitel.Digitel employees, except for two, were already performing
filed a motion for reconsideration but was denied in a their job as Traffic Operator which was later renamed
Resolution dated 9 October 2008. Hence, this petition as Customer Service Representative (CSR). It is
forreview on certiorari. equally undisputed that all throughout their
employment, their function as CSR remains the
same until they were terminated effective May
30, 2005. Their long period of employment as such is
ISSUES:
an indication that their job is directly related to
1) Whether Digiserv is a legitimate contractor; and the main business of DIGITEL which is
telecommunications. Furthermore, Digiserv does not
2) Whether there was a valid dismissal. exercise control over the affected employees.
Digiserv shared the same Human Resources,
Accounting, Audit and Legal Departments with
Digitel which manifested that it was Digitel who
RULING:
exercised control over the performance of
the affected employees. The NLRC also relied on the
letters of commendation, plaques of appreciation and
Digiserv is a labor-only contractor. certification issued by Digitel to the Customer
Service Representatives as evidence of control.
Considering that Digiserv has been found to be
engaged in labor-only contracting, the dismissed
Labor-only contracting is expressly prohibited by our
employees aredeemed employees of Digitel.
labor laws. After an exhaustive review of the records,
there is no showing that first, Digiserv has substantial
investment in the form of capital, equipment or tools.
The NLRC, as echoed by the CA, did not find The affected employees were illegally dismissed.
substantial Digiservs authorized capital stock of P
1,000,000.00. It pointed out that only P 250,000.00 of
the authorized capital stock had been subscribed and
In addition to finding that Digiserv is a labor-only
only P 62,500.00 had been paid up. There was no
contractor, records teemwith proof that its dismissed
increase in capitalization for the last 10 years.
employees are in fact employees of Digitel. The
NLRC enumerated these pieces of evidence, thus:
Further, the Certificates issued to Customer Service Only the 3 elements of a valid retrenchment had been
Representative likewise show that they are here satisfied. Indeed, it is management prerogative
employees of DIGITEL, Take for example the to close a department of the company. Digitels
"Service Award" issued to Ma. Loretta C. Esen, one decision to outsource the call center operation of the
of the remaining affected employees. The "Service company is a valid reason to close down the
Award" was signed by the officers of DIGITEL - the operations of a department under which the affected
VP-Customer Services Division, the VP-Human employees were employed. The fifth element
Resources Division and the Group Head-Human regarding the criteria to be observed by Digitel
Resources Division. It cannot be gainsaid that it is clearly does not apply because all employees under
only the employer that issues service award to its Digiserv were dismissed. The instant case is all about
employees. the fourth element, that is, whether or not the affected
employees were dismissed in good faith. We find that
there was no good faith in the retrenchment. Prior to
the cessation of Digiservs operations, the Secretary
As an alternative argument, Digitel maintains that the
of Labor had issued the first and second assumption
affected employees were validly dismissed on the
order. The effects of the assumption order issued by
grounds of closure of Digiserv, a department within
the Secretary of Labor are two-fold. It enjoins an
Digitel. In the recent case of Waterfront Cebu City
impending strike on the part of the employees and
Hotel v. Jimenez.
orders the employer to maintain the status quo. There
is no doubt that Digitel defied the assumption order
by abruptly closing down Digiserv. The closure of a
We reffered to the closure of a department or division of a department is not illegal per se. What makes it
company as retrenchment. For a valid retrenchment, unlawful is when the closure is undertaken in bad
the following elements must be present:(1) faith. In St. John Colleges, Inc.v. St. John Academy
That retrenchment is reasonably necessary and likely Faculty and Employees Union, bad faith was
to prevent business losses which, if already incurred, evidenced by the timing of and reasons for the
must be substantial, serious, actual and real, or if only closure andthe timing of and reasons for the
expected, are reasonably imminent as perceived subsequent opening.
objectively and in good faith by the employer;(2)
That the employer served written notice both to the 84. NORKIS TRADING CORPORATION vs.
employees and to the Department of Labor and JOAQUIN BUENA VISTA et al
Employment at least one month prior to the intended G.R. No. 182018 October 10, 2012
date of retrenchment;(3) That the employer pays The Facts
The respondents were hired by Norkis Trading, a
the retrenched employees separation pay equivalent
domestic corporation engaged in the business of
to one (1) month pay or at least month pay for manufacturing and marketing of Yamaha motorcycles
every year of service, whichever is higher;(4) That and multi-purpose vehicles, on separate dates and for
the employer exercises its prerogative to retrench various positions.
employees in good faith for the advancement of its Although they worked for Norkis Trading as skilled
interest and not to defeat or circumvent the workers assigned in the operation of industrial and
welding machines owned and used by Norkis Trading
employees right to security of tenure; and
for its business, they were not treated as regular
employees by Norkis Trading. Instead, they were
(5) That the employer used fair and reasonable
regarded by Norkis Trading as members of PASAKA,
criteria in ascertaining who would be dismissed and a cooperative organized under the Cooperative Code
who would be retained among the employees, such of the Philippines, and which was deemed an
as status, efficiency, seniority, physical fitness, age, independent contractor that merely deployed the
and financial hardship for certain workers. respondents to render services for Norkis
Trading.4 The respondents nonetheless believed that
they were regular employees of Norkis Trading,
citing in their Position Paper5 the following
circumstances that allegedly characterized their On August 26, 1999, PASAKA informed the
employment with the company: respondents of the cooperatives decision to suspend
The work of the operators involves operating them for fifteen (15) working days, to be effective
industrial machines, such as, press machine, from September 1 to 21, 1999, for violation of
hydraulic machine, and spotweld machine. On the PASAKA rules.
other hand, the welders used the welding machines. The records include copies of the memoranda13 sent
The machines used by complainants herein to Fabroa and Cape. The suspension prompted the
respondents in their work are all owned by respondents to file with the NLRC the complaint for
respondent Norkis Trading herein petitioner and these illegal suspension against Norkis Trading and
are installed and located in the working area of the PASAKA.
complainants inside the companys premises. The 15-day suspension of the respondents was
The salaries of complainants are paid inside the extended for another period of 15 days, from
premises of respondent Norkis Trading by Dalia Rojo September 22, 1999 to October 12, 1999.14 Copies of
and Belen Rubio, who are also employees of the said PASAKAs separate letters15 to Buenavista, Fabroa,
company assigned at the accounting office. Cape and Dondoyano on the cooperatives decision to
Despite having served respondent Norkis Trading for extend the suspension form part of the records.
many years and performing the same functions as On October 13, 1999, the respondents were to report
regular employees, complainants were not accorded back to work but during the hearing in their NLRC
regular status. It was made to appear that case, they were informed by PASAKA that they
complainants are not employees of said company but would be transferred to NorkisTradings sister
that of respondent PASAKA.6 company, PortaCoeli Industrial Corporation
Against the foregoing scenario, the respondents, (PortaCoeli), as washers of Multicab vehicles.
together with several other complainants,7 filed on The respondents opposed the transfer as it would
June 9, 1999 with the Department of Labor and allegedly result in a change of employers, from
Employment (DOLE) a complaint against Norkis Norkis Trading to PortaCoeli. The respondents also
Trading and PASAKA for labor-only contracting and believed that the transfer would result in a demotion
non-payment of minimum wage and overtime pay. since from being skilled workers in NorkisTrading,
The complaint was docketed as LSED Case No. they would be reduced to being utility workers.These
RO700-9906-CI-CS-168. circumstances made the respondents amend their
The filing of the complaint for labor-only contracting complaint for illegal suspension, to include the
allegedly led to the suspension of the respondents charges of unfair labor practice, illegal dismissal,
membership with PASAKA. On July 22, 1999, they damages and attorneys fees.
were served by PASAKA with memoranda charging For their part, both Norkis Trading and PASAKA
them with a violation of the rule against commission claimed that the respondents were not employees of
of acts injurious or prejudicial to the interest or Norkis Trading. They insisted that the respondents
welfare of the cooperative. The memoranda cited that were members of PASAKA, which served as an
the respondents filing of a case against Norkis independent contractor that merely supplied services
Trading had greatly prejudiced the interest and to Norkis International Co., Inc. (Norkis
welfare of the cooperative.8 In their answer9 to the International) pursuant to a job contract16 which
memoranda, the respondents explained that they PASAKA and Norkis International executed on
merely wanted to be recognized as regular employees January 14, 1999 for 121,500 pieces of F/GF-Series
of Norkis Trading. The case records include copies of Reinforcement Production. After PASAKA received
the memoranda sent to respondents Buenavista, reports from its coordinator at Norkis International of
Fabroa and Dondoyano.10 the respondents low efficiency and violation of the
On August 16, 1999, the respondents received cooperatives rules, and after giving said respondents
another set of memoranda from PASAKA, now the chance to present their side, a penalty of
charging them with the following violations of the suspension was imposed upon them by the
cooperatives rules and regulations: (1) serious cooperative. The illegal suspension being complained
misconduct or willful disobedience of superiors of was then not linked to the respondents
instructions or orders; (2) gross and habitual neglect employment, but to their membership with PASAKA.
of duties by abandoning work without permission; (3) Norkis Trading stressed that the respondents were
absences without filing leave of absence; and (4) deployed by PASAKA to Norkis International, a
wasting time or loitering on companys time or company that is entirely separate and distinct from
leaving their post temporarily without permission Norkis Trading.
during office hours.11 Copies of the memoranda12 sent ISSUES:
to Fabroa and Cape form part of the records.
1) THE COURT OF APPEALS HAS DEPARTED We have thus explained in Cocomangas Hotel Beach
FROM THE USUAL COURSE OF JUDICIAL Resort v. Visca48 that the CA can take cognizance of a
PROCEEDINGS WHEN IT MADE ITS OWN petition for certiorari if it finds that the NLRC
FACTUAL FINDINGS AND DISREGARDED THE committed grave abuse of discretion by capriciously,
UNIFORM AND CONSISTENT FACTUAL whimsically, or arbitrarily disregarding evidence
FINDINGS OF THE LABOR ARBITER AND THE which are material to or decisive of the controversy.
NLRC, WHICH MUST BE ACCORDED GREAT The CA cannot make this determination without
WEIGHT, RESPECT AND EVEN FINALITY. IN looking into the evidence presented by the parties.
SO DOING, THE COURT OF APPEALS The appellate court needs to evaluate the materiality
EXCEEDED ITS AUTHORITY ON CERTIORARI or significance of the evidence, which are alleged to
UNDER RULE 65 OF THE RULES OF COURT have been capriciously, whimsically, or arbitrarily
BECAUSE SUCH FACTUAL FINDINGS WERE disregarded by the NLRC, in relation to all other
BASED ON SPECULATIONS AND NOT ON evidence on record.
OTHER EVIDENCES [SIC] ON RECORD. This case falls within the exception to the general
4) THE COURT OF APPEALS HAS rule that findings of fact of labor officials are to be
DETERMINED A QUESTION OF SUBSTANCE accorded respect and finality on appeal. As our
NOT IN ACCORD WITH LAW AND discussions in the other grounds that are raised in this
JURISPRUDENCE IN RULING THAT THE petition will demonstrate, the CA has correctly held
RESPONDENTS WERE CONSTRUCTIVELY that the NLRC has disregarded facts and evidence
DISMISSED CONTRARY TO THE FACTUAL that are material to the outcome of the respondents
FINDINGS OF THE LABOR ARBITER AND THE case. No error can be ascribed to the appellate court
NLRC AND WITHOUT SHOWING ANY for making its own assessment of the facts that are
EVIDENCE TO OVERTURN SUCH FINDING OF significant to the case to determine the presence or
FACT.42 absence of grave abuse of discretion on the part of
This Courts Ruling the NLRC, even if the CAs findings turn out to be
The Court resolves to deny the petition. different from the factual findings of both the LA and
Factual findings of labor officials NLRC.
may be examined by the courts Termination of an employment for
when there is a showing that they no just or authorized cause
were arrived at arbitrarily or in amounts to an illegal dismissal.
disregard of evidence on record. As to the issue of whether the respondents were
As regards the first ground, the petitioner questions illegally dismissed by Norkis Trading, we answer in
the CAs reversal of LA Gutierrezs and the NLRCs the affirmative, although not by constructive
rulings, and argues that said rulings should have been dismissal as declared by the CA, but by actual
accorded great weight and finality by the appellate dismissal.
court as these were allegedly supported by substantial Where an entity is declared to be a labor-only
evidence. contractor, the employees supplied by said contractor
On this matter, the settled rule is that factual findings to the principal employer become regular employees
of labor officials, who are deemed to have acquired of the latter. Having gained regular status, the
expertise in matters within their jurisdiction, are employees are entitled to security of tenure and can
generally accorded not only respect but even finality only be dismissed for just or authorized causes and
by the courts when supported by substantial after they had been afforded due
evidence, i.e., the amount of relevant evidence which process.66 Termination of employment without just or
a reasonable mind might accept as adequate to authorized cause and without observing procedural
support a conclusion. We emphasize, nonetheless, due process is illegal.1wphi1
that these findings are not infallible. When there is a In claiming that they were illegally dismissed from
showing that they were arrived at arbitrarily or in their employment, the respondents alleged having
disregard of the evidence on record, they may be been informed by PASAKA that they would be
examined by the courts. The CA can then grant a transferred, upon the behest of Norkis Trading, as
petition for certiorari if it finds that the NLRC, in its Multicab washers or utility workers to PortaCoeli, a
assailed decision or resolution, has made a factual sister company of Norkis Trading. Norkis Trading
finding that is not supported by substantial evidence. does not dispute that such job transfer was relayed by
It is within the jurisdiction of the CA, whose PASAKA unto the respondents, although the
jurisdiction over labor cases has been expanded to company contends that the transfer was merely an
review the findings of the NLRC.47 "offer" that did not constitute a dismissal. It bears
mentioning, however, that the respondents were not
The case was brought before the NCMB employees serve as limitation to the
when the matter remained unsolved for voluntary Companys prerogative to outsource parts of
arbitration. Voluntary Arbitrator Bienvenido E. its operations especially when hiring
Laguesma manifested that amicable settlement was contractual employees.
no longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not the A collective bargaining agreement
Company is guilty of unfair labor acts in engaging is the law between the parties.
the services of PESO, a third party service provider,
under the existing CBA, laws, and jurisprudence." It is familiar and fundamental
doctrine in labor law that the CBA is the law
ISSUE: between the parties and they are obliged to
comply with its provisions.
Whether or not the Company is guilty of
unfair labor acts in engaging the services of PESO, a A collective bargaining agreement
third party service provider, under the existing CBA, or CBA refers to the negotiated contract
laws, and jurisprudence. between a legitimate labor organization and
the employer concerning wages, hours of
work and all other terms and conditions of
RULING: employment in a bargaining unit. As in all
contracts, the parties in a CBA may establish
The companys defense such stipulations, clauses, terms and
is that their act of hiring contractual conditions as they may deem convenient
employees is a management prerogative provided these are not contrary to law,
and is a valid act thereof. morals, good customs, public order or public
policy. Thus, where the CBA is clear and
Declaring that a particular act falls unambiguous, it becomes the law between
within the concept of management the parties and compliance therewith is
prerogative is significantly different from mandated by the express policy of the law.
acknowledging that such act is a valid
exercise thereof. What the VA and the CA Moreover, if the terms of a
correctly ruled was that the Companys act of contract, as in a CBA, are clear and leave no
contracting out/outsourcing is within the doubt upon the intention of the contracting
purview of management prerogative. Both parties, the literal meaning of their
did not say, however, that such act is a valid stipulations shall control.
exercise thereof. Obviously, this is due to
the recognition that the CBA provisions
agreed upon by the Company and the Union
delimit the free exercise of management On the power of the voluntary arbitrator:
prerogative pertaining to the hiring of
contractual employees. Indeed, the VA In general, the arbitrator is
opined that "the right of the management to expected to decide those questions expressly
outsource parts of its operations is not stated and limited in the submission
totally eliminated but is merely limited by agreement. However, since arbitration is the
the CBA," while the CA held that "this final resort for the adjudication of disputes,
management prerogative of contracting out the arbitrator can assume that he has the
services, however, is not without limitation. power to make a final settlement. Thus,
x x x These categories of employees assuming that the submission empowers the
particularly with respect to casual arbitrator to decide whether an employee
was discharged for just cause, the arbitrator employer; (b) MBMSI was the one who had
in this instance can reasonably assume that complete and direct control over the complainants;
his powers extended beyond giving a yes-or- and (c) PCCr had a contractual agreement with
MBMSI, thus, making the latter their direct
no answer and included the power to
employer.
reinstate him with or without back pay.
On September 11, 2009, PCCr submitted several
86. Vigilla et al., vs. Phil. College of documents before LA Ronaldo Hernandez, including
Criminology Inc., G.R. No. 200094, June releases, waivers and quitclaims in favor of MBMSI
10, 2013 executed by the complainants to prove that they were
employees of MBMSI and not PCCr.
Facts:
Ruling of the Labor Arbiter
PCCr is a non-stock educational institution, while the
petitioners were janitors, janitresses and supervisor in After due proceedings, the LA handed down his
the Maintenance Department of PCCr under the decision, finding that (a) PCCr was the real principal
supervision and control of Atty. Florante A. Seril employer of the complainants ; (b) MBMSI was a
(Atty. Seril), PCCrs Senior Vice President for mere adjunct or alter ego/labor-only contractor; (c)
Administration. The petitioners, however, were made the complainants were regular employees of PCCr;
to understand, upon application with respondent and (d) PCCr/Bautista were in bad faith in dismissing
school, that they were under MBMSI, a corporation the complainants.
engaged in providing janitorial services to clients.
Atty. Seril is also the President and General Manager The LA explained that PCCr was actually the one
of MBMSI. which exercised control over the means and methods
of the work of the petitioners, thru Atty. Seril, who
Sometime in 2008, PCCr discovered that the was acting, throughout the time in his capacity as
Certificate of Incorporation of MBMSI had been Senior Vice President for Administration of PCCr, not
revoked as of July 2, 2003. On March 16, 2009, in any way or time as the supposed employer/general
PCCr, through its President, respondent Gregory Alan manager or president of MBMSI.
F. Bautista (Bautista), citing the revocation,
terminated the schools relationship with MBMSI, .Ruling of the NLRC
resulting in the dismissal of the employees or
maintenance personnel under MBMSI, except Not satisfied, the respondents filed an appeal before
Alfonso Bongot (Bongot) who was retired. the NLRC. In its Resolution, dated February 11,
2011, the NLRC affirmed the LAs findings.
In September, 2009, the dismissed employees, led by Nevertheless, the respondents were excused from
their supervisor, Benigno Vigilla (Vigilla), filed their their liability by virtue of the releases, waivers and
respective complaints for illegal dismissal, quitclaims executed by the petitioners.
reinstatement, back wages, separation pay (for
Bongot), underpayment of salaries, overtime pay, In their motion for reconsideration, petitioners
holiday pay, service incentive leave, and 13th month attached as annexes their affidavits denying that they
pay against MBMSI, Atty. Seril, PCCr, and Bautista. had signed the releases, waivers, and quitclaims.
They prayed for the reinstatement in toto of the July
In their complaints, they alleged that it was the 30, 2010 Decision of the LA.8 MBMSI/Atty. Seril
school, not MBMSI, which was their real employer also filed a motion for reconsideration9 questioning
because (a) MBMSIs certification had been revoked; the declaration of the NLRC that he was solidarily
(b) PCCr had direct control over MBMSIs liable with PCCr.
operations; (c) there was no contract between
MBMSI and PCCr; and (d) the selection and hiring of On April 28, 2011, NLRC modified its February 11,
employees were undertaken by PCCr. 2011 Resolution by affirming the July 30, 2010
Decision10 of the LA only in so far as complainants
On the other hand, PCCr and Bautista contended that Ernesto B. Ayento and Eduardo B. Salonga were
(a) PCCr could not have illegally dismissed the concerned. As for the other 17 complainants, the
complainants because it was not their direct
NLRC ruled that their awards had been superseded notarized by a Notary Public. Such
by their respective releases, waivers and quitclaims. notarization gives prima facie evidence of
their due execution. Further, said releases,
Ruling of the Court of Appeals waivers, and quitclaims were not refuted nor
disputed by complainants herein, thus, we
On September 16, 2011, the CA denied the petition have no recourse but to uphold their due
and affirmed the two Resolutions of the NLRC, dated
execution
February 11, 2011 and April 28, 2011. The CA
pointed out that based on the principle of solidary
A Labor-only Contractor is Solidarily Liable with
liability and Article 121711 of the New Civil Code,
petitioners respective releases, waivers and the Employer
quitclaims in favor of MBMSI and Atty. Seril
redounded to the benefit of the respondents. The CA The issue of whether there is
also upheld the factual findings of the NLRC as to solidary liability between the labor-only
the authenticity and due execution of the individual contractor and the employer is crucial in this
releases, waivers and quitclaims because of the case. If a labor-only contractor is solidarily
failure of petitioners to substantiate their claim of liable with the employer, then the releases,
forgery and to overcome the presumption of waivers and quitclaims in favor of MBMSI
regularity of a notarized document. Petitioners
will redound to the benefit of PCCr. On the
motion for reconsideration was likewise denied by
the CA in its January 4, 2012 Resolution. other hand, if a labor-only contractor is not
solidarily liable with the employer, the latter
Hence, this petition under Rule 45 challenging the being directly liable, then the releases,
CA Decision waivers and quitclaims in favor of MBMSI
will not extinguish the liability of PCCr.
Issue:
xxx
Whether or not their claims against the
respondents were amicably settled by virtue The NLRC and the CA correctly
of the releases, waivers and quitclaims ruled that the releases, waivers and
which they had executed in favor of quitclaims executed by petitioners in favor
MBMSI. of MBMSI redounded to the benefit of PCCr
pursuant to Article 1217 of the New Civil
o whether or not petitioners executed Code. The reason is that MBMSI is
the said releases, waivers and solidarily liable with the respondents for the
quitclaims valid claims of petitioners pursuant to
Article 109 of the Labor Code.
o whether or not a labor-only
contractor is solidarily liable with As correctly pointed out by the
the employer. respondents, the basis of the solidary
liability of the principal with those engaged
in labor-only contracting is the last
paragraph of Article 106 of the Labor Code,
Ruling:
which in part provides: "In such cases labor-
The petition fails. only contracting, the person or intermediary
shall be considered merely as an agent of the
The Releases, Waivers and Quitclaims are Valid employer who shall be responsible to the
workers in the same manner and extent as if
We noted that the individual the latter were directly employed by him."
quitclaims, waivers and releases executed by
the complainants showing that they received Xxx
their separation pay from MBMSI were duly
Under the general rule set out in the A similar situation obtains where
first and second paragraphs of Article 106, there is "labor only" contracting. The "labor-
an employer who enters into a contract with only" contractor-i.e "the person or
a contractor for the performance of work for intermediary" - is considered "merely as an
the employer, does not thereby create an agent of the employer." The employer is
employer-employees relationship between made by the statute responsible to the
himself and the employees of the contractor. employees of the "labor only" contractor as
Thus, the employees of the contractor if such employees had been directly
remain the contractor's employees and his employed by the employer. Thus, where
alone. Nonetheless when a contractor fails to "labor-only" contracting exists in a given
pay the wages of his employees in case, the statute itself implies or establishes
accordance with the Labor Code, the an employer-employee relationship between
employer who contracted out the job to the the employer (the owner of the project) and
contractor becomes jointly and severally the employees of the "labor only" contractor,
liable with his contractor to the employees this time for a comprehensive purpose:
of the latter "to the extent of the work "employer for purposes of this Code, to
performed under the contract" as such prevent any violation or circumvention of
employer were the employer of the any provision of this Code." The law in
contractor's employees. The law itself, in effect holds both the employer and the
other words, establishes an employer- "laboronly" contractor responsible to the
employee relationship between the employer latter's employees for the more effective
and the job contractor's employees for a safeguarding of the employees' rights under
limited purpose, i.e., in order to ensure that the Labor Code.35
the latter get paid the wages due to them.
Facts:
provide services such as check clearing, delivery of Reyes and Cecil Conanan reiterating its objection. It
bank statements, fund transfers, card production, requested the BPI management to submit the BOMC
operations accounting and control, and cash issue to the grievance procedure under the CBA, but
servicing, conformably with BSP Circular No. 1388. BPI did not consider it as "grievable." Instead, BPI
Not a single BPI employee was displaced and those proposed a Labor Management Conference (LMC)
performing the functions, which were transferred to between the parties.
BOMC, were given other assignments.
Thereafter, the Union demanded that the matter be
submitted to the grievance machinery as the resort to
the LMC was unsuccessful. As BPI allegedly ignored
The Manila chapter of BPI Employees Union the demand, the Union filed a notice of strike before
(BPIEU-Metro ManilaFUBU) then filed a complaint the National Conciliation and Mediation Board
for unfair labor practice (ULP). The Labor Arbiter (NCMB) on the following grounds:
(LA) decided the case in favor of the union. The
decision was, however, reversed on appeal by the a) Contracting out services/functions performed by
NLRC. BPIEU-Metro Manila-FUBU filed a petition union members that interfered with, restrained and/or
for certiorari before the CA which denied it, holding coerced the employees in the exercise of their right to
that BPI transferred the employees in the affected self-organization;
departments in the pursuit of its legitimate business.
The employees were neither demoted nor were their b) Violation of duty to bargain; and
salaries, benefits and other privileges diminished.
c) Union busting.
terminated.13 The NLRC also stressed that ART. 261. Jurisdiction of Voluntary Arbitrators or
Department Order (D.O.) No. 10 series of 1997, panel of Voluntary Arbitrators. x x x Accordingly,
strongly relied upon by the Union, did not apply in violations of a Collective Bargaining Agreement,
this case as BSP Circular No. 1388, series of 1993, except those which are gross in character, shall no
was the applicable rule. longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective
After the denial of its motion for reconsideration, the Bargaining Agreement. For purposes of this article,
Union elevated its grievance to the CA via a petition gross violations of Collective Bargaining Agreement
for certiorari under Rule 65. The CA, however, shall mean flagrant and/or malicious refusal to
affirmed the NLRCs December 21, 2001 Resolution comply with the economic provisions of such
with modification that the enumeration of functions agreement.
listed under BSP Circular No. 1388 in the said
resolution be deleted. The CA noted at the outset that Clearly, only gross violations of the economic
the petition must be dismissed as it merely touched provisions of the CBA are treated as ULP. Otherwise,
on factual matters which were beyond the ambit of they are mere grievances.
the remedy availed of.14 Be that as it may, the CA
found that the factual findings of the NLRC were In the present case, the alleged violation of the union
supported by substantial evidence and, thus, entitled shop agreement in the CBA, even assuming it was
to great respect and finality. To the CA, the NLRC malicious and flagrant, is not a violation of an
did not act with grave abuse of discretion as to merit economic provision in the agreement. The provisions
the reversal of the resolution. relied upon by the Union were those articles referring
to the recognition of the union as the sole and
As to the applicability of D.O. No. 10, the CA agreed exclusive bargaining representative of all rank-and-
with the NLRC that the said order did not apply as file employees, as well as the articles on union
BPI, being a commercial bank, its transactions were security, specifically, the maintenance of membership
subject to the rules and regulations of the BSP. in good standing as a condition for continued
employment and the union shop clause.26 It failed to
take into consideration its recognition of the banks
exclusive rights and prerogatives, likewise provided
Not satisfied, the Union filed a motion for
in the CBA, which included the hiring of employees,
reconsideration which was, however, denied by the
promotion, transfers, and dismissals for just cause
CA.
and the maintenance of order, discipline and
efficiency in its operations
Hence, the present petition The Union, however, insists that jobs being
outsourced to BOMC were included in the existing
Issue: bargaining unit, thus, resulting in a reduction of a
number of positions in such unit. The reduction
Whether or not the act of BPI to outsource the interfered with the employees right to self-
cashiering, distribution and bookkeeping organization because the power of a union primarily
functions to BOMC is in conformity with the depends on its strength in number.28
law and the existing CBA. Particularly in
dispute is the validity of the transfer of twelve It is incomprehensible how the "reduction of
(12) former FEBTC employees to BOMC, positions in the collective bargaining unit" interferes
instead of being absorbed in BPI after the with the employees right to self-organization
corporate merger. because the employees themselves were neither
transferred nor dismissed from the service. As the
Ruling: NLRC clearly stated:
worker's preference may be enforced. Thus, Article insolvency, such unpaid wages shall be paid
110 of the Labor Code and its implementing rule in full before the 'claims of the Government
cannot be invoked by the respondents in this case and other creditors' may be paid. But, for an
absent a formal declaration of bankruptcy or a orderly settlement of a debtor's assets, all
liquidation order . . . creditors must be convened, their claims
The rationale is that to hold Art. 110 to be ascertained and inventoried, and thereafter
applicable also to extrajudicial proceedings would be the preferences determined in the course of
putting the worker in a better position than the State judicial proceedings which have for their
which could only assert its own prior preference in object the subjection of the property of the
case of a judicial proceeding. Art. 110, which was debtor to the payment of his debts or other
amended by R.A. 6715 effective 21 March 1989, now lawful obligations. Thereby, an orderly
reads: determination of preference of creditors'
ARTICLE 110. Worker claims is assured (Philippine Savings Bank
preference in case of bankruptcy. vs. Lantin, No. L-33929, September 2, 1983,
In the event of bankruptcy or 124 SCRA 476); the adjudication made will
liquidation of an employer's be binding on all parties-in-interest since
business, his workers shall enjoy those proceedings are proceedings in rem;
first preference as regards their and the legal scheme of classification,
unpaid wages and other monetary concurrence and preference of credits in the
claims, any provision of law to the Civil Code, the Insolvency Law, and the
contrary notwithstanding. Such Labor Code is preserved in harmony.
unpaid wages and monetary claims In ruling, as we did, in Development Bank
shall be paid in full before the of the Philippines v. Santos, we took into account the
claims of the Government and following pronouncements: In the event of
other creditors may be paid. insolvency, a principal objective should be to effect
Obviously, the amendment expanded the an equitable distribution of the insolvent's property
concept of "worker preference" to cover not only among his creditors. To accomplish this there must
unpaid wages but also other monetary claims to first be some proceeding where notice to all of the
which even claims of the Government must be insolvent's creditors may be given and where the
deemed subordinate. The Rules and Regulations claims of preferred creditors may be bindingly
Implementing R.A. 6715, approved 24 May 1989, adjudicated.
also amended the corresponding implementing rule, The rationale therefore has been expressed in the
and now reads: recent case of DBP v. Secretary of Labor (G.R. No.
SECTION 10. Payment of 79351, 28 November 1989), which we quote:
wages and other monetary claims A preference of credit bestows
in case of bankruptcy. In case upon the preferred creditor an advantage of
of bankruptcy or liquidation of the having his credit satisfied first ahead of
employer's business, the unpaid other claims which may be established
wages and other monetary claims against the debtor. Logically, it becomes
of the employees shall be given material only when the properties and assets
first preference and shall be paid in of the debtors are insufficient to pay his
full before the claims of debts in full; for if the debtor is amply able
government and other creditors to pay his various creditors in full, how can
may be paid. the necessity exist to determine which of his
Although the terms "declaration" (of creditors shall be paid first or whether they
bankruptcy) or "judicial" (liquidation) have been shall be paid out of the proceeds of the sale
notably eliminated, still in Development Bank of the (of) the debtor's specific property.
Philippines v. NLRC , this Court did not alter its Indubitably, the preferential right of credit
original position that the right to preference given to attains significance only after the properties
workers under Art. 110 cannot exist in any effective of the debtor have been inventoried and
way prior to the time of its presentation in liquidated, and the claims held by his
distribution proceedings. In effect, we reiterated our various creditors have been established.
previous interpretation in Development Bank of the In the present case, there is as yet no
Philippines v. Santos where we said: declaration of bankruptcy nor judicial liquidation of
It (worker preference) will find TPWII. Hence, it would be premature to enforce the
application when, in proceedings such as worker's preference. The additional ratiocination of
public respondent that "under Article 110 of the (2) Non-payment of their basic pay
Labor Code complainant enjoys a preference of credit and allowances for the period June 1984 to
over the properties of TPWII being held in possession October 1986, inclusive under Wage Order
by DBP," is a dismal misconception of the nature of
No. 5;
preference of credit.
(3) Non-payment of their salaries
The DBP anchors its claims on a mortgage
credit. A mortgage directly and immediately subjects for the period March 1986 to the present;
the property upon which it is imposed, whoever the (4) Non-payment of their 13th
possessor may be, to the fulfillment of the obligation month pay for 1985, 1986 and 1987;
for whose security it was constituted (Article 2176, (5) Non-payment of their vacation
Civil Code). It creates a real right which is and sick leave, and the compensatory leaves
enforceable against the whole world. It is a lien on an of mine site employees; and
identified immovable property, which a preference is (6) Non-payment of the salaries of
not. A recorded mortgage credit is a special preferred employees who were placed on forced
credit under Article 2242 (5) of the Civil Code on leaves since November, 1985 to the present,
classification of credits. The preference given by
if this is not feasible, the affected employees
Article 110, when not falling within Article 2241 (6)
and Article 2242 (3) of the Civil Code and not be awarded corresponding separation pay.
attached to any specific property, is an ordinary
preferred credit although its impact is to move it from On February 27, 1987, the
second priority to first priority in order of preference complainants filed a Motion for the issuance
established by Article 2244 of the Civil Code. of an inspection authority. After said
The present controversy could have been inspection, the Labor Standards and Welfare
easily settled by public respondent had it referred to Officers submitted their report with the
ample jurisprudence which already provides the recommendations that an Order of
solution. Stare decisis et non quietamovere. Once a
Compliance be issued directing
case is decided by this Court as the final arbiter of
any justiciable controversy one way, then another BatongBuhay Gold Mines Inc. to pay
case involving exactly the same point at issue should complainants' Elsie Rosalina Ty, et al.
be decided in the same manner. Public respondent P4,818,746.40 by way of unpaid salaries of
had no choice on the matter. It could not have ruled workers from March 16, 1987 to present,
any other way. This Court having spoken in a string unpaid and ECOLA differentials under
of cases against public respondent, its duty is simply Wage Order Nos. 2 and 5 unpaid 13th
to obey judicial precedents. Any further disregard, if
months pay for 1985 and 1986, and unpaid
not defiance, of our rulings will be considered a
ground to hold public respondent in contempt. (sic) vacation/sick/compensatory leave
benefits.
RD adopted recommendation of
LSWOs. Complainant filed an ex-parte
motion for issuance of a writ of execution
and appointment of special sheriff. The
89. Batongbuhay Gold Mines vs. De la Serna G.R. Regional Director issued an Order directing
No. 86963 August 6, 1999 BBGMI to put up a cash or surety bond
otherwise a writ of execution will be issued.
Facts:
On February 5, 1987, respondents Ty, Respondent, however, failed to do so and
Mendelebar, Reyes and 1,247 others filed a complaint RD appointed a special sheriff thereafter to
against BatongBuhay Gold Mines, Inc. for: collect amount from respondent. The Special
Sheriff proceeded to execute the order and
(1) Non-payment of their basic pay seized properties by respondent and sold
and allowances for the period of July 1983 them at public auction.
to July 1984, inclusive, under Wage Order On December 1987, BBGMI
No. 2; finally posted a supersedeas bond which
prompted this Office to issue an Order
restraining the complainants and Sheriff are not verifiable in the ordinary course of
Ramos from enforcing the writ of execution. inspection.
Herein petitioner appealed the Order dated
July 31, 1987 of Regional Director Luna C. Respondent Undersecretary
Piezas to respondent Undersecretary Dionisio C. DelaSerna, upheld the
Dionisio de la Serna, contending that the jurisdiction of Regional Director Luna C.
Regional Director had no jurisdiction over Piezas by relying on Sec 2 of E.O. 111,
the case. But the respondent upheld the which states:
The provisions of article 217 of this code to the
jurisdiction of the Regional Director and
contrary notwithstanding and in cases where the
annulled all the auction sales conducted by
relationship of employer-employee still exists, the
Special Sheriff John Ramos.
Minister of Labor and Employment or his duly
authorized representative shall have the power to
Issues: order and administer, after due notice and hearing,
compliance with the labor standards provision of this
Whether the Regional Director has jurisdiction over Code based on the findings of the findings of labor
the complaint filed by the employees of BBGMI regulation officers or industrial safety engineers
made in the course of inspection, and to issue writs
SC Ruling:
of execution to the appropriate authority for the
(1) YES. The Regional Director enforcement of their order, except in cases where the
has jurisdiction over the BBGMI employees employer contests the findings of the labor
who are the complainants in Case Number regulations officers and raises issues which cannot
NCR-LSED-CI-2047-87. The subject labor be resolved without considering evidentiary matters
standards case of the petition arose from the that are not verifiable in the ordinary course of
visitorial and enforcement powers by the inspection.
Regional Director of Department of Labor
The Court would have ruled
and Employment (DOLE). Labor standards
differently had the petitioner shown that
cases are governed by Article 128(b) of the
subject labor standards case is within the
Labor Code. As can be gleaned from the
purview of the exception clause in Article
records on hand, subject labor standards
128 (b) of the Labor Code. Said provision
case was filed on February 5, 1987 at which
requires the concurrence of the following
time Article 128 (b) read as follows:
Art. 128 (b) Visitorial and elements in order to divest the Regional
enforcement powers. Director or his representatives of
(b) The Minister of Labor or his duly jurisdiction, to wit: (a) that the petitioner
authorized representative shall have the (employer) contests the findings of the labor
power to order and administer, after due regulations officer and raises issues thereon;
notice and hearing, compliance with the (b) that in order to resolve such issues, there
labor standards provisions of this Code is a need to examine evidentiary matters;
based on the findings of labor regulation and (c) that such matters are not verifiable in
officers or industrial safety engineers made the normal course of inspection.
in the course of inspection, and to issue
Nowhere in the records does it
writs of execution to the appropriate
appear that the petitioner alleged any of the
authority for the enforcement of their order,
aforestated grounds. The only instance when
except in cases where the employer contests
there was a semblance of raising the
the findings of the labor regulations officers
aforestated grounds, was when they filed an
and raises issues which cannot be resolved
Appeal Memorandum wherein petitioner
without considering evidentiary matters that
comes up with the defense that the Regional
Labor Secretary and his representatives against BISUDECO in the form of a secured loan.
reads: Consequently, by virtue of a Trust Agreement
Art. 128 (b)Notwithstanding the provisions executed between the National Government and APT
of Articles 129 and 217 of this Code to the on February 27, 1987, APT was constituted as trustee
contrary, and in cases where the over BISUDECOs account with the PNB.
relationship of employer-employee still
exists, the Secretary of Labor and Sometime later, BISUDECO contracted the services
Employment or his duly authorized of Philippine Sugar Corporation (Philsucor) to take
representatives shall have the power to issue over the management of the sugar plantation and
compliance orders to give effect to the labor milling operations until August 31, 1992.Meanwhile,
standards provisions of this Code and other because of the continued failure of BISUDECO to
labor legislation based on the findings of pay its outstanding loan with PNB, its mortgaged
labor employment and enforcement officers properties were foreclosed and subsequently sold in a
or industrial safety engineers made in the public auction to APT, as the sole bidder. On April 2,
course of inspection. The Secretary or his 1991, APT was issued a Sheriffs Certificate of Sale.
duly authorized representative shall issue
writs of execution to the appropriate The union filed a complaint for unfair labor practice,
authority for the enforcement of their illegal dismissal, illegal deduction and underpayment
orders, except in cases where the employer of wages and other labor standard benefits plus
contests the findings of the labor damages. In the meantime, APTs Board of Trustees
employment and enforcement officer and issued a resolution accepting the offer of Bicol-Agro-
raises issues supported by documentary Industrial Cooperative (BAPCI) to buy the sugar
proofs which were not considered in the plantation and mill. Again, on September 23, 1992,
course of inspection. the board passed another resolution authorizing the
payment of separation benefits to BISUDECOs
employees in the event of the companys
privatization.
90. ABUNDIO BARAYOGA and BISUDECO-
PHILSUCORCORFARM WORKERS UNION Then, on October 30, 1992, BAPCI purchased the
(PACIWU CHAP-TPC) v. ASSET foreclosed assets of BISUDECO from APT and took
PRIVATIZATION over its sugar milling operations under the trade
name Peafrancia Sugar Mill (Pensumil). The union
G.R. No. 160073; October 24, 2005 alleged that when Philsucor initially took over the
operations of the company, it retained BISUDECOs
Facts: Bisudeco-Philsucor Corfarm Workers Union is existing
composed of workers of Bicolandia Sugar personnel under the same terms and conditions of em
Development Corporation (BISUDECO), a sugar ployment. Nonetheless, at the start of the season
plantation mill located in Himaao, Pili, Camarines sometime in May1991, Philsucor started recalling
Sur. Asset Privatization Trust (APT), a public trust workers back to work, to the exception of the union
was created under Proclamation No. 50, as amended, members. Management told them thatthey will be re-
mandated to take title to and possession of, conserve, hired only if they resign from the union. Just the
provisionally manage and dispose of non-performing same, thereafter, the company started to employ the
assets of the Philippine government identified for services of outsiders under the pakyaw system.
privatization or disposition. Pursuant to Section 23 of
Proclamation No. 50, former President Corazon Issue: whether APT is liable to pay petitioners
Aquino issued Administrative Order No. monetary claims, including back wages from May 1,
14identifying certain assets of government 1991, to October 30, 1992 (the date of the sale of
institutions that were to be transferred to the National BISUDECO assets to BAPCI).
Government. Among the assets transferred was the
financial claim of the Philippine National Bank
Held: No. Pursuant to Administrative Order No. 14, 2001 is MODIFIED. Considering that
Series of 1987, PNBs assets, loans and receivables petitioner is a detention prisoner
from its borrowers were transferred to APT as trustee making reinstatement impossible, PAL
of the national government. Among the liabilities is hereby ordered to pay petitioner
transferred to APT was PNBs financial claim against Zamora his separation pay, in lieu of
BISUDECO, not the latters assets and chattel. reinstatement, to be computed at one
BISUDECO remained the owner of the mortgaged month salary for every year of service
properties in August 1988, when the Philippine Sugar from February 9, 1981 and back wages
Corporation (Philsucor) undertook the operation and to be computed from December 19,
management of the sugar plantation until August 31, 1995, both up to October 1, 2000, the
1992, under a so-called Contract of Lease between date of his incarceration.
the two corporations. At the time, APT was merely a
secured creditor of BISUDECO. Considering that PAL is still under receivership, the
monetary claims of petitioner Zamora must be
presented to the PAL Rehabilitation Receiver, subject
to the rules on preference of credits. The Court of
Appeals took into account respondent Zamora's
incarceration when it recalled its order of
91.) G.R. 166996 February 6, 2007
reinstatement. Anent its earlier pronouncement
Philippine Airlines vs Zamora
against the suspension of the proceedings of the case
owing to the present rehabilitation of petitioner PAL,
FACTS: the appellate court only had this to say: However,
since PAL is still under receivership, the provisions
Respondent Zamora had been in the employ of of PD 902-A, should apply. The enforcement of the
petitioner PAL since 9 February 1981 when the monetary claims of petitioner should be brought
former was hired as a Cargo Representative at before the PAL Rehabilitation Receiver for proper
petitioner PALs Import Operations Division. disposition.
Respondent Zamora was then dismissed from service
for having been found by petitioner PALs ISSUE:
management to be liable for insubordination, neglect WON respondent Zamoras monetary claim should
of customer, disrespect for authority and absence be presented to the PAL rehabilitation receiver,
subject to the rules on preference of credits
without official leave.
RULING:
On 12 March 1996, respondent Zamora filed a
complaint against petitioners PAL and Francisco X. No. The relevant law dealing with the suspension of
Yngente IV before the NLRC for illegal dismissal, actions for claims against corporations is Presidential
unfair labor practice, non-payment of wages, Decree No. 902-A, 52 as amended. The term "claim,"
damages and attorneys fees as contemplated in Sec. 6 (c) of Presidential Decree
No. 902-A, refers "to debts or demands of
On 1 February 2005, the Court of Appeals
a pecuniary nature. It means 'the assertion of a right
promulgated an Amended Decision modifying its 13
to have money paid.
August 2004 Decision but at the same time resolving
petitioner PAL's Motion for Reconsideration in this It is plain from the foregoing provisions of law that
wise: WHEREFORE, this Court's August 13, 2004 "upon the appointment [by the SEC] of a
decision is hereby AMENDED, the dispositive management committee or a rehabilitation receiver"
portion to read as follows: all actions for claims against the corporation pending
before any court, tribunal or board shall ipso jure be
WHEREFORE, in view of the
suspended.
foregoing, the petition is GRANTED.
The NLRC resolution dated April 27,
The law is clear: upon the creation of a management Bargaining Agreement (CBA) entered into by herein
committee or the appointment of a rehabilitation parties.
receiver, all claims for actions "shall be suspended
accordingly." No exception in favor of labor claims is the facts are:
mentioned in the law. Since the law makes
no distinction or exemptions, neither should this On 6 February 1987, herein parties, PAL and PALEA,
the collective bargaining agent of the rank and file
Court.
employees of PAL, entered into a CBA that was to
cover the period of 1986 1989. Part of said
Otherwise stated, no other action may be taken in,
agreement required PAL to pay its rank and file
including the rendition of judgment during the state employees the following bonuses:
of suspension what are automatically stayed or
suspended are the proceedings of an action or suit Section 4 13th Month Pay (Mid-year
and not just the payment of claims during the Bonus)
execution stage after the case had become final and
executory. A 13th month pay, equivalent to one month's
current basic pay, consistent with the
The suspension of action for claims against a existing practice shall be paid in advance in
corporation under rehabilitation receiver or May.
management committee embraces all phases of the
suit, be it before the trial court or any tribunal or Section 5 Christmas Bonus
before this Court. Furthermore, the actions that are
suspended cover all claims against a distressed The equivalent of one month's basic pay as
corporation whether for damages founded on of November 30, shall be paid in December
as a Christmas bonus. Payment may be
a breach of contract of carriage, labor cases,
staggered in two (2) stages. It is distinctly
collection suits or any other claims of a pecuniary nat understood that nothing herein contained
ure. As to the appellate court's amended directive that shall be construed to mean that the
"the monetary claims of petitioner Zamora must be Company may not at its sole discretion give
presented to the PAL Rehabilitation Receiver, subject an additional amount or increase the
to the rules on preference of credits," the same is Christmas bonus.
erroneous for there has been no declaration of
bankruptcy or judicial liquidation. Thus, the rules on Prior to the payment of the 13th month pay (mid
year bonus), PAL released an implementing
preference of credits do not apply.
guideline on 22 April 1988. It stated that:
1) Eligibility
92.)PAL vs. PALEA G.R. No. 142399 June
19, 2007 a) Ground employees in the general
payroll who are regular as of April
30, 1988;
The Labor Arbiter rendered his decision dismissing the real justification is to enable the management
the complaint for lack of merit. The Labor Arbiter committee or rehabilitation receiver to effectively
ruled that PAL was not guilty of unfair labor practice exercise its/his powers free from any judicial or
in withholding the grant of the 13th Month Pay or extra-judicial interference that might unduly hinder
Mid-Year Bonus, as set out in Section 4 of the CBA, or prevent the "rescue" of the debtor company. To
to the concerned employees. The giving of the allow such other action to continue would only add
particular bonus was said to be merely an additional to the burden of the management committee or
practice made in the past, "such being the case, it rehabilitation receiver, whose time, effort and
violated no agreement or existing practice or resources would be wasted in defending claims
committed unfair labor practice, as charged." against the corporation instead of being directed
toward its restructuring and rehabilitation.
On appeal to the NLRC, the assailed decision of the
Labor Arbiter was reversed. The Supreme Court citing Rubberworld vs. NLRC
said:
Undaunted, PAL went to this Court via a Petition for
Review on Certiorari, however, the petition was we held that worker's claims before the NLRC and
referred to the Court of Appeals for proper resolution. labor arbiters are included among the actions
suspended upon the placing under receivership of the
The Court of Appeals promulgated its Decision employer-corporations. Although strictly speaking,
dismissing the petition filed by PAL. It affirmed the the ruling in Rubberworld dealt with actions for
28 January 1998 NLRC Resolution. claims pending before the NLRC and labor
arbiters, we find that the rationale for the automatic
Hence, this Petition for Review on Certiorari. suspension therein set out would apply to the instant
case where the employee's claim was elevated on
Issue: certiorari before this Court
that this Court is "not prepared to depart from the Arbiters order of reinstatement pending
well-established doctrines" essentially maintaining appeal and the NLRC decision overturning
that all actions for claims against a corporation that of the Labor Arbiter, now that
pending before any court, tribunal or board shall ipso respondent has exited from rehabilitation
jure be suspended in whatever stage such actions may proceedings.
be found upon the appointment by the SEC of a 2. WON peculiar predicament of a corporate
management committee or a rehabilitation receiver. rehabilitation rendered it impossible for
respondent to exercise its option under the
In view of the ongoing rehabilitation of petitioner circumstances.
Philippine Airlines, Inc., herein proceedings are
heretoforeSUSPENDED Ruling:
1. The decision of the Labor Arbiter reinstating
a dismissed or separated employee, insofar
as the reinstatement aspect is concerned,
shall immediately be executory, pending
appeal. The employee shall either be
admitted back to work under the same terms
and conditions prevailing prior to his
dismissal or separation or, at the option of
the employer, merely reinstated in the
payroll. The posting of a bond by the
93.) Garcia vs. Phil. Air Lines, G.R. No. 164856, employer shall not stay the execution for
January 20, 2009 reinstatement provided herein.
Facts: The view as maintained in a number of cases is that:
The case stemmed from the administrative charge x x x [E]ven if the order of reinstatement of the
filed by PAL against its employees-herein Labor Arbiter is reversed on appeal, it is
petitioners3 after they were allegedly caught in the act obligatory on the part of the employer to reinstate
of sniffing shabu when a team of company security and pay the wages of the dismissed employee
personnel and law enforcers raided the PAL Technical during the period of appeal until reversal by the
Centers Toolroom Section on July 24, 1995. higher court. On the other hand, if the employee has
After due notice, PAL dismissed petitioners on been reinstated during the appeal period and such
October 9, 1995 for transgressing the PAL Code of reinstatement order is reversed with finality, the
Discipline, prompting them to file a complaint for employee is not required to reimburse whatever
illegal dismissal and damages resolved by the Labor salary he received for he is entitled to such, more so
Arbiter in their favor, thus ordering PAL to, inter if he actually rendered services during the period.
alia, immediately comply with the reinstatement In other words, a dismissed employee whose case
aspect of the decision. was favorably decided by the Labor Arbiter is
Prior to the promulgation of the Labor Arbiters entitled to receive wages pending appeal upon
decision, the Securities and Exchange Commission reinstatement, which is immediately executory.
(SEC) placed PAL (hereafter referred to as Unless there is a restraining order, it is ministerial
respondent), which was suffering from severe upon the Labor Arbiter to implement the order of
financial losses, under an Interim Rehabilitation reinstatement and it is mandatory on the employer to
Receiver, who was subsequently replaced by a comply therewith.
Permanent Rehabilitation Receiver on June 7, 1999. The Court reaffirms the prevailing principle that even
The Labor Arbiter issued a Writ of Execution (Writ) if the order of reinstatement of the Labor Arbiter is
respecting therein statement aspect of his January 11, reversed on appeal, it is obligatory on the part of the
1999 Decision, and on October 25, 2000, he issued a employer to reinstate and pay the wages of the
Notice of Garnishment (Notice). Respondent dismissed employee during the period of appeal until
thereupon moved to quash the Writ and to lift the reversal by the higher court. It settles the view that
Notice while petitioners moved to release the the Labor Arbiter's order of reinstatement
garnished amount. is immediately executory and the employer has to
either re-admit them to work under the same terms
Issue: and conditions prevailing prior to their dismissal, or
1. Whether petitioners may collect their wages to reinstate them in the payroll, and that failing to
during the period between the Labor exercise the options in the alternative, employer must
pay the employees salaries.
2. The spirit of the rule on reinstatement shall ipso jure be suspended. As stated early on,
pending appeal animates the proceedings during the pendency of petitioners complaint before
once the Labor Arbiter issues the decision the Labor Arbiter, the SEC placed respondent under
containing an order of reinstatement. The an Interim Rehabilitation Receiver. After the Labor
immediacy of its execution needs no further Arbiter rendered his decision, the SEC replaced the
elaboration.Reinstatement pending appeal Interim Rehabilitation Receiver with a Permanent
necessitates its immediate execution during Rehabilitation Receiver.
the pendency of the appeal, if the law is to Case law recognizes that unless there is a restraining
serve its noble purpose. At the same order, the implementation of the order of
time, any attempt on the part of the reinstatement is ministerial and mandatory. This
employer to evade or delay its execution, as injunction or suspension of claims by legislative
observed in Panuncillo and as what actually fiat partakes of the nature of a restraining order that
transpired in Kimberly, Composite, Air constitutes a legal justification for respondents non-
Philippines, and Roquero, should not be compliance with the reinstatement order.
countenanced. Respondents failure to exercise the alternative
After the labor arbiters decision is reversed by a options of actual reinstatement and payroll
higher tribunal, the employee may be barred from reinstatement was thus justified. Such being the case,
collecting the accrued wages, if it is shown that the respondents obligation to pay the salaries pending
delay in enforcing the reinstatement pending appeal, as the normal effect of the non-exercise of the
appeal was without fault on the part of the options, did not attach.
employer. While reinstatement pending appeal aims to avert the
The test is two-fold: (1) there must be actual delay or continuing threat or danger to the survival or even the
the fact that the order of reinstatement pending life of the dismissed employee and his family, it does
appeal was not executed prior to its reversal; and (2) not contemplate the period when the employer-
the delay must not be due to the employers corporation itself is similarly in a judicially
unjustified act or omission. If the delay is due to the monitored state of being resuscitated in order to
employers unjustified refusal, the employer may still survive.
be required to pay the salaries notwithstanding the The parallelism between a judicial order of
reversal of the Labor Arbiters decision. corporation rehabilitation as a justification for the
The new NLRC Rules of Procedure, which took non-exercise of its options, on the one hand, and a
effect on January 7, 2006, now require the employer claim of actual and imminent substantial losses as
to submit areport of compliance within 10 calendar ground for retrenchment, on the other hand, stops at
days from receipt of the Labor Arbiters the red line on the financial statements.
decision, disobedience to which clearly denotes a More importantly, there are legal effects arising from
refusal to reinstate. The employee need not file a a judicial order placing a corporation under
motion for the issuance of the writ of execution since rehabilitation. Respondent was, during the period
the Labor Arbiter shall thereafter motu proprio issue material to the case, effectively deprived of the
the writ. With the new rules in place, there is alternative choices under Article 223 of the Labor
hardly any difficulty in determining the Code, not only by virtue of the statutory injunction
employers intransigence in immediately but also in view of the interim relinquishment of
complying with the order. management control to give way to the full exercise
In the case at bar, petitioners exerted efforts to of the powers of the rehabilitation receiver. Had there
execute the Labor Arbiters order of reinstatement been no need to rehabilitate, respondent may have
until they were able to secure a writ of execution, opted for actual physical reinstatement pending
albeit issued on October 5, 2000 after the reversal by appeal to optimize the utilization of resources. Then
the NLRC of the Labor Arbiters decision. again, though the management may think this wise,
Technically, there was still actual delay which brings the rehabilitation receiver may decide otherwise, not
to the question of whether the delay was due to to mention the subsistence of the injunction on
respondents unjustified act or omission. claims.
It is apparent that there was inaction on the part of In sum, the obligation to pay the employees salaries
respondent to reinstate them, but whether such upon the employers failure to exercise the alternative
omission was justified depends on the onset of the options under Article 223 of the Labor Code is not a
exigency of corporate rehabilitation. hard and fast rule, considering the inherent
It is settled that upon appointment by the SEC of a constraints of corporate rehabilitation
rehabilitation receiver, all actions for claims before
any court, tribunal or board against the corporation
94.) Bank of the Philippines Island vs. NLRC, 171 conceding that Lacsina is entitled to payment for his
SCRA 556 legal services, they argue that this must be made not
by the individual workers directly, as this is
Facts: prohibited by law, but by the union itself from its
own funds. In support of this contention, they invoke
On March 22, 1983, the NLRC resolved the
Article 222(b) of the Labor Code, providing as
bargaining deadlock between BPI and its employees
follows:
by fixing the wage increases and other economic
benefits and ordering them to be embodied in a new Art. 222. Appearances and Fees.
collective bargaining agreement to be concluded by (b) No attorney's fees, negotiation
BPIEU-Metro Manila and ALU with BPI. It did not fees or similar charges of any kind
decide the intra-union dispute, however, holding that arising from any collective
this was under the original jurisdiction of the med- bargaining negotiations or
arbiter and the exclusive appellate jurisdiction of the conclusions of the collective
Bureau of Labor Relations. agreement shall be imposed on any
individual member of the
Following the promulgation by the NLRC of its contracting union: Provided,
decision of March 23, 1983, in Certified Cases Nos. however, that attorneys fees may
0279 and 0281, private respondent Ignacio Lacsina be charged against union funds in
filed a motion for the entry of attorney's lien for legal an amount to be agreed upon by the
services to be rendered by him as counsel of BPIEU parties. Any contract, agreement or
in the negotiation of the new collective bargaining arrangement of any sort to the
agreement with BPI.The basis of this motion was a contrary shall be null and void.
resolution dated August 26, 1982, signed by members
of the BPI Employees Union, providing for the terms They also cite the case of Pacific Banking
and conditions, including attorneys fees and his Corporation v. Clave, where the lawyer's fee was
authority to check-off with the company. taken not from the total economic benefits received
by the workers but from the funds of their labor
Accordingly, BPI deducted the amount of P200.00 union.
from each of the employees who had signed the
authorization. Upon learning about this, the Issue:
petitioners (ALU and BPIEU-ALU) challenged the
said order, on the ground that it was not authorized Is the mentioned Resolution signed by the
under the Labor Code. BPI employees granting attorneys fees to
Lacsina to be deducted from the employees
On April 15, 1983, the NLRC issued a resolution wages valid?
setting aside the order and requiring BPI to safe-keep
the amounts sought to be deducted "until the rights Ruling:
thereto of the interested parties shall have been
determined in appropriate proceedings. Yes. The Court reads the afore-cited provision as
Subsequently, the NLRC issued an en banc resolution prohibiting the payment of attorney's fees only when
dated September 27, 1983, ordering the release to it is effected through forced contributions from the
Lacsina of the amounts deducted "except with respect workers from their own funds as distinguished from
to any portion thereof as to which no individual the union funds.
signed authorization has been given by the members
The purpose of the provision is to prevent imposition
concerned or where such authorization has been
on the workers of the duty to individually contribute
withdrawn.
their respective shares in the fee to be paid the
The petitioners now impugn this order as contrary to attorney for his services on behalf of the union in its
the provisions and spirit of the Labor Code. While negotiations with the management. The obligation to
pay the attorney's fees belongs to the union and against unwarranted practices that would diminish his
cannot be shunted to the workers as their direct compensation without his knowledge and consent.
responsibility. Neither the lawyer nor the union itself
may require the individual workers to assume the A similar recognition was made in Galvadores v.
obligation to pay the attorney's fees from their own Trajano, where the payment of the attorney's fees
pockets. So categorical is this intent that the law also from the wages of the employees was not allowed
makes it clear that any agreement to the contrary because: "No check-offs from any amount due to
shall be null and void ab initio. employees may be effected without individual written
authorities duly signed by the employees specifically
We see no such imposition in the case at bar. A stating the amount, purpose and beneficiary of the
reading of the above-cited resolution will clearly deduction. The required individual authorizations in
show that the signatories thereof have not been in any this case are wanting.
manner compelled to undertake the obligation they
have there assumed. On the contrary, it is plain that Finally, we hold that the agreement in question is in
they were voluntarily authorizing the check-off of the every respect a valid contract as it satisfies all the
attorney's fees from their payment of benefits and the elements thereof and does not contravene law,
turnover to Lacsina of the amounts deducted, morals, good customs, public order, or public policy.
conformably to their agreement with him. There is no On the contrary, it enables the workers to avail
compulsion here. And significantly, the authorized themselves of the services of the lawyer of their
deductions affected only the workers who adopted choice and confidence under terms mutually
and signed the resolution and who were the only ones acceptable to the parties and, hopefully, also for their
from whose benefits the deductions were made by mutual benefit.
BPI. No similar deductions were taken from the other
workers who did not sign the resolution and so were
not bound by it. 95.) Traders Royal Bank Employees Union vs.
NLRC, 269 SCRA 733 [1997]
That only those who signed the resolution could be
subjected to the authorized deductions was Facts:
recognized and made clear by the order itself of the Petitioner Traders Royal Bank Employees
NLRC. It was there categorically declared that the Union and private respondent Atty. Emmanuel Noel
A. Cruz, head of the E.N.A. Cruz and Associates law
check-off could not be made where "no individual
firm, entered into a retainer agreement on February
signed authorization has been given by the members 26, 1987 whereby the former obligated itself to pay
concerned or where such authorization has been the latter a monthly retainer fee of P3,000.00 in
withdrawn. consideration of the law firm's undertaking to render
the services enumerated in their contract. During the
The Pacific Banking Corporation case is not existence of that agreement, petitioner union referred
applicable to the present case because there was there to private respondent the claims of its members for
no similar agreement as that entered into between holiday, mid-year and year-end bonuses against their
Lacsina and the signatories of the resolution in employer, Traders Royal Bank (TRB). These
employees obtained favorable decision from their
question. Absent such an agreement, there was no
complaint which went through the SC.
question that the basic proscription in Article 222 The Supreme Court, in its decision
would have to operate. It is noteworthy, though, that promulgated on August 30, 1990, modified the
the Court there impliedly recognized arrangements decision of the NLRC by deleting the award of mid-
such as the one at bar with the following significant year and year-end bonus differentials while affirming
observation. the award of holiday pay differential. The bank
voluntarily complied with such final judgment and
Moreover, the case is covered squarely by the determined the holiday pay differential to be in the
mandatory and explicit prescription of Art. 222 which amount of P175,794.32. Petitioner never contested
the amount thus found by TRB. The latter duly paid
is another guarantee intended to protect the employee
its concerned employees their respective entitlement
in said sum through their payroll. After private have been conducted for the proper determination of
respondent received the above decision of the attorney's fees.
Supreme Court on September 18, 1990, he notified There are two commonly accepted concepts
the petitioner union, the TRB management and the of attorney's fees, the so-called ordinary and
NLRC of his right to exercise and enforce his extraordinary. In its ordinary concept, an attorney's
attorney's lien over the award of holiday pay fee is the reasonable compensation paid to a lawyer
differential through a letter dated October 8, 1990. by his client for the legal services he has rendered to
Thereafter, on July 2, 1991, private the latter. The basis of this compensation is the fact of
respondent filed a motion before Labor Arbiter his employment by and his agreement with the client.
Lorenzo for the determination of his attorney's fees, In its extraordinary concept, an attorney's
praying that ten percent (10%) of the total award for fee is an indemnity for damages ordered by the court
holiday pay differential computed by TRB at to be paid by the losing party in a litigation. The basis
P175,794.32, or the amount of P17,579.43, be of this is any of the cases provided by law where such
declared as his attorney's fees, and that petitioner award can be made, such as those authorized in
union be ordered to pay and remit said amount to Article 2208, Civil Code, and is payable not to the
him. The LA and the NLRC affirmed Atty. Cruz lawyer but to the client, unless they have agreed that
motion. the award shall pertain to the lawyer as additional
Petitioner union filed a comment and compensation or as part thereof.
opposition to said motion on July 15, 1991. Petitioner It is the first type of attorney's fees which
maintains that the NLRC committed grave abuse of private respondent demanded before the labor arbiter.
discretion amounting to lack of jurisdiction in Also, the present controversy stems from petitioner's
upholding the award of attorney's fees in the amount apparent misperception that the NLRC has
of P17,574.43, or ten percent (10%) of the jurisdiction over claims for attorney's fees only
P175,794.32 granted as holiday pay differential to its before its judgment is reviewed and ruled upon by the
members, in violation of the retainer agreement; and Supreme Court, and that thereafter the former may no
that the challenged resolution of the NLRC is null longer entertain claims for attorney's fees. It will be
and void, for the reasons hereunder stated. noted that no claim for attorney's fees was filed by
Although petitioner union concedes that the private respondent before the NLRC when it acted on
NLRC has jurisdiction to decide claims for attorney's the money claims of petitioner, nor before the
fees, it contends that the award for attorney' s fees Supreme Court when it reviewed the decision of the
should have been incorporated in the main case and NLRC. It was only after the High Tribunal modified
not after the Supreme Court had already reviewed the judgment of the NLRC awarding the differentials
and passed upon the decision of the NLRC. Since the that private respondent filed his claim before the
claim for attorney's fees by private respondent was NLRC for a percentage thereof as attorney's fees.
neither taken up nor approved by the Supreme Court, It would obviously have been impossible, if
no attorney's fees should have been allowed by the not improper, for the NLRC in the first instance and
NLRC. Thus, petitioner posits that the NLRC acted for the Supreme Court thereafter to make an award
without jurisdiction in making the award of attorney's for attorney's fees when no claim therefor was
fees, as said act constituted a modification of a final pending before them. Courts generally rule only on
and executory judgment of the Supreme Court which issues and claims presented to them for adjudication.
did not award attorney's fees. It then cited decisions Accordingly, when the labor arbiter ordered the
of the Court declaring that a decision which has payment of attorney's fees, he did not in any way
become final and executory can no longer be altered modify the judgment of the Supreme Court.
or modified even by the court which rendered the A CLAIM FOR ATTORNEY'S FEES MAY
same. BE ASSERTED EITHER IN THE VERY ACTION
IN WHICH THE SERVICES OF A LAWYER HAD
Issue: Whether or not Atty. Cruz is entitled to 10 % BEEN RENDERED OR IN A SEPARATE ACTION
of the judgment award as his attorneys fees even if it - It is well settled that a claim for attorney's fees may
was not taken up in the main decision of the SC. be asserted either in the very action in which the
services of a lawyer had been rendered or in a
Ruling: separate action. Attorney's fees cannot be determined
Yes, not in the concept contemplatedin until after the main litigation has been decided and
Article 111 of the Labor Code. The Labor Arbiter the subject of the recovery is at the disposition of the
erroneously set the amount of attorney's fees on the court. The issue over attorney's fees only arises when
basis of Art. 111 of the Labor Code; a hearing should 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 compensation for lost opportunities. A special
determination as to the propriety of the fees or as to retainer is a fee for a specific case handled or special
the amount thereof will have to be held in abeyance service rendered by the lawyer for a client. A client
until the main case from which the lawyer's claim for may have several cases demanding special or
attorney's fees may arise has become final. individual attention. If for every case there is a
Otherwise, the determination to be made by the separate and independent contract for attorney's fees,
courts will be premature. Of course, a petition for each fee is considered a special retainer.
attorney's fees may be filed before the judgment in THE P3,000.00 MONTHLY FEE
favor of the client is satisfied or the proceeds thereof PROVIDED IN THE RETAINER AGREEMENT
delivered to the client. It is apparent from the BETWEEN THE UNION AND THE LAW FIRM
foregoing discussion that a lawyer has two options as REFERS TO A GENERAL RETAINER OR A
to when to file his claim for professional fees. Hence, RETAINING FEE. The P3,000.00 which
private respondent was well within his rights when he petitioner pays monthly to private respondent does
made his claim and waited for the finality of the not cover the services the latter actually rendered
judgment for holiday pay differential, instead of before the labor arbiter and the NLRC in behalf of
filing it ahead of the award's complete resolution. To the former. As stipulated in Part C of the agreement,
declare that a lawyer may file a claim for fees in the the monthly fee is intended merely as a consideration
same action only before the judgment is reviewed by for the law firm's commitment to render the services
a higher tribunal would deprive him of his aforestated enumerated in Part A (General Services) and Part B
options and render ineffective the foregoing (Special Legal Services) of the retainer agreement.
pronouncements of this Court. Evidently, the P3,000.00 monthly fee provided in the
The provisions of the contract entered into retainer agreement between the union and the law
between petitioner and respondents are clear and firm refers to a general retainer, or a retaining fee, as
need no further interpretation; all that is required to said monthly fee covers only the law firm's pledge, or
be done in the instant controversy is its application. as expressly stated therein, its "commitment to render
The P3,000.00 which petitioner pays monthly to the legal services enumerated." The fee is not
private respondent does not cover the services the payment for private respondent's execution or
latter actually rendered before the labor arbiter and performance of the services listed in the contract,
the NLRC in behalf of the former. As stipulated in subject to some particular qualifications or
Part C of the agreement, the monthly fee is intended permutations stated there. We have already shown
merely as a consideration for the law firm's that the P3,000.00 is independent and different from
commitment to render the services enumerated in the compensation which private respondent should
Part A (General Services) and Part B (Special Legal receive in payment for his services. While petitioner
Services) of the retainer agreement. and private respondent were able to fix a fee for the
The difference between a compensation for latter's promise to extend services, they were not able
a commitment to render legal services and a to come into agreement as to the law firm's actual
remuneration for legal services actually rendered can performance of services in favor of the union. Hence,
better be appreciated with a discussion of the two the retainer agreement cannot control the measure of
kinds of retainer fees a client may pay his lawyer. remuneration for private respondent's services.
These are a general retainer, or a retaining fee, and a PRIVATE RESPONDENT'S
special retainer. ENTITLEMENT TO AN ADDITIONAL
RETAINER FEES, GENERAL RETAINER REMUNERATION FOR SPECIAL SERVICES
AND A SPECIAL RETAINER A general retainer, RENDERED IN THE INTEREST OF PETITIONER
or retaining fee, is the fee paid to a lawyer to secure IS BASED ON QUASI-CONTRACT. The fact
his future services as general counsel for any that petitioner and private respondent failed to reach
ordinary legal problem that may arise in the routinary a meeting of the minds with regard to the payment of
business of the client and referred to him for legal professional fees for special services will not absolve
action. The future services of the lawyer are secured the former of civil liability for the corresponding
and committed to the retaining client. For this, the remuneration therefor in favor of the latter.
client pays the lawyer a fixed retainer fee which Obligations do not emanate only from contracts. One
could be monthly or otherwise, depending upon their of the sources of extra-contractual obligations found
arrangement. The fees are paid whether or not there in our Civil Code is the quasi-contract premised on
are cases referred to the lawyer. The reason for the the Roman maxim that nemo cum alterius detrimento
remuneration is that the lawyer is deprived of the locupletari protest. As embodied in our law, certain
opportunity of rendering services for a fee to the lawful, voluntary and unilateral acts give rise to the
opposing party or other parties. In fine, it is a juridical relation of quasi-contract to the end that no
one shall be unjustly enriched or benefited at the legal services he rendered. Also, while it limits the
expense of another. A quasi-contract between the maximum allowable amount of attorney's fees, it
parties in the case at bar arose from private does not direct the instantaneous and automatic
respondent's lawful, voluntary and unilateral award of attorney's fees in such maximum limit.
prosecution of petitioner's cause without awaiting the It, therefore, behooves the adjudicator in
latter's consent and approval. Petitioner cannot deny questions and circumstances similar to those in the
that it did benefit from private respondent's efforts as case at bar, involving a conflict between lawyer and
the law firm was able to obtain an award of holiday client, to observe the above guidelines in cases
pay differential in favor of the union. It cannot even calling for the operation of the principles of quasi-
hide behind the cloak of the monthly retainer of contract and quantum meruit, and to conduct a
P3,000.00 paid to private respondent because, as hearing for the proper determination of attorney's
demonstrated earlier, private respondent's actual fees. The criteria found in the Code of Professional
rendition of legal services is not compensable merely Responsibility are to be considered, and not
by said amount. disregarded, in assessing the proper amount. Here,
THE LABOR ARBITER ERRONEOUSLY the records do not reveal that the parties were duly
SET THE AMOUNT OF ATTORNEY'S FEES ON heard by the labor arbiter on the matter and for the
THE BASIS OF ART. 111 OF THE LABOR CODE; resolution of private respondent's fees.
A HEARING SHOULD HAVE BEEN It is axiomatic that the reasonableness of
CONDUCTED FOR THE PROPER attorney's fees is a question of fact. Ordinarily,
DETERMINATION OF ATTORNEY'S FEES. - therefore, we would have remanded this case for
Here, then, is the flaw we find in the award for further reception of evidence as to the extent and
attorney's fees in favor of private respondent. Instead value of the services rendered by private respondent
of adopting the above guidelines, the labor arbiter to petitioner. However, so as not to needlessly
forthwith but erroneously set the amount of attorney's prolong the resolution of a comparatively simple
fees on the basis of Article 111 of the Labor Code. He controversy, we deem it just and equitable to fix in
completely relied on the operation of Article 111 the present recourse a reasonable amount of
when he fixed the amount of attorney's fees at attorney's fees in favor of private respondent. For that
P17,574.43. As already stated, Article 111 of the purpose, we have duly taken into account the
Labor Code regulates the amount recoverable as accepted guidelines therefor and so much of the
attorney's fees in the nature of damages sustained by pertinent data as are extant in the records of this case
and awarded to the prevailing party. It may not be which are assistive in that regard. On such premises
used therefore, as the lone standard in fixing the and in the exercise of our sound discretion, we hold
exact amount payable to the lawyer by his client for that the amount of P10,000.00 is a reasonable and fair
the legal services he rendered. Also, while it limits compensation for the legal services rendered by
the maximum allowable amount of attorney's fees, it private respondent to petitioner before the labor
does not direct instantaneous and automatic award of arbiter and the NLRC.
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 96.) 96. Brahm Industries vs. NLRC, 280 SCRA
operation of the principles of quasi-contract and 824 [1997
quantum meruit, and to conduct a hearing for the
proper determination of attorney's fees. The criteria Facts:
found in the Code of Professional Responsibility are
to be considered, and not disregarded, in assessing Roberto M. Durian, Jone M. Comendador and
the proper amount. Here, the records do not reveal Reynaldo C. Gagarino (respondents) filed a case for
that the parties were duly heard by the labor arbiter
illegal suspension, illegal dismissal, illegal lay-off,
on the matter and for the resolution of private
respondent's fees. illegal deductions, non-payment of service incentive
As already stated, Article 111 of the Labor leave, 13th month pay, and actual, moral and
Code regulates the amount recoverable as attorney's exemplary damages against Brahm Industries, Inc.
fees in the nature of damages sustained by and (BRAHM) before the Labor Arbiter.
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
The respondents filed their complaints, they alleged is for the duration of the season.[6] Before an
therein that they were over worked, they have to employee hired on a per project basis can be
work for 7 days, forced to over time for 3 times a dismissed, a report must be made to the nearest
week, and that their overtime was based on minimum employment office of the termination of the services
wage. And without cause and due process the of the workers everytime it completed a project,
respondents were terminated. pursuant to Policy Instruction No. 20.
Brahm contended that Gagarino left the company for Based on the facts, BRAHM did not follow anything
abroad, and when he returned in the country, he work mentioned above and in pursuant to the case of
for another company, and in the case of 2 other Ochoco v. National Labor Relations Commission,
respondents, they left the job for inability to account where the SC held that the failure of the employer to
for some tools amounting to 10,000php. Also, Brahm follow such rule is a proof that the employee is not a
asserted that these respondents were not employees, project employee rather a regular employee.
since they have their own customers and clients, and
the character of their work is based upon the Furthermore, in pursuant to the Art. 280 of the Labor
availability of projects or it depends if there are Code which provides:
contracts for projects such as constructing water
Art. 280. Regular and Casual Employment. - The
purifier or water control devices.
provisions of written agreement to the contrary
On Feb. 8, 1994, the labor arbiter ruled in favor of notwithstanding and regardless of the oral agreement
the respondents, BRAHM was ordered to reinstate of the parties, an employment shall be deemed to be
them, pay their back wages and pay their attorneys regular where the employee has been engaged to
fees. However, with regards to Gagarinos case, it perform activities which are usually necessary or
was dismissed by the labor arbiter since it was found desirable in the usual business or trade of the
out that he really left the company for more than 2 employer, except where the employment has been
years before he filed the complaint. Gagarino did not fixed for a specific project or undertaking the
appeal the order of the labor arbiter. completion or termination of which has been
determined at the time of the engagement of the
The decision was appealed by BRAHM to the NLRC employee or where the work or services to be
with regards to ruling of the labor arbiter which did performed is seasonal in nature and the employment
not favor them. However, NLRC affirmed the ruling is for the duration of the season.
of labor arbiter.
An employment shall be deemed to be casual if it
This prompted BRAHM to appeal the decision in is not covered by the preceding paragraph: provided,
Supreme Court (SC). that, any employee who has rendered at least one (1)
year of service, whether such service is continuous
Issue: or broken, shall be considered a regular employee
with respect to the activity in which he is employed
Whether or not Durian and Comendador are project
and his employment shall continue while such
employees.
activity exists (underscoring supplied).
Ruling:
Those respondents, namely durian worked for 5 years
No, they are no project employees. while comendador worked for 9 years under
BRAHM. Mere self serving statements coming from
A project employee is one whose employment has the petitioners will not prove that the respondents are
been fixed for a specific project or undertaking, the project employees.
completion or termination of which has been
determined at the time of the engagement of the Even in the issue of abandonment raised by BRAHM,
employee or where the work or service to be it doesnt disprove that they illegally terminate the
performed is seasonal in nature and the employment
that the cause of death could be considered family. In this case, there is substantial proof that
occupational. Being a factual finding by the myocardial infarction is an occupational disease for
administrative agency tasked with its determination, which Aniban's employer obligated itself to pay
such conclusion deserves respect and must be death benefits and additional compensation under the
accorded finality. Besides we have already repeatedly CBA in the event of the demise of its employee by
ruled that death due to myocardial infarction is reason thereof.
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. 98.) Sapio vs. Undaloc Construction et al., G.R.
No. 155034, May 22, 2008
Facts:
Although it may be conceded in the instant case that
the physical exertion involved in carrying out the Petitioner filed against Undaloc
functions of a radio operator may have been quite Construction and/or Engineer Cirilo
minimal, we cannot discount the pressure and
Undaloc for illegal dismissal, underpayment
strain that went with the position of radio operator.
As radio operator, Reynaldo Aniban had to place his of wages and nonpayment of statutory
full attention in hearing the exact messages received benefits. Respondent Undaloc Construction,
by the vessel and to relay those that needed to be
a single proprietorship owned by Cirilo
transmitted to the mainland or to other vessels. We
have already recognized that any kind of work or Undaloc, is engaged in road construction
labor produces stress and strain normally resulting business in Cebu City.
in the wear and tear of the human body. It is not Petitioner had been employed as
required that the occupation be the only cause of watchman from 1 May 1995 to 30 May 1998
the disease as it is enough that the employment
when he was terminated on the ground that
contributed even in a small degree to its
development. the project he was assigned to was already
finished, he being allegedly a project
employee. Petitioner asserted he was a
It must be stressed that the strict rules of evidence regular employee having been engaged to
are not applicable in claims for compensation
perform works which are usually necessary
considering that probability and not the ultimate
degree of certainty is the test of proof in or desirable in respondents business. He
compensation proceedings. claimed that from 1 May to 31 August 1995
and from 1 September to 31 December
1995, his daily wage rate was only P80.00
It is a matter of judicial notice that an overseas
and P90.00, respectively, instead of P121.87
worker, having to ward off homesickness by reason
of being physically separated from his family for the as mandated by Wage Order No. ROVII-03.
entire duration of his contract, bears a great degree of From 1 March 1996 to 30 May 1998, his
emotional strain while making an effort to perform
daily rate was P105.00. He further alleged
his work well. The strain is even greater in the case
of a seaman who is constantly subjected to the perils that he was made to sign two payroll sheets,
of the sea while at work abroad and away from his the first bearing the actual amount he
filed before the appellate court. Then the Court of ART. 111. ATTORNEY'S FEES.
appeals rendered a decision affirming the NLRC (a) In cases of unlawful withholding of wages the
decisions, only in so far as it concerned complainant culpable party may be assessed attorney's fees
Alfredo Gadian, Jr. (complainant Gadian), the only equivalent to ten percent of the amount of wages
complainant who did not execute a Deed of Release, recovered.
Waiver and Quitclaim. With respect to the other b) It shall be unlawful for any person to demand or
complainants in the Aguirre and Toquero Cases, their accept, in any judicial or administrative proceedings
complaints were dismissed on account of their duly for the recovery of the wages, attorney's fees which
executed Deeds of Release, Waiver and Quitclaim. In exceed ten percent of the amount of wages recovered.
a Resolution dated 9 January 2002, the appellate In PCL Shipping Philippines, Inc. v.
court denied the motion of complainant Gadian and National Labor Relations Commission citing Dr.
his counsel, herein petitioner , that the award of Reyes v. Court of Appeals, this Court enunciated that
attorney's fees of 10% should be based on the there are two commonly accepted concepts of
monetary awards adjudged by the NLRC. attorney's fees, the so-called ordinary and
Thus, this petition filed before the Court praying to extraordinary. In its ordinary concept, an attorney's
affirm the award of attorney's fees equivalent to 10% fee is the reasonable compensation paid to a lawyer
of the monetary award adjudged by the NLRC in its by his client for the legal services the former has
Decisions dated 21 July 1995 and 25 July 1995 in rendered to the latter. The basis of this compensation
Toquero Case and Aguirre Cases respectively. is the fact of the attorney's employment by and his
agreement with the client. In its extraordinary
ISSUE concept, attorney's fees are deemed indemnity for
Whether he is entitled to the amount of damages ordered by the court to be paid by the losing
attorney's fees as adjudged by the NLRC in its party in a litigation. The instances in which these may
Decisions in the Aguirre and Toquero Cases or only be awarded are those enumerated in Article 2208 of
to the 10% of the amounts actually paid to his clients, the Civil Code, specifically paragraph 7 thereof,
the complainants who signed the Deeds of Release, which pertains to actions for recovery of wages, and
Waiver and Quitclaim. is payable not to the lawyer but to the client, unless
they have agreed that the award shall pertain to the
RULING lawyer as additional compensation or as part thereof.
Article 111 of the Labor Code, as amended,
This Court has consistently ruled contemplates the extraordinary concept of attorney's
that a question of law exists when there is a fees.
doubt or controversy as to what the law is on Based on the foregoing, the attorney's fees
a certain state of facts. On the other hand, awarded by the NLRC in its Decisions in the Aguirre
there is a question of fact when the doubt or and Toquero Cases pertain to the complainants,
difference arises as to the alleged truth or petitioner's clients, as indemnity for damages; and not
falsehood of the alleged facts. For a to petitioner as compensation for his legal services.
question to be one of law, it must involve no Records show that the petitioner neither alleged nor
examination of the probative value of the proved that his clients, the complainants, willingly
evidence presented by the litigants or any of agreed that the award of attorney's fees would accrue
them. The test of whether a question is one to him as an additional compensation or part thereof.
of law or of fact is not the appellation given What the complainants explicitly agreed to in their
to such question by the party raising the individual Deeds of Release, Waiver, and Quitclaim
same; rather, it is whether the appellate court was that the 10% attorney's fees of the petitioner shall
can determine the issue raised without be deducted from the amount of the gross settlement.
reviewing or evaluating the evidence, in Thus, this Court has no recourse but to
which case, it is a question of law; interpret the award of attorney's fees by the NLRC in
otherwise, it is a question of fact. its extraordinary concept. And since the attorney's
The aforesaid issue evidently involves a fees pertained to the complainants as indemnity for
question of law. What it needs to do is ascertain and damages, it was totally within the complainants' right
apply the relevant law and jurisprudence on the to waive the amount of said attorney's fees and settle
award of attorney's fees to the prevailing parties in for a lesser amount thereof in exchange for the
labor cases immediate end to litigation. Petitioner cannot prevent
Article 111 of the Labor Code, as amended, complainants from compromising and/or
specifically provides: 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 100.) G.R. NO. 183385: February 13, 2009
indeed agree that the attorney's fees awarded by the
NLRC should be considered in their ordinary
concept, i.e., as compensation for petitioner's EVANGELINA MASMUD (as substitute
complainant for ALEXANDER J. MASMUD),
services, we refer back to Article 111 of the Labor
Code, as amended, which provides that the attorney's Petitioner, v. NATIONAL LABOR RELATIONS
COMMISSION (First Division) and ATTY.
fees should be equivalent to 10% of the amount of
wages recovered. Since the complainants decided to ROLANDO B. GO, JR., Respondents.
settle their complaints against the private respondent,
the amounts actually received by them pursuant to FACTS:
the Deeds of Release, Waiver and Quitclaim are the
amounts "recovered" and the proper basis for On July 9, 2003, Evangelina
determining the 10% attorney's fees. Masmud's (Evangelina) husband, the late
In the case at bar, it is beyond cavil that the Alexander J. Masmud (Alexander), filed a
petitioner is not the real party in interest; hence, he complaint against First Victory Shipping
cannot file this Petition to recover the attorney's fees Services and Angelakos (Hellas) S.A. for
as adjudged by the NLRC in its Decisions dated 21 non-payment of permanent disability
July 1995 and 25 July 1995 in the Aguirre and benefits, medical expenses, sickness
Toquero Cases, respectively. To reiterate, the award allowance, moral and exemplary damages,
of attorney's fees pertain to the prevailing parties in and attorney's fees. Alexander engaged the
the NLRC cases, namely, the complainants, all but services of Atty. Rolando B. Go, Jr. (Atty.
one of whom no longer pursued their complaints Go) as his counsel.
against private respondent after executing Deeds of
Release, Waiver and Quitclaim. Not being the party In consideration of Atty. Go's legal
to whom the NLRC awarded the attorney's fees, services, Alexander agreed to pay attorney's
neither is the petitioner the proper party to question fees on a contingent basis, as follows:
the non-awarding of the same by the appellate court. twenty percent (20%) of total monetary
This would show that petitioner has been claims as settled or paid and an additional
compensated for the services he rendered the ten percent (10%) in case of appeal. It was
complainants. It may do well for petitioner to likewise agreed that any award of attorney's
remember that as a lawyer, he is a member of an fees shall pertain to respondent's law firm as
honorable profession, the primary vision of which is compensation.
justice. The practice of law is a decent profession and
not a money-making trade. Compensation should be On November 21, 2003, the Labor
but a mere incident. Arbiter (LA) rendered a Decision granting
If petitioner earnestly believes that the the monetary claims of Alexander.
amounts he already received are grossly deficient,
petitioner's remedy is not against the private
respondent, but against his own clients, the Alexander's employer filed an appeal before
complainants. He should file a separate action for the National Labor Relations Commission (NLRC).
collection of sum of money against complainants to During the pendency of the proceedings before the
recover just compensation for his legal services, and NLRC, Alexander died. After explaining the terms of
not the present Petition for Review to claim from the lawyer's fees to Evangelina, Atty. Go caused her
private respondent the attorney's fees which were substitution as complainant. On April 30, 2004, the
adjudged by the NLRC in favor of complainants as NLRC rendered a Decision dismissing the appeal of
the prevailing parties in the Aguirre and Toquero Alexander's employer.
Cases.
WHEREFORE, the instant Petition is hereby Eventually, the decision of the
DENIED. 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 compensation that Atty. Go is entitled to
check amounting to P3,454,079.20. receive for representing Evangelina, in
Thereafter, Atty. Go moved for the release of substitution of her husband, before the labor
the said amount to Evangelina. tribunals and before the court.
ISSUE: WHETHER OR NOT THE 40% In this regard, Section 24, Rule 138 of the Rules of
LAWYERS FEE ON CONTINGENT BASIS OF Court should be observed in determining Atty. Go's
ATTY. GO IS PROPER? (AFFIRMATIVE) compensation. The said Rule provides:
employees of the MWSS were the attorneys fees to its counsel under the MOA
amelioration allowance (AA) and the cost- and also gave up the attorneys fees awarded
of-living allowance (COLA). The payment to the Unions members in favor of their
of the AA and the COLA was discontinued counsel. This is supported by Borelas
pursuant to Republic Act No. 6758, affidavit which stated that [t]he 10%
otherwise known as the Salary attorneys fees paid by the
Standardization Law, which integrated the members/employees is separate and distinct
allowances into the standardized salary. The from the obligation of the company to pay
Company agreed to reinstate them upon the 10% awarded attorneys fees which we
renegotiation of the parties CBA but also gave to our counsel as part of our
however failed to give them. As a result, the contingent fee agreement.[43] The limit to
Union and Borela filed a complaint against this agreement is that the indemnity for
the Company for payment of the AA, damages imposed by the NLRC on the
COLA, moral and exemplary damages, legal losing party (i.e., the Company) cannot
interest, and attorneys fees before the exceed ten percent (10%).
National Labor Relations Commission
(NLRC). In his decision of August 20, 2003, Properly viewed from this
Labor Arbiter Aliman D. Mangandog ( LA) perspective, the award cannot be taken to
ruled in favor of the petitioners and ordered mean an additional grant of attorneys fees,
the payment of ten percent (10%) attorneys in violation of the ten percent (10%) limit
fees in addition to their benefits and under Article 111 of the Labor Code since it
interests. The award of attorneys fees was rests on an entirely different legal obligation
upheld by NLRC. However, this was than the one contracted under the MOA.
reversed by the CA. CAs Decision: The Simply stated, the attorneys fees contracted
additional grant of 10% attorneys fees under the MOA do not refer to the amount
violates Article 111 of the Labor Code of attorneys fees awarded by the NLRC; the
considering that the MOA between the MOA provision on attorneys fees does not
parties already ensured the payment of 10% have any bearing at all to the attorneys fees
attorneys fees, deductible from the AA and awarded by the NLRC under Article 111 of
CBA receivables of the Unions members. the Labor Code. Based on these
considerations, it is clear that the CA erred
ISSUE: in ruling that the LAs award of attorneys
fees violated the maximum limit of ten
1.Whether or not the workers are entitled to percent (10%) fixed by Article 111 of the
attorneys fees. Labor Code.
percent (10%) on the basis of quantum KFPI and Bautista sought the reconsideration of the
meruit, as in the present case. NLRCs decision, but the NLRC denied their motion
to that effect.
Undaunted, KFPI and Bautista assailed the adverse
outcome before the CA on certiorari, contending that
the NLRC thereby committed grave abuse of
discretion. However, the petition for certiorari was
102. Malvar vs. Kraft Food Phils Inc. et al., G.R. dismissed by the CA on December 22, 2004, but with
No. 183952, Sept. 9, 2013 the CA reversing the order of reinstatement and
instead directing the payment of separation pay to
Facts: Malvar, and also reducing the amounts awarded as
The case initially concerned the execution of a final moral and exemplary damages.
decision of the Court of Appeals (CA) in a labor After the judgment in her favor became final and
litigation, but has mutated into a dispute over executory on March14, 2006, Malvar moved for the
attorney's fees between the winning employee and issuance of a writ of execution. The Executive Labor
her attorney after she entered into a compromise Arbiter then referred the case to the Research and
agreement with her employer under circumstances Computation Unit (RCU) of the NLRC for the
that the attorney has bewailed as designed to prevent computation of the monetary awards under the
the recovery of just professional fees. judgment. The RCUs computation ultimately arrived
Antecedents at the total sum of P41,627,593.75.
On August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI) On November 9, 2006, however, Labor Arbiter Jaime
hired Czarina Malvar (Malvar) as its Corporate M. Reyno issued an order, finding that the RCUs
Planning Manager. From then on, she gradually rose computation lacked legal basis for including the
from the ranks, becoming in 1996 the Vice President salary increases that the decision promulgated did not
for Finance in the Southeast Asia Region of Kraft include. Hence, Labor Arbiter Reyno reduced
Foods International (KFI),KFPIs mother company. Malvars total monetary award to P27,786,378.11.
On November 29, 1999, respondent Bienvenido S. Both parties appealed the computation to the NLRC,
Bautista, as Chairman of the Board of KFPI and which, on April19, 2007, rendered its decision setting
concurrently the Vice President and Area Director for aside Labor Arbiter Reynos November 9, 2006 order,
Southeast Asia of KFI, sent Malvar a memo directing and adopting the computation by the RCU.
her to explain why no administrative sanctions should In its resolution dated May 31, 2007, the NLRC
be imposed on her for possible breach of trust and denied the respondents motion for reconsideration.
confidence and for willful violation of company rules Malvar filed a second motion for the issuance of a
and regulations. Following the submission of her writ of execution to enforce the decision of the
written explanation, an investigating body was NLRC rendered on April 19, 2007. After the writ of
formed. In due time, she was placed under preventive execution was issued, a partial enforcement as
suspension with pay. Ultimately, on March 16, 2000, effected by garnishing the respondents funds
she was served a notice of termination. deposited with Citibank worth 37,391,696.06.
Obviously aggrieved, Malvar filed a complaint for On July 27, 2007, the respondents went to the CA on
illegal suspension and illegal dismissal against KFPI certiorari (with prayer for the issuance of a temporary
and Bautista in the National Labor Relations restraining order (TRO) or writ of preliminary
Commission (NLRC). In a decision dated April 30, injunction), assailing the NLRCs setting aside of the
2001, the Labor Arbiter found and declared her computation by Labor Arbiter Reyno (CA-G.R. SP
suspension and dismissal illegal, and ordered her No. 99865). The petition mainly argued that the
reinstatement, and the payment of her full NLRC had gravely abused its discretion in ruling
backwages, inclusive of allowances and other that: (a) the inclusion of the salary increases and
benefits, plus attorneys fees. other monetary benefits in the award to Malvar was
On October 22, 2001, the NLRC affirmed the final and executory; and (b) the finality of the ruling
decision of the Labor Arbiter but additionally ruled in CA-G.R. SP No. 69660 precluded the respondents
that Malvar was entitled to "any and all stock options from challenging the inclusion of the salary increases
and bonuses she was entitled to or would have been and other monetary benefits. The CA issued a TRO,
entitled to had she not been illegally dismissed from enjoining the NLRC and Malvar from implementing
her employment," as well as to moral and exemplary the NLRCs decision.
damages. On April 17, 2008, the CA rendered its decision
reversing the NLRC decision.
The matter of computation of monetary awards for Llasos resigned from the Intervenor and Atty. Richard
private respondent is hereby REMANDED to the B. Dasal became barred from private practice upon
Labor Arbiter and he is DIRECTED to recompute the his appointment as head of the Legal Department of
monetary award due to private respondent based on the Small Business Guarantee and Finance
her salary at the time of her termination, without Corporation, a government subsidiary; and that Atty.
including projected salary increases. Llasos and Atty. Dasal had personally handled her
Malvar sought reconsideration, but the CA denied her case.
motion on July30, 2008. Issues
Aggrieved, Malvar appealed to the Court, assailing (a) Whether or not Malvars motion to dismiss the
the CAs decision. petition on the ground of the execution of the
On December 9, 2010, while her appeal was pending compromise agreement was proper; and (b) whether
in this Court, Malvar and the respondents entered into or not the Motion for Intervention to protect
a compromise agreement, the pertinent dispositive attorneys rights can prosper..
portion of which is quoted as follows: Ruling:
The Compromise Payment includes full and complete Clients right to settle litigation
payment and settlement of Ms. Malvars salaries and by compromise agreement, and
wages up to the last day of her employment, to terminate counsel; limitations
allowances, 13th and 14th month pay, cash A compromise agreement is a contract, whereby the
conversion of her accrued vacation, sick and parties undertake reciprocal obligations to avoid
emergency leaves, separation pay, retirement pay and litigation, or put an end to one already
such other benefits, entitlements, claims for stock, commenced. The client may enter into a compromise
stock options or other forms of equity compensation agreement with the adverse party to terminate the
whether vested or otherwise and claims of any and all litigation before a judgment is rendered therein. If the
kinds against KFPI and KFI and Altria Group, Inc., compromise agreement is found to be in order and
their predecessors-in-interest, their stockholders, not contrary to law, morals, good customs and public
officers, directors, agents or successors-in-interest, policy, its judicial approval is in order. Compromise
affiliates and subsidiaries, up to the last day of the agreement, once approved by final order of the court,
aforesaid cessation of her employment. has the force of res judicata between the parties and
Thereafter, Malvar filed an undated Motion to will not be disturbed except for vices of consent or
Dismiss/Withdraw Case, praying that the appeal be forgery.
immediately dismissed/withdrawn in view of the A client has an undoubted right to settle her litigation
compromise agreement, and that the case be without the intervention of the attorney, for the
considered closed and terminated. former is generally conceded to have exclusive
Before the Court could act on Malvars Motion to control over the subject matter of the litigation and
Dismiss/Withdraw Case, the Court received on may at anytime, if acting in good faith, settle and
February 15, 2011 a so-called Motion for adjust the cause of action out of court before
Intervention to Protect Attorneys Rights from The judgment, even without the attorneys intervention. It
Law Firm of Dasal, Llasos and Associates, through is important for the client to show, however, that the
its Of Counsel Retired Supreme Court Associate compromise agreement does not adversely affect
Justice Josue N. Bellosillo (Intervenor), whereby the third persons who are not parties to the agreement.
Intervenor sought, among others, that both Malvar By the same token, a client has the absolute right to
and KFPI be held and ordered to pay jointly and terminate the attorney-client relationship at any time
severally the Intervenors contingent fees. with or without cause. But this right of the client is
Upon execution of the Compromise Agreement and not unlimited because good faith is required in
pursuant thereto, Petitioner immediately received terminating the relationship. The right is also subject
(supposedly) from RespondentsP40,000,000.00. But to the right of the attorney to be compensated.
despite the settlement between the parties, Petitioner A client may at any time dismiss his attorney or
did not pay Intervenor its just compensation as set substitute another in his place, but if the contract
forth in their engagement agreement; instead, she between client and attorney has been reduced to
immediately moved to Dismiss/Withdraw the Present writing and the dismissal of the attorney was without
Petition On 15. justifiable cause, he shall be entitled to recover from
Opposing the Motion for Intervention,28 Malvar the client the full compensation stipulated in the
stresses that there was no truth to the Intervenors contract. However, the attorney may, in the discretion
claim to defraud it of its professional fees; that the of the court, intervene in the case to protect his rights.
Intervenor lacked the legal capacity to intervene For the payment of his compensation the attorney
because it had ceased to exist after Atty. Marwil N. shall have a lien upon all judgments for the payment
of money, and executions issued in pursuance of such on winning the litigation, the subsequent withdrawal
judgment, rendered in the case wherein his services of the case upon the clients initiative would not
had been retained by the client. (Bold emphasis deprive the attorney of the legitimate compensation
supplied) for professional services rendered.40
In fine, it is basic that an attorney is entitled to have The stipulations of the written agreement between
and to receive a just and reasonable compensation for Malvar and the Intervenors, not being contrary to law,
services performed at the special instance and request morals, public policy, public order or good customs,
of his client. The attorney who has acted in good faith were valid and binding on her. They expressly gave
and honesty in representing and serving the interests rise to the right of the Intervenor to demand
of the client should be reasonably compensated for compensation. In a word, she could not simply walk
his service. away from her contractual obligations towards the
2. Intervenor, for Article 1159 of the Civil Code
Compromise agreement is to be approved provides that obligations arising from contracts have
despite favorable action on the the force of law between the parties and should be
Intervenors Motion for Intervention complied with in good faith.
On considerations of equity and fairness, the Court As a final word, it is necessary to state that no court
disapproves of the tendencies of clients can shirk from enforcing the contractual stipulations
compromising their cases behind the backs of their in the manner they have agreed upon and written. As
attorneys for the purpose of unreasonably reducing or a rule, the courts, whether trial or appellate, have no
completely setting to naught the stipulated contingent power to make or modify contracts between the
fees. Thus, the Court grants the Intervenors Motion parties. Nor can the courts save the parties from
for Intervention to Protect Attorneys Rights as a disadvantageous provisions. The same precepts hold
measure of protecting the Intervenors right to its sway when it comes to enforcing fee arrangements
stipulated professional fees that would be denied entered into in writing between clients and attorneys.
under the compromise agreement. The Court does so In the exercise of their supervisory authority over
in the interest of protecting the rights of the attorneys as officers of the Court, the courts are
practicing Bar rendering professional services on bound to respect and protect the attorneys lien as a
contingent fee basis. necessary means to preserve the decorum and
Nonetheless, the claim for attorneys fees does not respectability of the Law Profession. Hence, the
void or nullify the compromise agreement between Court must thwart any and every effort of clients
Malvar and the respondents. There being no obstacles already served by their attorneys worthy services to
to its approval, the Court approves the compromise deprive them of their hard-earned compensation.
agreement. The Court adds, however, that the Truly, the duty of the courts is not only to see to it
Intervenor is not left without a remedy, for the that attorneys act in a proper and lawful manner, but
payment of its adequate and reasonable compensation also to see to it that attorneys are paid their just and
could not be annulled by the settlement of the lawful fees.61
litigation without its participation and conformity. It WHEREFORE, the Court APPROVES the
remains entitled to the compensation, and its right is compromise agreement; GRANTS the Motion for
safeguarded by the Court because its members are Intervention to Protect Attorney's Rights; and
officers of the Court who are as entitled to judicial ORDERS Czarina T. Malvar and respondents Kraft
protection against injustice or imposition of fraud Food Philippines Inc. and Kraft Foods International
committed by the client as much as the client is to jointly and severally pay to Intervenor Law Firm,
against their abuses as her counsel. In other words, represented by Retired Associate Justice Josue N.
the duty of the Court is not only to ensure that the Bellosillo, its stipulated contingent fees of 10%
attorney acts in a proper and lawful manner, but also of P41,627,593.75, and the further sum equivalent to
to see to it that the attorney is paid his just fees. Even 10% of the value of the stock option.
if the compensation of the attorney is dependent only