MAXIMO CALALANG vs A. D. WILLIAMS, ET AL., G.R. No.

47800 December 2, 1940 (Doctrine: Social

Justice)

LAUREL, J.:

Facts:

The National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to the
Director of the Public Works and to the Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along the following for a period of one year from the date
of the opening of the Colgante Bridge to traffic:

1) Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street from 7:30Am to
12:30 pm and from 1:30 pm to 530 pm; and

2) along Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague Street from
7 am to 11pm

The Chairman of the National Traffic Commission on July 18, 1940 recommended to the Director of
Public Works with the approval of the Secretary of Public Works the adoption of thethemeasure
proposed in the resolution aforementioned in pursuance of the provisions of theCommonwealth Act
No. 548 which authorizes said Director with the approval from the Secretary of the Public Works and
Communication to promulgate rules and regulations to regulate and control the use of and traffic on
national roads.

On August 2, 1940, the Director recommended to the Secretary the approval of the recommendations
made by the Chairman of the National Traffic Commission with modifications. The Secretary of Public
Works approved the recommendations on August 10,1940. The Mayor of Manila and the Acting Chief
of Police of Manila have enforced and caused to be enforced the rules and regulation. As a
consequence, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places
above mentioned to the detriment not only of their owners but of the riding public as well.

Issues:

1) Whether the rules and regulations promulgated by the respondents pursuant to the provisions of
Commonwealth Act NO. 548 constitute an unlawful inference with legitimate business or trade and
abridged the right to personal liberty and freedom of locomotion?
2) Whether the rules and regulations complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-being and economic security of all the
people?

Held:

1) No. The promulgation of the Act aims to promote safe transit upon and avoid obstructions on
national roads in the interest and convenience of the public. In enacting said law, the National
Assembly was prompted by considerations of public convenience and welfare. It was inspired by the
desire to relieve congestion of traffic, which is a menace to the public safety. Public welfare lies at the
bottom of the promulgation of the said law and the state in order to promote the general welfare
may interfere with personal liberty, with property, and with business and occupations. Persons and
property may be subject to all kinds of restraints and burdens in order to secure the general comfort,
health, and prosperity of the State. To this fundamental aims of the government, the rights of the
individual are subordinated. Liberty is a blessing which should not be made to prevail over authority
because society will fall into anarchy. Neither should authority be made to prevail over liberty
because then the individual will fall into slavery. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its preserving.

2) No. Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the
humanization of laws and the equalization of social and economic forces by the State so that justice in
its rational and objectively secular conception may at least be approximated. Social justice means the
promotion of the welfare of all the people, the adoption by the Government of measures calculated
to insure economic stability of all the competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally,
through the exercise of powers underlying the existence of all governments on the time-honored
principles of salus populi estsuprema lex.

Social justice must be founded on the recognition of the necessity of interdependence among divers
and diverse units of a society and of the protection that should be equally and evenly extended to all
groups as a combined force in our social and economic life, consistent with the fundamental and
paramount objective of the state of promoting health, comfort and quiet of all persons, and of
bringing about “the greatest good to the greatest number.
Calalang vs. Williams

Facts: The National Traffic Commission recommended the Director of Public Works and to the
Secretary of Public Works and Communication that animal-drawn vehicles be prohibited from passing
along Rosario St. extending from Plaza Calderon de la Barca to Dasmarinas St. from 7:30 am to 12 pm
and 1:30 pm to 5:30 pm and also along Rizal Avenue from 7 am to 11 pm from a period of one year
from the date of the opening of Colgante Bridge to traffic. It was subsequently passed and thereafter
enforce by Manila Mayor and the acting chief of police. Maximo Calalang then, as a citizen and a
taxpayer challenges its constitutionality.

Issue: Whether the rules and regulations promulgated by the Director of Public Works infringes upon
the constitutional precept regarding the promotion of social justice.

Held: The promotion of social justice is to be achieved not through a mistaken sympathy towards any
given group. It is the promotion of the welfare of all people. It is neither communism, despotism, nor
atomism, nor anarchy but the humanization of laws and the equalization of social and economic
forces by the state so that justice in its rational and objectively secular conception may at least be
approximated.

Sanchez v. Harry Lyons Construction Inc. et al G.R. No. L-2779. October 18, 1950

Labor Code, Article 4 – Construction in favor of Labor

Facts:

· In Jan. 1947, Daniel Sanchez et al (other 10 workers) was employed by Harry Lyons as
Carpenter Foreman, Warehousemen and Guards.

· In Dec. 1947, they were dismissed by the Harry Lyons without one months' previous notice.
They demanded payment of one month's salary, but the company refused.

· The Municipal Court of Manila ruled in favor of the Sanchez et al, which was affirned by the CFI
Manila.

· On appeal to the CA, the petitioner argued that:

a. In their contracts of employment, they agreed that their employment may be terminated at any
time without previous notice; and that the use of the word "temporary" in their contracts of services
show that their employment was with a term, and the term was "temporary, on a day to day basis.".

b. They also executed an advance waiver on the benefit of Article 302 of the Code of Commerce and
that of any other law, ruling, or custom which might require notice of discharge or payment of salary
or wages after date of the termination of such employment.

Issues:

1. WoN those paid on a monthly and daily basis, are entitled to the benefit granted in article 302 of
the Code of Commerce.

2. WoN, if they are so entitled, their waiver of such benefits was legal and valid.

Ruling:

1. Yes, the law gives an added proviso that in the case of factors or shop clerks, these shall be
entitled to salary during this one month of standing notice.

Under ART. 302- In cases in which no special time is fixed in the contracts of service, any one of the
parties thereto may cancel it, advising the other party thereof one month in advance. "The factor or
shop clerk shall be entitled, in such case, to the salary due for said month."

The one-month notice must be given to them, because the two conditions concur: (a) that no special
time is fixed in the contract of service, and (b) that said employee is a commercial employee.
Consequently, when such notice is not given under these conditions, they are entitled to indemnity
which may be one month's salary.

The word "temporary" as used in the contract does not mean the special time fixed in the contracts
referred to in article 302 of the Code of Commerce. The daily basis therein stipulated is for the
computation of pay, and is not necessarily the period of employment.

Thus, they are entitled to the payment of one month's salary.

2. No, such a waiver made in advance is void as being contrary to public policy.

Public policy, with regard to labor, is clearly stated in article II, section 5, of the Philippine Constitution
- "The promotion of social justice to insure the well-being and economic security of all the people
should be the concern of theState”; and article XIV, section 6 - "The State shall afford protection to
labor, especially to working women and minors, and shall regulate the relations between landowner
and tenant, and between labor and capital in industry and in agriculture. * * *".
Article 302 of the Code of Commerce must be applied in consonance with these provisions of our
constitution.

In the matter of employment bargaining, there is no doubt that the employer stands on higher footing
than the employee. First of all, there is greater supply than demand for labor. Secondly, the need for
employment by labor comes from vital and even desperate, necessity. Consequently, the law must
protect labor, at least, to the extent of raising him to equal footing in bargaining relations with capital
and to shield him from abuses brought about by the necessity for survival. It is safe to presume
therefore, that an employee or laborer who waives in advance any benefit granted him by law does
so, certainly not in his interest or through generosity but under the forceful intimidation of urgent
need, and hence, he could not have so acted freely and voluntarily.

Thus, the decision of the lower court is AFFIRMED.

G.R. No. L-2779 October 18, 1950

FACTS:Plaintiffs were employed by DEFENDANT MATERIAL DISTRIBUTORS, INC. and DEFENDANT

HARRY LYONS CONSTRUCTION, INC.

Plaintiffs agreed: “I accept the foregoing appointment, and in consideration thereof I hereby agree
that such employment may be terminated at any time, without previous notice, and I further agree
that salary and wages, shall be computed and paid at the rate specified up to the date of such
termination.”

“Also in consideration of such employment I hereby expressly waive the benefit of article 302 of the
Code of Commerce and that of any other law, ruling, or custom which might require notice of
discharge or payment of salary or wages after date of the termination of such employment.”

Plaintiffs were dismissed by the defendants on December 31, 1947 without one months’ previous
notice. Each of the plaintiffs demanded payment of one month’s salary from the defendants and the
latter refused to pay the same.

Plaintiffs claimed from defendants P2,210 plus interest as one month advance past due them. The
parties entered into a stipulation of facts upon which the municipal court rendered judgment for the
plaintiffs RTC ruled in favor of plaintiffs. From this judgment, defendants filed an appeal with this
court purely upon a question of law.

ISSUE: Whether plaintiffs, both those paid on a monthly and daily basis, are entitled to the benefit
granted in article 302 of the Code of Commerce; and secondly, if they are so entitled, was their waiver
of such benefits legal and valid?
HELD: AFFIRMS DECISION OF LOWER COURT.

Article 302 of the Code of Commerce reads as follows:

ART. 302. In cases in which no special time is fixed in the contracts of service, any one of the parties
thereto may cancel it, advising the other party thereof one month in advance.

Applicable when 2 requisites are complied: (1) that no special time is fixed in the contract of service,
and (2) that said employee is a commercial employee

Plaintiffs are commercial employees and no special time has been fixed in their contract for service.
Hence, this Court holds that plaintiffs-appellants come within the purview of article 302 of the Code
of Commerce.

Also, this court holds that such a waiver, made in advance, is void as being contrary to public policy.

It is safe to presume therefore, that an employee or laborer who waives in advance any benefit
granted him by law does so, certainly not in his interest or through generosity but under the forceful
intimidation of urgent need, and hence, he could not have so acted freely and voluntarily.

For all the foregoing, this court hereby affirms the decision of the lower court, with costs against
appellants.

Ramy Gallego vs. Bayer Philippines, Inc., et. al. G.R. No. 179807, July 31, 2009

Facts:Ramy Gallego was contracted in 1992 by Bayer Philippines as crop protection technician to
promote and market Bayer products by making farm visits to convince the farmers to buy their
products. Petitioner employment came to a halt in 1996 prompting Gallego to seek another
employment, but he was reemployed in 1997 as part of the product image which actually performing
the same task as crop protection technician. In 2001, he was directed to submit a resignation letter
and ordered to return all pieces of service equipment, which he refused. He continued performing his
duties and received compensation until January 2002, however, in April 2002, he received a
memorandum that he will be transferred to Luzon; and that he heard that respondents spread
rumors that reached the dealers in Antique that he is no longer connected with Bayer and any
transaction with him will not be honored as of April 30, 2002.

Believing he was terminated, he instituted a complaint for illegal dismissal before the NLRC.
Respondents Bayer and Guillermo denied the existence of employment relationship, while,
respondents Product Image and Bergonia admitted that the petitioner was hired as contractual
employee and that he has stopped reporting for work. The Labor Arbiter declared that respondents
were guilty of illegal dismissal. On appeal by the respondents, the NLRC reversed the Arbiter’s
decision and contended that petitioner was not dismissed but has abandoned his employment by
failure to report on his duties. Hence, this petition for Review.

Issues:

(1) Was there employment relation between petitioner and respondent Bayer?

(2) Was petitioner illegally dismissed from his employment?

Ruling (First Issue):

The existence of an employer-employee relationship is determined on the basis of four standards,

namely: (a) the manner of selection and engagement of the putative employee; (b) the mode of
payment of wages; (c) the presence or absence of power of dismissal; and (d) the presence or
absence of control of the putative employee’s conduct. Most determinative among these factors is
the so-called "control test." If at all, the only control measure retained by Bayer over petitioner was
to act as his de facto supervisor in certifying to the veracity of the accomplishment reports he
submitted to Product Image. This is by no means the kind of control that establishes an employer-
employee relationship as it pertains only to the results and not the manner and method of doing the
work. It would be a rare contract of service that gives untrammelled freedom to the party hired and
eschews any intervention whatsoever in his performance of the engagement. Surely, it would be
foolhardy for any company to completely give the reins and totally ignore the operations it has
contracted out. In fine, Product Image is ineluctably the employer of petitioner.

(Second Issue):

The Court appreciates no evidence that petitioner was dismissed. What it finds is that petitioner
unilaterally stopped reporting for work before filing a complaint for illegal dismissal, based on his
belief that Guillermo and Bergonia had spread rumors that his transactions on behalf of Bayer would
no longer be honored as of April 30, 2002. This belief remains just that – it is unsubstantiated. While
in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid
or authorized cause, the employee must first establish by substantial evidence the fact of dismissal.
Miguela Santuyo, et al. vs. Remerco Garments Manufacturing, Inc. and/or Victoria Reyes

GR No. 174420; March 22, 2010

Facts:

Petitioners, who are employees of the Remerco Garments Manufacturing, Inc. (RGMI), were among
those recalled to work by the company, after their union, the Kaisahan ng Manggagawa sa Remerco
Garments Manufacturing Inc. (KMM Kilusan), staged a 2-year illegal strike from 1992 to 1994. Among
the conditions of their recall was that they would no longer be paid a daily rate but on a piece-rate
basis. However, even before RGMI could normalize its operations, the union filed a notice of strike in
the National Conciliation and Mediation Board (NCMB) on August 8, 1995. According to the union,
RGMI conducted a time and motion study and changed the salary scheme from a daily rate to piece-
rate basis without consulting it. It claimed that RGMI therefore not only violated the existing
collective bargaining agreement (CBA) but also diminished the salaries agreed upon. It therefore
committed an unfair labor practice. The conciliation proceedings between the union and RGMI before
the NCMB resulted in a lock-out. The union went on strike in November 1995. Therafter, the
Secretary of Labor assumed jurisdiction over the case, pursuant to Article 263(g) of the Labor Code. It
ordered all striking workers to return to work.

The Secretary of Labor found that the employees would receive higher wages if they were paid on a
piece-rate rather than on a daily rate basis. Hence, the new salary scheme would be more
advantageous to the employees. For this reason, despite the provisions of the CBA, the change in
salary scheme was validated.

In an order dated September 18, 1996, the Secretary of Labor ordered all employees to return to
work and RGMI to pay its employees their unpaid salaries (from September 25, 1995 to October 14,
1995) on the piece-rate basis. Neither the union nor RGMI appealed the aforementioned order.
Meanwhile, however, on October 18, 1995, while the conciliation proceedings between the union and
respondent were pending, petitioners filed a complaint for illegal dismissal against RGMI and
respondent Victoria Reyes, accusing the latter of harassment. Petitioners subsequently amended their
complaint, demanding payment of their accrued salaries from September 25 to October 14, 1995.

Respondents moved to dismiss the complaint in view of the pending conciliation proceedings,
involving the same issue, in the NCMB. It also claimed that alleged violations of the CBA should be
resolved according to the grievance procedure laid out therein. It argued that the labor arbiter had no
jurisdiction over the complaint. The labor arbiter assumed jurisdiction over the case and rendered a
decision granting the claims of the union. The NLRC denied the appeal of the respondents. The Court
of Appeals, however, reversed the NLRC and ruled that the labor arbiter had no jurisdiction over the
complaint. This prompted the petitioners to elevate the matter to the Supreme Court.
Issues:

1. Did the labor arbiter have jurisdiction over the complaint filed by the petitioners?

2. Was the labor arbiter barred by prior judgment from assuming jurisdiction over the complaint?

Ruling (First Issue): No, the labor arbiter did not have jurisdiction over the complaint. Petitioners
clearly and consistently questioned the legality of RGMI’s adoption of the new salary scheme (i.e.,
piece-rate basis), asserting that such action, among others, violated the existing CBA. The controversy
was not a simple case of illegal dismissal but a labor dispute involving the manner of ascertaining
employees’ salaries, a matter which was governed by the existing CBA. Article 217 of the Labor Code
provides that “[c]ases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company personnel policies
shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements.”

This provision requires labor arbiters to refer cases involving the implementation of CBAs to the
grievance machinery provided therein and to voluntary arbitration.

Moreover, Article 260 of the Labor Code clarifies that such disputes must be referred first to the
grievance machinery and, if unresolved within seven days, they shall automatically be referred to
voluntary arbitration. Thus, under Article 261 of the Labor Code, voluntary arbitrators have original
and exclusive jurisdiction over matters which have not been resolved by the grievance machinery.
Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code, the labor arbiter should
have referred the matter to the grievance machinery provided in the CBA. Because the labor arbiter
clearly did not have jurisdiction over the subject matter, his decision was void.

(Second Issue):Yes, the labor arbiter was barred by prior judgment from assuming jurisdiction over
the complaint. The Secretary of Labor resolved the labor dispute between the union and RGMI in his
September 18, 1996 order. Since neither the union nor RGMI appealed the said order, it became final
and executory. Article 263(g) of the Labor Code gives the Secretary of Labor discretion to assume
jurisdiction over a labor dispute likely to cause a strike or a lockout in an industry indispensable to the
national interest and to decide the controversy or to refer the same to the NLRC for compulsory
arbitration. In doing so, the Secretary of Labor shall resolve all questions and controversies in order to
settle the dispute. The Secretary of Labor assumed jurisdiction over the controversy because RGMI
had a substantial number of employees and was a major exporter of garments to the United States
and Canada
Settled is the rule that unions are the agent of its members for the purpose of securing just and fair
wages and good working conditions. Since petitioners were part of the bargaining unit represented by
the union and members thereof, the September 18, 1996 order of the Secretary of Labor applies to
them.

Furthermore, since the union was the bargaining agent of petitioners, the complaint was barred
under the principle of conclusiveness of judgments. The parties to a case are bound by the findings in
a previous judgment with respect to matters actually raised and adjudged therein. Hence, the labor
arbiter should have dismissed the complaint on the ground of res judicata.

Masonic Contractor Inc. vs Madjos, Tiamzon and Rapadas

G.R. No. 185094, November 25, 2009

Facts:Respondents Magdalena Madjos, Zenaida Tiamzon and Carmelita Rapadas were employed
sometime in 1991 as all-around laborers (driver/sweeper/ “taga-libing”/grass-cutter) by Masonic
Contractor, Inc. (MCI). Each of them received an initial daily wage of P165.00 and were required to
report for work from 7:00 a.m. to 4:00 p.m. Three years thereafter, MCI increased their wages by
P15.00 per day but not without earning the ire of Melvin Balais, president of MCI.

Sometime in 2004, Balais told Madjos, Tiamzon and Rapadas, along with nine (9) other employees, to
take a two-day leave. When they reported for work two days thereafter, they were barred from
entering the work premises and were informed that they had already been replaced by other
workers. This prompted Madjos and her co-workers to file a complaint against herein petitioners for
illegal dismissal and for non-payment of overtime pay, holiday pay, 13th month pay, and damages.

Petitioners, for their part, denied being the direct employer of respondents. Essentially, they argued
that MCI had maintenance contracts with different memorial park companies and that, over the
years, they had engaged the services of a certain Luz Malibiran to provide them with the necessary
manpower depending on MCI’s volume of work.

Issue:Are respondents regular employees of petitioner?

Ruling:Yes. Petitioners’ defense that they merely contracted the services of respondents through
Malibiran fails to persuade us. The facts of this case show that respondents have been under the
employ of MCI as early as 1991. They were hired not to perform a specific job or undertaking. Instead,
they were employed as all-around laborers doing varied and intermittent jobs, such as those of
drivers, sweepers, gardeners, and even undertakers or tagalibing, until they were arbitrarily
terminated by MCI in 2004. Their wages were paid directly by MCI, as evidenced by the latter’s
payroll summary, belying its self-serving and unsupported contention that it paid directly to Malibiran
for respondents’ services. Respondents had identification cards or gate passes issued not by
Malibiran, but by MCI, and were required to wear uniforms bearing MCI’s emblem or logo when they
reported for work.

It is common practice for companies to provide identification cards to individuals not only as a
security measure, but more importantly to identify the bearers thereof as bona fide employees of the
firm or institution that issued them. The provision of company-issued identification cards and
uniforms to respondents, aside from their inclusion in MCI’s summary payroll, indubitably constitutes
substantial evidence sufficient to support only one conclusion: that respondents were indeed
employees of MCI.

People vs. Balagan and Avila G.R. No. 183099, February 3, 2010

Facts: Complainant went into the office of a certain recruiter whom he heard can facilitate
employment overseas. Upon arriving at the latter’s office, the recruiter asked him if he was
interested in getting employment abroad. After answering in the affirmative, the recruiter told him to
submit certain requirements (e.g. passport and other requirements). After doing so, the recruiter told
Complainant to prepare P150,000 for deployment. A few days later, Complainant went to the
recruiter’s office and handed P37,000. A day after that, he gave another P20,000. These amounts,
however, were not personally handed to said recruiter, but instead was given to the accused
(Balagan and Avila) who allegedly served as the recruiter’s clerk and secretary respectively.

No deployment occurred. Complainant demanded for the return of the money, but the recruiter
refused. Upon Complainant’s inquiry with the POEA, he discovered that the recruiter and the accused
(Balagan and Avila) were not licensed to perform recruitment activities. Aggrieved he filed a case of
Syndicated Illegal Recruitment and Estafa against the accused (Balagan and Avila only). The RTC
convicted the accused as charged, but on appeal, the CA, while affirming the conviction of Estafa,
modified the conviction of Syndicated Illegal Recruitment to Simple Illegal Recruitment. Hence, the
present petition.

Issue: Was the modification correct?

Ruling:Yes, because the prosecution failed to establish that the illegal recruitment was committed by
a syndicate.[1]
People vs. Maritess Martinez y Dulay G.R. No. 158627, March 5, 2010

Facts:Appellant Maritess Martinez and her daughter, Jenilyn Martinez, were charged with seven
counts of Estafa before the RTC of Manila. In addition, appellant together with her children Jenilyn
Martinez and Julius Martinez, were also charged with the crime of Illegal Recruitment in large scale.
However, warrants of arrest were served only against appellantand Julius Martinez, whereas accused
Jenilyn Martinez remains at large. The RTC rendedered a decision acquitting Julius Martinez while
declaring Maritess Martinez guilty of four (4) counts of estafa and illegal recruitment. On appeal the
CA affirmed the appellants conviction of (4) counts of estafa, while in the case of illegal recruitment
modified it as illegal recruitment in large scale.

Issue: Is appellant guilty of illegal recruitment in large scale?

Ruling:Yes. As defined in Art. 38 of the Labor Code, Illegal Recruitment a) any recruitment activities,
including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by
non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of
this Code. x x x (b) Illegal recruitment when committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage and shall be penalized in accordance with Article
39 hereof. illegal recruitment is deemed committed by a syndicate if carried out by a group of three
(3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or
illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment
is deemed committed in large scale if committed against three (3) or more persons individually or as a
group.

In the instant case, the prosecution satisfactorily established that appellant was not a licensee or
holder of authority to deploy workers abroad. By this fact alone, she is deemed to have engaged in
illegal recruitment and the same was committed in large scale because it was carried out against the
four complainants.

The three elements of the crime of illegal recruitment, to wit: a) the offender has no valid license or
authority required by law to enable him to lawfully engage in recruitment and placement of workers;
b) the offender undertakes any of the activities within the meaning of "recruitment and placement"
under Article 13(b) of the Labor Code, or any of the prohibited practices enumerated under Article 34
of the said Code (now Section 6 of RA 8042); and c) the offender committed the same against three or
more persons, individually or as a group, are present in the instant case.
LNS international Manpower Services vs. Armando Padua, Jr. G.R. No. 179792, March 5, 2010

Facts:Respondent Armando C. Padua, Jr. filed a Sworn Statement before the Adjudication Office of
the POEA against LNS and Sharikat Al Saedi International Manpower (Sharikat) for violation of Section
2(b), (d), and (e) of Rule I, Part VI of the 2002 POEA Rules and Regulations Governing the Recruitment
and Employment of Land-based Overseas Workers. Respondent Padua alleged that he applied as auto
electrician with petitioner LNS and assured of a job in Saudi Arabia. Respondent paid to LNS the
processing fees, medical expenses, and trade test. Respondent Padua further alleged that it was
another agency, Sharikat, which processed his papers and eventually deployed him to Saudi Arabia.
However, he returned to the Philippines because he was not allegedly paid his salaries and also
because of violations in the terms and conditions of his employment contract.

In its answer, LNS admitted that Padua applied for employment abroad but he withdrew all the
documents he submitted to LNS. As proof, LNS attached the withdrawal letter duly signed by Padua.
Thus, LNS claimed that it could not be held liable for non-issuance of receipt or misrepresentation.
The POEA issued its order finding LNS liable for non-issuance of receipt and misrepresentation. As to
Sharikat, the POEA found no sufficient evidence to hold it liable for the violations charged. On appeal
to the Secretary of DOLE, it dismissed the appeal of petitioner and affirmed the ruling of the POEA.
Aggrieved, petitioner filed with the CA a petition for certiorari but it was dismissed.

Issue:Is petitioner liable for non-issuance of receipt and misrepresentation?

Ruling:No. As a general rule, factual findings of administrative and quasi-judicial agencies specializing
in their respective fields, especially when affirmed by the CA, must be accorded high respect, if not
finality. However, the Court find out that the factual findings do not conform to the evidence on
record or are not supported by substantial evidence, as in the instant case.

The self-serving and unsubstantiated allegations of respondent cannot defeat the concrete evidence
submitted by petitioner. In fine, for failure to adduce any shred of evidence of payment made to
petitioner, or that petitioner referred or endorsed respondent for employment abroad to another
agency, the charges of non-issuance of receipt and misrepresentation against petitioner could not
possibly prosper. By the voluntary withdrawal of respondent’s application from petitioner, the latter
could not have been involved in the recruitment and placement of respondent and consequently
could not be held liable for any violation.
People vs. Melissa Chua G.R. No. 184058, March 10, 2010

Facts:Melissa Chua (appellant) was indicted for Illegal Recruitment (Large Scale). Appellant pleaded
not guilty on arraignment. Her co-accused Josie remained at large. The cases were consolidated,
hence, trial proceeded only with respect to appellant. Of the five complainants, only three testified,
namely, Marilyn D. Macaranas (Marilyn), Erik de Guia Tan (Tan) and Harry James King (King).
Appellant denied the charges. Claiming having worked as a temporary cashier from January to
October, 2002 at the office of Golden Gate, owned by one Marilyn Calueng, she maintained that
Golden Gate was a licensed recruitment agency and that Josie, who is her godmother, was an agent.

Appellant was convicted thereof by the Regional Trial Court (RTC) of Manila. She was also indicted for
five counts of Estafa but was convicted only for three. The Court of Appeals affirmed appellant’s
conviction.

Issue: Is appellant guilty of illegal recruitment in large scale?

Ruling:Yes. For illegal recruitment in large scale to prosper, the prosecution has to prove three
essential elements, to wit: (1) the accused undertook a recruitment activity under Article 13(b) or any
prohibited practice under Article 34 of the Labor Code; (2) the accused did not have the license or the
authority to lawfully engage in the recruitment and placement of workers; and (3) the accused
committed such illegal activity against three or more persons individually or as a group.

In the present case, Golden Gate, of which appellant admitted being a cashier from January to
October 2002, was initially authorized to recruit workers for deployment abroad. Per the certification
from the POEA, Golden Gate’s license only expired on February 23, 2002 and it was delisted from the
roster of licensed agencies on April 2, 2002.

Appellant was positively pointed to as one of the persons who enticed the complainants to part with
their money upon the fraudulent representation that they would be able to secure for them
employment abroad. In the absence of any evidence that the complainants were motivated by
improper motives, the trial court’s assessment of their credibility shall not be interfered with by the
Court

Even if appellant were a mere temporary cashier of Golden Gate, that did not make her any less an
employee to be held liable for illegal recruitment as principal by direct participation, together with the
employer, as it was shown that she actively and consciously participated in the recruitment process.

Assuming arguendo that appellant was unaware of the illegal nature of the recruitment business of
Golden Gate, that does not free her of liability either. Illegal Recruitment in Large Scale penalized
under Republic Act No. 8042, or "The Migrant Workers and Overseas Filipinos Act of 1995," is a
special law, a violation of which is malum prohibitum, not malum in se. Intent is thus immaterial. And
that explains why appellant was, aside from Estafa, convicted of such offense.
Nate Casket Maker v. Arango, G.R. No. 192282, October 5, 2016

Ponente: Peralta, J.

Facts: Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate
Casket Maker. They employed respondents on various dates as carpenters, mascilladors
and painters in their casket-making business from 1998 until their alleged termination
in March 2007. Petitioners alleged in their Position Paper6 that respondents are pakyaw
workers who are paid per job order. Respondents are "stay-in" workers with free board
and lodging, but they would "always" drink, quarrel with each other on petty things
such that they could not accomplish the job orders on time. Hence, petitioners would
then be compelled to "contract out" to other workers for the job to be finished. On
February 3, 2007, they met with respondents in order to present a proposed employ-
ment agreement which would change the existing pakyaw system to "contractual basis"
and would provide for vacation leave and sick leave pay and other benefits given to
regular employees.

Issue:Whether or not the respondents are entitled to security of tenure.

Whether or not there was illegal dismissal.

Ruling: YES to both. There is no dispute that the tasks performed by respondents as
carpenters, painters, and mascilladors were necessary and desirable in the usual business
of petitioners who are engaged in the manufacture and selling of caskets. Respondents
follow the steps in making a casket, as instructed by the petitioners, like carpentry, mas-
cilla, rubbing and painting. They had their own notebooks where they listed the work
completed with their signature and the date finished. The same would be checked by
petitioners as basis for the compensation for the day. Thus, petitioners wielded control
over the respondents in the discharge of their work. Petitioners violated respondents'
rights to security of tenure and constitutional right to due process in not even serving
them with a written notice of termination which would recite any valid or just cause for
their dismissal. Respondents were merely told that their services are terminated.

Issue: Whether or not Respondents are entitled to backwages.

Ruling: Respondents are entitled to reinstatement with full backwages pursuant to Ar-
ticle 279 of the Labor Code, as amended by R.A. No. 6715. However, respondents
cannot be fully settled at this time. As respondents are piece-rate workers being paid by
the piece, there is need to determine the varying degrees of production and days worked
by each worker, this issue is best left to the NLRC.
Issue: Whether or not respondents are entitled to 13th month pay.

Ruling: With respect to the payment of 13th month pay, however, We find that respond-
ents are not entitled to such benefit. Section 3 of the Rules and Regulations Implement-
ing P.D. No. 851 enumerates the exemptions from the coverage of 13th month pay
benefits. Under Section 3(e), "employers of those who are paid on xxx task basis, and
those who are paid a fixed amount for performing a specific work, irrespective of the
time consumed in the performance thereof' are exempted.

Issue: Whether or not the respondents are Field Personnel

Ruling: Based on the definition of field personnel under Article 82,43 respondents do
not fall under the definition of "field personnel." First, respondents regularly performed
their duties at petitioners' place of business; second, their actual hours of work could
be determined with reasonable certainty; and, third, petitioners supervised their time
and performance of their duties. Since respondents cannot be considered as "field per-
sonnel," then they are not exempted from the grant of holiday and SIL pay even as they
were engaged on pakyaw or task basis.

Del Rosario vs. Philippine Journalists, Inc. G.R. No. 181516, August 19, 2009

Facts: The instant petition stemmed from a complaint filed by petitioner, Cesario L. del Rosario,
against herein respondent, Philippine Journalists, Inc. (PJI), for illegal dismissal with money claims.

On November 5, 2002, the Labor Arbiter rendered a decision in favor of petitioner. Respondent
elevated its case to the National Labor Relations Commission (NLRC). On January 6, 2003, it filed its
memorandum of appeal together with the appeal bond issued by Philippine Pryce Assurance
Corporation (PPAC).

On December 15, 2003, the NLRC issued a resolutiondismissing the appeal for failure to perfect the
same due to the posting of the appeal bond from a bonding company not duly accredited by the
Court. But in a bid of liberality, the NLRC directed respondent to post a new bond, but respondent
failed to comply. Thus, on March 31, 2005, the NLRC issued a resolution dismissing the appeal.

Aggrieved, respondent filed a petition for certiorari under Rule 65 of the Rules of Court before the
Court of Appeals (CA). The CA reversed the NLRC, saying that the NLRC committed grave abuse of
discretion in dismissing PJI’s appeal based on an erroneous finding that the surety bond respondent
posted was void. The CA ratiocinated that at the time the subject bond was issued, PPAC was still
authorized to issue the same. Thus, there was no legal basis to dismiss PJI’s appeal because it had
actually posted a valid bond. The CA directed the NLRC to give due course to the appeal, as well as
directed the respondent to file a new bond.
Issue:

Should the appeal be granted due course?

Ruling:

Yes. The Supreme Court sided with the Court of Appeals. Article 223 of the Labor Code mandates that
in cases of judgment involving a monetary award, an appeal by the employer may be perfected only
upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by
the Commission in an amount equivalent to the monetary award in the judgment appealed from.

The filing of a supersedeas bond for the perfection of an appeal is mandatory and jurisdictional. The
requirement that employers post a cash or surety bond to perfect their appeal is apparently intended
to assure workers that if they prevail in the case, they will receive the money judgment in their favor
upon the dismissal of the former’s appeal. It was intended to discourage employers from using an
appeal to delay, or even evade, their obligations to satisfy their employees' just and lawful claims.

At the time of the filing of the surety bond by PJI on January 2, 2003, PPAC was still an accredited
bonding company. Thus, it was but proper to honor the appeal bond issued by a bonding company
duly accredited by this Court at the time of its issuance. The subsequent revocation of the authority of
a bonding company should not prejudice parties who relied on its authority. The revocation of
authority of a bonding company is prospective in application.

Still, the Court takes due notice of the opportunity given to PJI to post a new bond issued by an
accredited bonding company in the NLRC resolution dated February 23, 2004. Yet, PJI insisted on the
validity of the bond it had filed despite the fact the PPAC was no longer accredited to act as a surety.
This notwithstanding, guided by the principle that technical rules of procedure should not hamper the
quest for justice and truth, this Court deems it prudent that the case be reviewed and decided on the
merits, in view of the question on the employer-employee relationship of the parties and its resultant
legal consequences. But, so as not to prejudice the rights of petitioner in this case, the Court
reiterates the CA directive for PJI to post a new bond issued by an accredited bonding company.
(REGULAR EMPLOYEES)

Philippine Long Distance Telephone Company vs. Rizalina Raut, et. al.

G.R. No. 174209, August 25, 2009

Facts:This is an illegal case by Raut, Emnace and Capistrano against PLDT. They alleged that they were
illegally dismissed on November 30 and December 16, 1996. The Labor Arbiter ruled in their favor
reinstating the respondents to their former position or if not feasible anymore to another equal
position without loss of seniority rights and benefits and its backwages.

Soon after, the respondents were reinstated, but allegedly continued to be treated as temporary
employees of the company. Petitioner appealed the decision alleging that the respondents were
never employees of the company but that of an independent contractor, Peerless Integrated Services.
However, NLRC affirmed the arbiter’s decision. The Court of Appeals also granted the NLRC’s ruling.
The judgment became final and executory.

Issue:

Are respondents considered regular employees?

Ruling:

The Labor Arbiter, the NLRC, and the Court of Appeals found that the respondents are regular
employees of the petitioner as provided under Article 279, in relation to Article 280 of the Labor
Code. Thus, the lower tribunals all affirmed the order of reinstatement of respondents and their
corresponding entitlement to the payment of salaries and other benefits received by petitioner’s
regular employees.

Finally, on the increase in the computation of the monetary award to respondents, the decision of the
Labor Arbiter specified that for purposes of putting up a bond should petitioner appeal, the
backwages were computed only for a certain period. Otherwise, the actual backwages to be paid to
respondents are computed from the date of dismissal until the finality of the decision. In addition,
because petitioner continues to refuse and accord regular status to respondents and to pay them
their corresponding wages even after the lapse of two (2) years from the finality of the Labor Arbiter’s
decision, the Labor Arbiter correctly included that in its order of execution. Thus, the Labor Arbiter’s
order of execution simply covered the correct computation of wages and other payments enjoyed by
petitioner’s regular employees.
Locsin vs. PLDT GR No. 185251, October 2, 2009

Facts:On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and the
Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services Agreement
(Agreement) whereby SSCP would provide armed security guards to PLDT to be assigned to its various
offices. Pursuant to such agreement, petitioners Raul Locsin and Eddie Tomaquin, among other
security guards, were posted at a PLDT office.

On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the Agreement
effective October 1, 2001. Despite the termination of the Agreement, however, petitioners continued
to secure the premises of their assigned office. They were allegedly directed to remain at their post by
representatives of respondent. In support of their contention, petitioners provided the Labor Arbiter
with copies of petitioner Locsin’s pay slips for the period of January to September 2002.

Then, on September 30, 2002, petitioners’ services were terminated. Thus, petitioners filed a
complaint before the Labor Arbiter for illegal dismissal and recovery of money claims such as
overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay,
Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT.

The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was explained in the
Decision that petitioners were found to be employees of PLDT and not of SSCP. Such conclusion was
arrived at with the factual finding that petitioners continued to serve as guards of PLDT’s offices. As
such employees, petitioners were entitled to substantive and procedural due process before
termination of employment.

Issue: Is there employer-employee relationship?

Ruling:Yes. From the foregoing circumstances, reason dictates that we conclude that petitioners
remained at their post under the instructions of respondent. We can further conclude that
respondent dictated upon petitioners that the latter perform their regular duties to secure the
premises during operating hours. This, to our mind and under the circumstances, is sufficient to
establish the existence of an employer-employee relationship.

To reiterate, while respondent and SSCP no longer had any legal relationship with the termination of
the Agreement, petitioners remained at their post securing the premises of respondent while
receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials
proffered by respondent do not shed any light to the situation. It is but reasonable to conclude that,
with the behest and, presumably, directive of respondent, petitioners continued with their services.
Evidently, such are indicia of control that respondent exercised over petitioners.
Evidently, respondent having the power of control over petitioners must be considered as petitioners’
employer––from the termination of the Agreement onwards––as this was the only time that any
evidence of control was exhibited by respondent over petitioners and in light of our ruling in Abella.
Thus, as aptly declared by the NLRC, petitioners were entitled to the rights and benefits of employees
of respondent, including due process requirements in the termination of their services.

Both the Labor Arbiter and NLRC found that respondent did not observe such due process
requirements. Having failed to do so, respondent is guilty of illegal dismissal.

Gomez vs PNOC G.R. No. 174044, November 27, 2009

Facts: Petitioner Gloria V. Gomez used to work as Manager of the Legal Department of Petron
Corporation, then a government-owned corporation. With Petron’s privatization, she availed of the
company’s early retirement program and left that organization on April 30, 1994. On the following
day, May 1, 1994, however, Filoil Refinery Corporation (Filoil), also a government-owned corporation,
appointed her its corporate secretary and legal counsel, with the same managerial rank,
compensation, and benefits that she used to enjoy at Petron. However, the privatization did not
materialize so Gomez continued to serve as corporate secretary of respondent PDMC. On September
23, 1996 its president re-hired her as administrator and legal counsel of the company.

On March 29, 1999 the new board of directors of respondent PDMC removed petitioner Gomez as
corporate secretary. Further, at the board’s meeting on October 21, 1999 the board questioned her
continued employment as administrator. In answer, she presented the former president’s May 24,
1998 letter that extended her term. Dissatisfied with this, the board sought the advice of its legal
department, which expressed the view that Gomez’s term extension was an ultra vires act of the
former president. It reasoned that, since her position was functionally that of a vice-president or
general manager, her term could be extended under the company’s by-laws only with the approval of
the board. The legal department held that her “de facto” tenure could be legally put to an end.

Petitioner Gomez for her part conceded that as corporate secretary, she served only as a corporate
officer. But, when they named her administrator, she became a regular managerial employee.
Consequently, the respondent PDMC’s board did not have to approve either her appointment as such
or the extension of her term in 1998.

Issue: Is Gomez an ordinary employee whose complaint is within the jurisdiction of the NLRC?
Ruling:

Yes. The relationship of a person to a corporation, whether as officer or agent or employee, is not
determined by the nature of the services he performs but by the incidents of his relationship with the
corporation as they actually exist. That the employee served concurrently as corporate secretary for a
time is immaterial. A corporation is not prohibited from hiring a corporate officer to perform services
under circumstances which will make him an employee. Indeed, it is possible for one to have a dual
role of officer and employee. NLRC has jurisdiction over a complaint filed by one who served both as
corporate officer and employee, when the money claims were made as an employee and not as a
corporate officer.

PROJECT EMPLOYEES

William Uy Construction vs. Trinidad G.R. No. 183250, March 10, 2010

Facts:Trinidad claimed that he had been working with the latter company for 16 years since 1988 as
driver of its service vehicle, dump truck, and transit mixer. He had signed several employment
contracts with the company that identified him as a project employee although he had always been
assigned to work on one project after another with some intervals. On December 2004, he was
terminated from work due to the shutdown of operations due to lack of projects but he later found
out that there was a project in Batangas but he was no longer hired back.

Petitioner company countered that it was in the construction business. By the nature of such
business, it had to hire and engage the services of project construction workers, including respondent
Trinidad, whose employments had to be co-terminous with the completion of specific company
projects. For this reason, every time the company employed Trinidad, he had to execute an
employment contract with it, called Appointment as Project Worker.

The Labor Arbiter dismissed Trinidad’s complaint for unjust dismissal and ordered petitioner company
to pay Trinidad P1,500.00 in unpaid service incentive leave, taking into consideration the three-year
prescriptive period for money claims. The Labor Arbiter held that, since Trinidad was a project
employee and since his company submitted the appropriate establishment termination report to
DOLE, his loss of work cannot be regarded as unjust dismissal. National Labor Relations Commission
(NLRC) affirmed the Labor Arbiter’s ruling, prompting respondent Trinidad to elevate his case to the
Court of Appeals (CA). The CA reversed the NLRC’s findings
Issue: Is respondent Trinidad a regular employee?

Ruling:

No. The test for distinguishing a “project employee” from a “regular employee” is whether or not he
has been assigned to carry out a “specific project or undertaking,” with the duration and scope of his
engagement specified at the time his service is contracted. Here, it is not disputed that petitioner
company contracted respondent Trinidad’s service by specific projects with the duration of his work
clearly set out in his employment contracts. He remained a project employee regardless of the
number of years and the various projects he worked for the company.

Generally, length of service provides a fair yardstick for determining when an employee initially hired
on a temporary basis becomes a permanent one, entitled to the security and benefits of
regularization. But this standard will not be fair, if applied to the construction industry, simply
because construction firms cannot guarantee work and funding for its payrolls beyond the life of each
project. The repeated and successive rehiring of project employees do not qualify them as regular
employees, as length of service is not the controlling determinant of the employment tenure of a
project employee, but whether the employment has been fixed for a specific project or undertaking,
its completion has been determined at the time of the engagement of the employee.

Trinidad’s series of employments with petitioner company were co-terminous with its projects. When
its Boni Serrano-Katipunan Interchange Project was finished in December 2004, Trinidad’s
employment ended with it. He was not dismissed. His employment contract simply ended with the
project for which he had signed up. His employment history belies the claim that he continuously
worked for the company. Intervals or gaps separated one contract from another.

The CA noted that DOLE Order 19 required employers to submit a report of termination of employees
every completion of construction project. And, since petitioner company submitted at the hearing
before the Labor Arbiter only the termination report covering respondent Trinidad’s last project, it
failed to satisfy such requirement.
LABOR ONLY CONTRACTING

Coca-Cola Bottlers Phils., Inc., vs. Agito, Oca III, Alariao, Jr., Ong, Arvin, Francisco, and Golez

G.R. No. 179546, February 13, 2009

Facts:

Respondents filed before the NLRC two complaints against Petitioner, Interserve, Peerless Integrated
Services, Inc., Better Builders, Inc., and Excellent Partners, Inc. for reinstatement with backwages,
regularization, nonpayment of 13th month pay, and damages. Respondents alleged in their Position
Paper that they were salesmen assigned at the Lagro Sales Office of petitioner. They had been in the
employ of petitioner for years, but were not regularized. Their employment was terminated on 8
April 2002 without just cause and due process. However, they failed to state the reason/s for filing a
complaint against Interserve; Peerless Integrated Services, Inc.; Better Builders, Inc.; and Excellent
Partners, Inc.

Petitioner Coca-cola filed its Position Paper (with Motion to Dismiss), where it averred that
respondents were employees of Interserve who were tasked to perform contracted services in
accordance with the provisions of the Contract of Services executed between petitioner and
Interserve on 23 March 2002. Said Contract between petitioner and Interserve, covering the period
of 1 April 2002 to 30 September 2002, constituted legitimate job contracting, given that the latter was
a bona fide independent contractor with substantial capital or investment in the form of tools,
equipment, and machinery necessary in the conduct of its business.

To prove the status of Interserve as an independent contractor, petitioner presented the following
pieces of evidence: (1) the Articles of Incorporation of Interserve; (2) the Certificate of Registration of
Interserve with the Bureau of Internal Revenue; (3) the Income Tax Return, with Audited Financial
Statements, of Interserve for 2001; and (4) the Certificate of Registration of Interserve as an
independent job contractor, issued by the Department of Labor and Employment (DOLE).

As a result, petitioner asserted that respondents were employees of Interserve, since it was the latter
which hired them, paid their wages, and supervised their work, as proven by: (1) respondents’
Personal Data Files in the records of Interserve; (2) respondents’ Contract of Temporary Employment
with Interserve; and (3) the payroll records of Interserve. Petitioner, thus, sought the dismissal of
respondents’ complaint against it on the ground that the Labor Arbiter did not acquire jurisdiction
over the same in the absence of an employer-employee relationship between petitioner and the
respondents.

The Labor Arbiter found that respondents were employees of Interserve and not of petitioner. The
Labor Arbiter placed considerable weight on the fact that Interserve was registered with the DOLE as
an independent job contractor, with total assets amounting to P1,439,785.00 as of 31 December
2001. It was Interserve that kept and maintained respondents’ employee records, including their
Personal Data Sheets; Contracts of Employment; and remittances to the Social Securities System
(SSS), Medicare and Pag-ibig Fund, thus, further supporting the Labor Arbiter’s finding that
respondents were employees of Interserve. She ruled that the circulars, rules and regulations which
petitioner issued from time to time to respondents were not indicative of control as to make the
latter its employees.

Unsatisfied with the foregoing Decision of the Labor Arbiter, respondents filed an appeal with the
NLRC. In their Memorandum of Appeal, respondents maintained that contrary to the finding of the
Labor Arbiter, their work was indispensable to the principal business of petitioner. Respondents
supported their claim with copies of the Delivery Agreement between petitioner and TRMD
Incorporated, stating that petitioner was “engaged in the manufacture, distribution and sale of soft
drinks and other related products with various plants and sales offices and warehouses located all
over the Philippines.” Moreover, petitioner supplied the tools and equipment used by respondents in
their jobs such as forklifts, pallet, etc. Respondents were also required to work in the warehouses,
sales offices, and plants of petitioner. Respondents pointed out that, in contrast, Interserve did not
own trucks, pallets cartillas, or any other equipment necessary in the sale of Coca-Cola products.

The NLRC affirmed the Labor Arbiter’s Decision and pronounced that no employer-employee
relationship existed between petitioner and respondents. Aggrieved once more, respondents sought
recourse with the Court of Appeals by filing a Petition for Certiorari under Rule 65. The Court of
Appeals reversed the NLRC decision. The appellate court ruled that Interserve was a labor-only
contractor, with insufficient capital and investments for the services which it was contracted to
perform. With only P510,000.00 invested in its service vehicles and P200,000.00 in its machineries
and equipment, Interserve would be hard-pressed to meet the demands of daily soft drink deliveries
of petitioner in the Lagro area. The Court Appeals concluded that the respondents used the
equipment, tools, and facilities of petitioner in the day-to-day sales operations.
Additionally, the Court of Appeals determined that petitioner had effective control over the means
and method of respondents’ work as evidenced by the Daily Sales Monitoring Report, the
Conventional Route System Proposed Set-up, and the memoranda issued by the supervisor of
petitioner addressed to workers, who, like respondents, were supposedly supplied by contractors.
The appellate court deemed that the respondents, who were tasked to deliver, distribute, and sell
Coca-Cola products, carried out functions directly related and necessary to the main business of
petitioner. The appellate court finally noted that certain provisions of the Contract of Service
between petitioner and Interserve suggested that the latter’s undertaking did not involve a specific
job, but rather the supply of manpower.

Issue: Is Interserve a legitimate job contractor?

Ruling: No.The law clearly establishes an employer-employee relationship between the principal
employer and the contractor’s employee upon a finding that the contractor is engaged in “labor-only”
contracting. Article 106 of the Labor Code categorically states: “There is ‘labor-only’ contracting
where the person supplying workers to an employee does not have substantial capital or investment
in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are directly related to the
principal business of such employer.” Thus, performing activities directly related to the principal
business of the employer is only one of the two indicators that “labor-only” contracting exists; the
other is lack of substantial capital or investment. The Court finds that both indicators exist in the case
at bar.

Respondents worked for petitioner as salesmen, with the exception of respondent Gil Francisco
whose job was designated as leadman. In the Delivery Agreement between petitioner and TRMD
Incorporated, it is stated that petitioner is engaged in the manufacture, distribution and sale of
softdrinks and other related products. The work of respondents, constituting distribution and sale of
Coca-Cola products, is clearly indispensable to the principal business of petitioner. The repeated re-
hiring of some of the respondents supports this finding. Petitioner also does not contradict
respondents’ allegations that the former has Sales Departments and Sales Offices in its various offices,
plants, and warehouses; and that petitioner hires Regional Sales Supervisors and District Sales
Supervisors who supervise and control the salesmen and sales route helpers.

As to the supposed substantial capital and investment required of an independent job contractor,
petitioner calls the attention of the Court to the authorized capital stock of Interserve amounting to
P2,000,000.00. It cites as authority Filipinas Synthetic Fiber Corp. v. National Labor Relations
Commission and Frondozo v. National Labor Relations Commission, where the contractors’ authorized
capital stock of P1,600,000.00 and P2,000,000.00, respectively, were considered substantial for the
purpose of concluding that they were legitimate job contractors. Petitioner also refers to Neri v.
National Labor Relations Commission where it was held that a contractor ceases to be a labor-only
contractor by having substantial capital alone, without investment in tools and equipment.

Note: Labor-only contracting would give rise to: (1) the creation of an employer-employee
relationship between the principal and the employees of the contractor or sub-contractor; and (2) the
solidary liability of the principal and the contractor to the employees in the event of any violation of
the Labor Code.

Coca-cola Bottlers Philippines vs. Ricky Dela Cruz, et. al. G.R. No. 184977, December 7, 2009

Facts:Respondents filed two separate complaints for regularization with money claims against Coca-
Cola Bottlers Philippines, Inc. Before the Labor Arbiter, the respondents alleged that they are route
helpers assigned to work in the petitioner’s trucks. They go from the Coca-Cola sales offices or plants
to customer outlets; they were hired either directly by the petitioner or by its contractors, but they do
not enjoy the full remuneration, benefits and privileges granted to the petitioner’s regular sales force.
They argued that the services they render are necessary and desirable in the regular business of the
petitioner. In defense, the petitioner contended that it entered into contracts of services with
Peerless and Excellent Partners Cooperative, Inc. (Excellent) to provide allied services; under these
contracts, Peerless and Excellent retained the right to select, hire, dismiss, supervise, control and
discipline and pay the salaries of all personnel they assign to the petitioner; in return for these
services, Peerless and Excellent were paid a stipulated fee. The petitioner posited that there is no
employer-employee relationship between the company and the respondents and the complaints
should be dismissed for lack of jurisdiction on the part of the NLRC. In reply, the respondents
countered that they worked under the control and supervision of the company’s supervisors who
prepared their work schedules and assignments. Peerless and Excellent, too, did not have sufficient
capital or investment to provide services to the petitioner. The respondents thus argued that the
petitioner’s contracts of services with Peerless and Excellent are in the nature of "labor-only"
contracts prohibited by law.

Issue: Was there labor-only contracting?

Ruling:

Yes. The contract between the principal and the contractor is not the final word on how the
contracted workers relate to the principal and the purported contractor; the relationships must be
tested on the basis of how they actually operate. The legitimate job contractor must have the
capitalization and equipment to undertake the sale and distribution of the manufacturer’s products,
and must do it on its own using its own means and selling methods.

Even before going into the realities of workplace operations, the Court of Appeals found that the
service contracts themselves provide ample leads into the relationship between the company, on the
one hand, and Peerless and Excellent, on the other. The Court of Appeals noted that both the Peerless
and the Excellent contracts show that their obligation was solely to provide the company with “the
services of contractual employees,” and nothing more. These contracted services were for the
handling and delivery of the company’s products and allied services. Following D.O. 18-02 and the
contracts that spoke purely of the supply of labor, the Court of Appeals concluded that Peerless and
Excellent were labor-only contractors unless they could prove that they had the required
capitalization and the right of control over their contracted workers.

The contractors were not independently selling and distributing company products, using their own
equipment, means and methods of selling and distribution; they only supplied the manpower that
helped the company in the handing of products for sale and distribution. In the context of D.O. 18-02,
the contracting for sale and distribution as an independent and self-contained operation is a
legitimate contract, but the pure supply of manpower with the task of assisting in sales and
distribution controlled by a principal falls within prohibited labor-only contracting. Consequently, the
contracted personnel, engaged in component functions in the main business of the company under
the latter’s supervision and control, cannot but be regular company employees.

Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al. G.R. No. 160506, March 9, 2010

Facts:

Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with
either Promm-Gem or SAPS for periods of more or less five months at a time.They were assigned at
different outlets, supermarkets and stores where they handled all the products of P&G. They received
their wages from Promm-Gem or SAPS. Subsequently, petitioners filed a complaintagainst P&G for
regularization, service incentive leave pay and other benefits with damages. The complaint was later
amendedto include the matter of their subsequent dismissal.
The Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employer-
employee relationship between petitioners and P&G. He found that the selection and engagement of
the petitioners, the payment of their wages, the power of dismissal and control with respect to the
means and methods by which their work was accomplished, were all done and exercised by Promm-
Gem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job
contractors. On appeal to the NLRC, the NlRC affirmed the decision of the labor arbiter. Petitioners
then filed a petition for certiorari with the CA, alleging grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the Labor Arbiter and the NLRC. However, said petition was also
denied by the CA.

Issues:

1.) Is P&G the employer of petitioners?

2.) Were petitioners illegally dismissed?

Ruling:

Qualify. In order to determine whether P&G is the employer of petitioners, it is necessary to first
determine whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors.
There is "labor-only" contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work premises, among
others, and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the person or intermediary
shall be considered merely as an agent of the employer who shall be responsible to the workers in the
same manner and extent as if the latter were directly employed by him.

The Court held that Promm-Gem cannot be regarded as labor-only contractor but a legitimate
independent contractor because the financial statement of Promm-Gem shows that it has authorized
capital stock of P1 million and a paid-in capital, or capital available for operations, of P500,000.00 as
of 1990. It also has long term assets worth P432, 895.28 and current assets of P719, 042.32. Promm-
Gem has also proven that it maintained its own warehouse and office space with a floor area of 870
square meters. It also had under its name three registered vehicles which were used for its
promotional/merchandising business. Promm-Gem also has other clients aside from P&G.
On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only
P31, 250.00. There is no other evidence presented to show how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.
Considering that SAPS has no substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal business of P&G, the court held that
SAPS is engaged in "labor-only contracting". The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees of the labor-only contractor as if
such employees had been directly employed by the principal employer.

With regard to the termination letters given by Promm-Gem to its employees uniformly specified the
cause of dismissal as grave misconduct and breach of trust. The court held that there were no valid
causes for the dismissal of petitioners-employees of Promm-Gem.

Misconduct to be valid just cause for dismissal, such misconduct (a) must be serious; (b) must relate
to the performance of the employee’s duties; and (c) must show that the employee has become unfit
to continue working for the employer. In the case, petitioners-employees of Promm-Gem may have
committed an error of judgment in claiming to be employees of P&G, but it cannot be said that they
were motivated by any wrongful intent in doing so. As such, they are guilty of only simple misconduct
for assailing the integrity of Promm-Gem as a legitimate and independent promotion firm. A
misconduct which is not serious or grave, as that existing in the instant case, cannot be a valid basis
for dismissing an employee.

Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based on the willful
breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. Loss of
trust and confidence, as a cause for termination of employment, is premised on the fact that the
employee concerned holds a position of responsibility or of trust and confidence. And, in order to
constitute a just cause for dismissal, the act complained of must be work-related and must show that
the employee is unfit to continue to work for the employer. In the case at bar, In the instant case, the
petitioners-employees of Promm-Gem have not been shown to be occupying positions of
responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to
continue to work as merchandisers for Promm-Gem. Hence, no valid cause for dismissal by Promm-
Gem against petitioner-employees.
With regard to the petitioners placed with P&G by SAPS, they were given no written notice of
dismissal. The records show that upon receipt by SAPS of P&G’s letter terminating their
"Merchandising Services Contact", they in turn verbally informed the concerned petitioners not to
report for work anymore. It must be emphasized that the onus probandi to prove the lawfulness of
the dismissal rests with the employer. In termination cases, the burden of proof rests upon the
employer to show that the dismissal is for just and valid cause. In the instant case, P&G failed to
discharge the burden of proving the legality and validity of the dismissals of those petitioners who are
considered its employees. Hence, the dismissals necessarily were not justified and are therefore
illegal.