LABOR RELATIONS DIGEST COMPILATION

1ST SET ASSIGNMENT

CMMA vs POEA
GR No. 114714
Petition to annul Resolution # 1 series 1994 of the Governing Board
of POEA and POEA Memorandum Circular # 5 series 1994

Facts: CMMA an incorporated association of licensed Filipino

Manning Agencies and its co petitioners, all licensed manning
agencies which hire and recruit Filipino seamen for and in behalf of
their respective foreign ship-owner principals, urge the Court to annul
Resolution #1 series 1994 of the Governing Board of POEA and
POEA Memorandum Circular # 5 series 1994. CMMA contend that
POEA does not have the power and authority to fix and promulgate
rules affecting death and workmens compensation of Filipino
seamen working in ocean-going vessels; only the Congress can.
Governing Board Resolution #1 provides that the POEA Governing
Board shall resolve to ament and increase the compensation and
other benefits as specified under the rules of POEA Standard
Employment Contract for Seafarers.
Issue: W/N the POEA can promulgate rules by virtue of the
delegation of legislative power.
Held: YES. The constitutional challenge of the rule-making power of
the POEA based on the impermissible delegation of legislative power
had been brushed aside by this Court in Eastern Shipping Lines, Inc.
v POEA. The governing board of POEA can promulgate the
necessary rules and regulations to govern the exercise of the
adjudicatory functions of the Administration. The legislature may not
have the competence to provide for the required direct and
efficacious solutions, however, these solutions may be expected
from its delegates, who are supposed to be experts in the particular
fields assigned to them. While the making of laws is a non-delegable
power that pertains exclusively to the Congress, nevertheless, the
latter may constitutionally delegate the authority to promulgate rules
and regulations to implement a given legislation and effectuate its
policies. The challenged resolution and memorandum circular which
merely further amended the previous memorandum circular #2
strictly conform to the sufficient and valid standard of fair and
equitable employment practices.
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Philippine Long Distance Telephone Company v. The National
Labor Relations Commission and Marilyn Abucay (PLDT v.
NLRC and Abucay)
GR # 80609 | 164 SCRA 671
Petition: Petition to the Resolution of the NLRC
Petitioner: PLDT
Respondents: NLRC and Marilyn Abucay
DOCTRINE: The policy of Social Justice is not intended to
countenance wrongdoing for the mere fact that it was committed by
the underprivileged. At best, it may mitigate the penalty but certainly
will not condone the offence, Those who invoke social justice may
only do so if their hands are clean and their motives blameless and
not simply because they happen to be poor.
FACTS
- The issue of the case revolves around the legality of the award of
financial assistance to an employee who had been dismissed for a
cause by the NLRC.
- Abucay, a traffic operator of PLDT was accused of having
demanded and received Php 3,800 in consideration of her promise
to facilitate the approval of their applications for telephone
installations. (Bribes)
- She was found guilty and was subsequently let go.
- Abucay went to the Labor Arbiter and filed a case for illegal
dismissal but was subsequently dismissed.
LA decided that the company has valid grounds for her
dismissal but also awarded Abucay with separation pay.
- Both parties appealed to the NLRC.
Petitioner contends that yes, considering the long term service
given by the Abucay warrants her of certain benefits, however
such should not be applied to those employees who were
dismissed on valid grounds. Basically giving her benefits despite
her offence would be awarding her rather than punishing.
- NLRC affirmed the decision of the LA.
NLRC contends that the grant of financial assistance is not
intended as a reward for her offense but merely to help her for
the loss of her employment after working faithfully with the
company for ten years.
Cases were cited where the employees were dismissed with
just and authorized causes but were still given separation
benefits on the grounds of social justice because the purpose is
still served because the employee will not be reinstated.
Hence, this petition.
ISSUE
1. W/N the grant of separation pay to Abucay is valid?
RULING & RATIO
- NO
The SC ruled that the grant of separation pay in the case at bar
is unjustified. The private respondent has been dismissed for
dishonesty, as found by the labor arbiter and affirmed by the
NLRC and as she herself has impliedly admitted. The fact that
she has worked with the PLDT for more than a decade, if it is to
be considered at all, should be taken against her as it reflects a
regrettable lack of loyalty that she should have strengthened
instead of betraying during all of her 10 years of service with the
company.
If regarded as a justification for moderating the penalty of
dismissal, it will actually become a prize for disloyalty, perverting
the meaning of social justice and undermining the efforts of
labor to cleanse its ranks of all undesirables.
The Labor Code provides that when an employee is dismissed
for just and authorised causes, the said employees is no longer
entitled to separation pay.
The SC mentioned instanced where the grant of separation pay
is valid despite the employee was dismissed on just and
authorized caused on the basis of equity. These are the
exceptions. (Refer to Notes)
DISPOSTION
WHEREFORE, the petition is GRANTED. The challenged resolution
of September 22,1987, is AFFIRMED in toto except for the grant of
separation pay in the form of financial assistance, which is hereby
DISALLOWED. The temporary restraining order dated March 23,
1988, is LIFTED. It is SO ORDERED.
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NOTES
Award of separation pay distinguished; Grant of separation pay to
the dismissed employee is just where the separation was due to
valid but inequitous causes as failure to comply with work standards;
Grant of award is based on the social justice policy even if
separation is for cause.There should be no question that where it
comes to such valid but not iniquitous causes as failure to comply
with work standards, the grant of separation pay to the dismissed
employee may be both just and compassionate, particularly if he has
worked for some time with the company. For example, a subordinate
who has irreconcilable policy or personal differences with his
employer may be validly dismissed for demonstrated loss of
confidence, which is an allowable ground. A working mother who has
to be frequently absent because she has also to take care of her
child may also be removed because of her poor attendance, this
being another authorized ground. It is not the employees fault if he
does not have the necessary aptitude for his work but on the other
hand the company cannot be required to maintain him just the same
at the expense of efficiency of its operations. He too may be validly
replaced. Under these and similar circumstances, however, the
award to the employee of separation pay would be sustainable under
the social justice policy even if the separation is for cause.
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Capitol Medical Center vs Meris
G.R. No. 155098 470 SCRA 125 September 16, 2005
Petition: Subject of the petition is to review the decision of the Court
of Appeals which reversed the Resolution of the NLRC
PETITIONER: Capitol Medical Center, Inc. and Dr. Thelma
Navarette-Clemente
RESPONDENT: Dr. Cesar E. Meris
DOCTRINE: The right to close the operation of an establishment or
undertaking is explicitly recognized under the Labor Code as one of
the authorized causes in terminating employment of workers, the
only limitation being that closure must not be for the purpose of
circumventing the provisions on termination of employment
embodied in the Labor Code.
FACTS:
Petitioner Capitol Medical Center Inc. (Capitol) hired
respondent Dr. Cesar Meris (Meris) as in charge of its
Industrial Services Unit (ISU). As such, respondent
performed dual functions of providing services to Capitol's
more than 500 employees and health workers as well as to
employees and workers of companies having retainer
contacts with it.
Respondent received a letter from Capitol's president and
chairman of the board, petitioner Dr. Thelma Navarette-
Clemente.
The letter contained a notice advising him of the
management's decision to close or abolish the ISU and the
consequent termination of his services as its Chief.
The reason cited was the almost extinct demand for direct
medical services by the private and the semi-government
corporation in providing care for their employees.
Respondent, however, doubts petitioners' reason and
believes that it was just a mere ploy for his ouster after his
refusal to retire when petitioner Dr. Thelma Navaratte-
Clemente told him to do so.
Respondent filed a complaint of illegal dismissal against the
petitioners before the Labor Arbiter.
The Labor Arbiter found for petitioners and held that the
abolition was a valid and lawful exercise of management
prerogatives and that there was convincing evidence that the
ISU was operating at a loss.
Upon appeal, the NLRC modified the decision of the Labor
Arbiter and held that petitioners have the right to close the
ISU even if it was not suffering any business losses in light
1
of Art. 283 of the Labor Code and jurisprudence.
Respondent appealed to the CA which held that petitioners
failed to strictly comply with both procedural and substantive
due process, a condition sine qua non for the validity of
termination; that respondent was illegally dismissed.
1 Art. 283. Closure of establishment and reduction of personnel. The employer
may also terminate the
employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written
notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least
one (1) month pay for
every year of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closures
or cessation of operations of establishment or undertaking not due to serious business
losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-
half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1)
whole year.
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Hence, this petition.
Petitioners argue that the findings and conclusions of the
NLRC and the LA must be accorded with respect and that it
was incurring losses.
ISSUE: W/N respondent Dr. Cesar E. Meris was illegally dismissed.
(6) Months being considered as One (1) year, full backwages from
the time of hus dismissal from April 30, 1993 until the expiration of
his term as Chief of the ISU or his mandatory retirement, whichever
comes first; other benefits due him or their money equivalent; and
attorneys fees.

COURT:
YES.
The phrase in Art. 283 closures or cessation xxx
not due to serious business losses or financial
revenues recognizes the right of the employer to
close or cease his business operations or
undertaking even if he is not suffering from serious
business losses or financial reverses, as long as he
pays his employees their termination pay in the
amount corresponding to their length of service.
The ultimate test of the validity of closure or
cessation of establisment or undertaking is that it
must be bona fide in character. And the burden of
proving such falls upon the employer.
In the case at bar, petitioner failed to sufficiently
prove good faith in closing the ISU.
From the letter of Dr. Clemente to Dr. Meris, it is
gathered that the abolition of the ISU was due to the
almost extinct demand for direct medical service by
the private and semi-government corporations in
providing health care for their employees.
The records of the case however, fail to impress that
there was indeed extinct demand for the medical
services rendered by the ISU.

DISPOSITION:

WHEREFORE, the decision of the Court of Appeals dated February

15, 2002 is hereby AFFIRMED with MODIFICATION. As modified,
judgement is hereby rendered ordering Capitol Medical Center, Inc.
to pay Dr. Cesar Meris separation pay at the rate of One (1) Month
salary for every year of his employment, with a fraction of at least Six
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CHERRY J. PRICE vs. INNODATA PHILS. INC.
G.R. No. 178505/ 567 SCRA 122/ September 30, 2008
Petition for Review on Certiorari under Rule 45 of the Rules of
Court
Petitioner: CHERRY J. PRICE, STEPHANIE G. DOMINGO AND
LOLITA ARBILERA
Respondent: INNODATA PHILS. INC.,/ INNODATA
CORPORATION, LEO RABANG AND JANE NAVARETTE
DOCTRINE: Court emphasizes that it has already found that
petitioners should be considered regular employees of INNODATA
by the nature of the work they performed as formatters, which was
necessary in the business or trade of INNODATA. Hence, the total
period of their employment becomes irrelevant.
FACTS:
- Respondent Innodata Philippines, Inc./Innodata Corporation
(INNODATA) was a domestic corporation engaged in the
data encoding and data conversion business. It employed
encoders, indexers, formatters, programmers,
quality/quantity staff, and others, to maintain its business
and accomplish the job orders of its clients.
- Petitioners Cherry J. Price, Stephanie G. Domingo, and
Lolita Arbilera were employed as formatters by INNODATA.
The parties executed an employment contract denominated
as a "Contract of Employment for a Fixed Period," stipulating
that the contract shall be for a period of one year.
CONTRACT OF EMPLOYMENT FOR A FIXED PERIOD:
- EMPLOYER hereby employs, engages and hires the
EMPLOYEE and the EMPLOYEE hereby accepts such
appointment as FORMATTER effective FEB. 16, 1999 to
FEB. 16, 2000 a period of ONE YEAR.
- In the event that EMPLOYER shall discontinue operating its
business, this CONTRACT shall also ipso facto terminate on
the last day of the month on which the EMPLOYER ceases
operations with the same force and effect as is such last day
of the month were originally set as the termination date of
this Contract.
- On 16 February 2000, the HRAD Manager of INNODATA
wrote petitioners informing them of their last day of work.
- On 22 May 2000, petitioners filed a Complaint6 for illegal
dismissal and damages against respondents. Petitioners
claimed that they should be considered regular employees
since their positions as formatters were necessary and
desirable to the usual business of INNODATA as an
encoding, conversion and data processing company.
- Respondents asserted that petitioners were not illegally
dismissed, for their employment was terminated due to the
expiration of their terms of employment. Petitioners
contracts of employment with INNODATA were for a limited
period only, commencing on 6 September 1999 and ending
on 16 February 2000.
- Labor Arbiter11 issued its Decision12 finding petitioners
complaint for illegal dismissal and damages meritorious. The
Labor Arbiter held that as formatters, petitioners occupied
jobs that were necessary, desirable, and indispensable to
the data processing and encoding business of INNODATA.
By the very nature of their work as formatters, petitioners
should be considered regular employees of INNODATA, who
were entitled to security of tenure.
- NLRC, in its Decision dated 14 December 2001, reversed
the Labor Arbiters Decision dated 17 October 2000, and
absolved INNODATA of the charge of illegal dismissal.
NLRC found that petitioners were not regular employees, but
were fixed-term employees as stipulated in their respective
contracts of employment.
- Court of Appeals promulgated its Decision sustaining the
ruling of the NLRC that petitioners were not illegally
dismissed.
ISSUE: W/N Petitioners are regular employees so as to
exempt them from being removed from employment at the
terminatation of their contract
RULING:
- YES
. Article 280 of the Labor Code: the following employees are
accorded regular status: (1) those who are engaged to
perform activities which are necessary or desirable in the
usual business or trade of the employer, regardless of the
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length of their employment; and (2) those who were initially
hired as casual employees, but have rendered at least one
year of service, whether continuous or broken, with respect
to the activity in which they are employed. (Undoubtedly,
petitioners belong to the first type of regular employees.)
. It is apparent that the period was imposed to preclude the
acquisition of tenurial security by the employee, then it
should be struck down as being contrary to law, morals,
good customs, public order and public policy.
. The Court is convinced that the terms fixed therein were
meant only to circumvent petitioners right to security of
tenure and are, therefore, invalid.
. Respondents asserted before the Labor Arbiter that
petitioners employment contracts were effective only on 6
September 1999. They later on admitted in their
Memorandum filed with this Court that petitioners were
originally hired on 16 February 1999 but the project for which
they were employed was completed before the expiration of
one year. . .Petitioners were merely rehired on 6
September 1999 for a new project. While respondents
submitted employment contracts with 6 September 1999 as
beginning date of effectivity, it is obvious that in one of them,
the original beginning date of effectivity, 16 February 1999,
was merely crossed out and replaced with 6 September
1999.
. Such modification and denial by respondents as to the real
beginning date of petitioners employment contracts render
the said contracts ambiguous. The contracts themselves
state that they would be effective until 16 February 2000 for
a period of one year. If the contracts took effect only on 6
September 1999, then its period of effectivity would
obviously be less than one year, or for a period of only about
five months.

WHEREFORE, the Petition for Review on Certiorari

is GRANTED. The Decision dated 25 September 2006 and
Resolution dated 15 June 2007 of the Court of Appeals in
CA-G.R. SP No. 72795are hereby REVERSED and SET
ASIDE.
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MANAGEMENT RIGHTS ARE LIKEWISE PROTECTED
NATIONAL FEDERATION OF LABOR, ET. AL. VS NLRC,
PATALON COCONUT ESTATE, ET. AL.
G.R. No. 127718. March 2, 2000
Petition: Special Civil Action for Certiorari
Petitioners: National Federation of Labor Et. Al
Respondents: NLRC, Patalon Coconut Estate Et. Al
Doctrine: While the Constitution provides that "the State shall
protect the rights of workers and promote their welfare", that
constitutional policy of providing full protection to labor is not
intended to oppress or destroy capital and management. Thus, the
capital and management sectors must also be protected under a
regime of justice and the rule of law.
FACTS: Petitioners are bona fide members of the National
Federation of Labor (NFL), a legitimate labor organization duly
registered with the DOLE. They were employed by private
respondents Charlie Reith and Susie Galle Reith, general manager
and owner, respectively, of the Patalon Coconut Estate, which was
engaged in growing agricultural products and in raising livestock.
Later, CARL was enacted and it mandated the compulsory
acquisition of all covered agricultural lands for distribution to qualified
farmer beneficiaries. Including subject estate.
As a result of this acquisition, private respondents shut down the
operation of the Patalon Coconut Estate and the employment of the
petitioners was severed later. Petitioners did not receive any
separation pay. The cooperative then took over the estate, and being
beneficiaries, the petitioners became part-owners of the land.
Petitioners later filed individual complaints before the Regional
Arbitration Branch (RAB) NLRC, praying for their reinstatement with
full backwages on the ground that they were illegally dismissed. The
petitioners were represented by their labor organization, the NFL.
RAB : Dismissed complainants' charge for illegal dismissal for
lack of merit, but ordering respondents thru [sic] its owner-manager
or its duly authorized representative to pay complainants' separation
pay in view of the latter's cessation of operations or forced sale, and
for 13th month differential pay in the amount
Private Respondent filed an appeal with the NLRC.
NLRC: RAB Ruling Modified. Respondents are not guilty of illegally
dismissing complainants. Respondents' cessation of operation was
not due to a unilateral action on their part resulting in the cutting
off of the employment relationship between the parties. The
severance of employer-employee relationship between the parties
came about INVOLUNTARILY, as a result of an act of the State.
Consequently, complainants are not entitled to any separation pay.
The award of 13th month pay differential is, however, Set Aside
Petitioners filed an MR which was denied by NLRC hence the
petition. Petitioners contend that they are entitled to separation pay
citing Article 283 of the Labor Code
ISSUE: WON an employer that was compelled to cease its operation
because of the compulsory acquisition by the government of its land
for purposes of agrarian reform, is liable to pay separation pay to its
affected employees.
HELD: NO.
It is clear that Article 283 of the Labor Code applies in
cases of closures of establishment and reduction of personnel. The
peculiar circumstances in the case at bar, however, involves neither
the closure of an establishment nor a reduction of personnel as
contemplated under the aforesaid article. When the Patalon Coconut
Estate was closed because a large portion of the estate was
acquired by DAR pursuant to CARP, the ownership of that large
portion of the estate was precisely transferred to PEARA and
ultimately to the petitioners as members thereof and as agrarian lot
beneficiaries. Hence, Article 283 of the Labor Code is not applicable
to the case at bench.
In other words, Article 283 of the Labor Code does not contemplate a
situation where the closure of the business establishment is forced
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upon the employer and ultimately for the benefit of the employees.

The closure of the Patalon Coconut Estate was not effected

voluntarily by private respondents who even filed a petition to have
said estate exempted from the coverage of RA 6657. Unfortunately,
their petition was denied by the Department of Agrarian Reform.
Since the closure was due to the act of the government to benefit the
petitioners, as members of the Patalon Estate Agrarian Reform
Association, by making them agrarian lot beneficiaries of said estate,
the petitioners are not entitled to separation pay. The
termination of their employment was not caused by the private
respondents.
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Ledesma jr. Vs NLRC
G.R. No. 174585 October 19, 2007
Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court, filed by petitioner Federico Ledesma, Jr., seeking to
reverse and set aside the Decision, dated 28 May 2005, and the
Resolution, dated 7 September 2006, of the Court of Appeals in CA-
G.R. SP No. 79724.
Petitioner: FEDERICO M. LEDESMA, JR
Respondents: NATIONAL LABOR RELATIONS COMMISSION
(NLRC-SECOND DIVISION) HONS. RAUL T. AQUINO,
VICTORIANO R. CALAYCAY and ANGELITA A. GACUTAN ARE
THE COMMISSIONERS, PHILIPPINE NAUTICAL TRAINING INC.,
ATTY. HERNANI FABIA, RICKY TY, PABLO MANOLO, C. DE
LEON and TREENA CUEVA,
Doctrine: The law in protecting the rights of the employees,
authorizes neither oppression nor self-destruction of the employer. It
should be made clear that when the law tilts the scales of justice in
favor of labor, it is in recognition of the inherent economic inequality
between labor and management. The intent is to balance the scales
of justice; to put the two parties on relatively equal positions. There
may be cases where the circumstances warrant favoring labor over
the interests of management but never should the scale be so tilted if
the result is an injustice to the employer.
Facts:
This is a Petition for Review on Certiorari under Rule 45 of
the Revised Rules of Court, filed by petitioner Federico Ledesma, Jr.,
seeking to reverse and set aside the Decision, dated 28 May 2005,
and the Resolution, dated 7 September 2006, of the Court of
Appeals in CA-G.R. SP No. 79724.
In his Position Paper, the petitioner averred that in view of
the complaint he filed against de Leon for his abusive conduct as site
administrator, the latter retaliated by falsely accusing petitioner as a
drug user. VP for Administration Ty, however, instead of verifying the
veracity of de Leons report, readily believed his allegations and
together with HR Manager Cueva, verbally dismissed petitioner from
service on 29 November 2000.
On 29 November 2000, the petitioner was served by HR
Manager Cueva a copy of the Notice to Explain together with the
copy of de Leons report citing his suspected drug use but Mr. Cueva
later took back the earlier Notice to Explain given to him and flatly
declared that there was no more need for the petitioner to explain
since his drug test result revealed that he was positive for drugs.
Petitioner was then asked by HR Manager Cueva to sign a
resignation letter. The events transpired in the presence of VP for
Administration Ty, who even convinced petitioner to just voluntarily
resign with the assurance that he would still be given separation pay.
Petitioner did not yet sign the resignation letter replying that he
needed time to think over the offers. When petitioner went back to
private respondents training site in Dasmarias, Cavite, to get his
bicycle, he was no longer allowed by the guard to enter the
premises.
On 2 December 2000, petitioner reported for work but he
was no longer allowed to enter the training site for he was allegedly
banned according to the guard on duty. This incident prompted the
petitioner to file the complaint for illegal dismissal against the private
respondent before the Labor Arbiter.
The private respondents countered that petitioner was never
dismissed from employment but merely served a Notice to Explain
why no disciplinary action should be filed against him in view of his
superiors report that he was suspected of using illegal drugs. Instead
of filing an answer to the said notice, however, petitioner prematurely
lodged a complaint for illegal dismissal against private respondent
before the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally
dismissed from employment warranting the payment of his
backwages. The NLRC and the Court of Appeals found otherwise.
Hence, this instant Petition for Review on Certiorari under
Rule 45 of the Revised Rules of Court.
Issue: Whether or not the petitioner was illegally dismissed
Provisions:
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should the scale be so tilted if the result is an injustice to the
Ruling: employer.
No. The Court noted that the NLRC did not give credence to
petitioners allegation that he was banned by the private respondent Disposition: WHEREFORE, premises considered, the instant Petition
from entering the workplace, opining that had it been true that is DENIED. The Court of Appeals Decision dated 28 May 2005 and
petitioner was no longer allowed to enter the training site when he its Resolution dated 7 September 2006 in CA-G.R. SP No. 79724
reported for work thereafter on 2 December 2000, and odd that he are hereby AFFIRMED. Costs against the petitioner.
was able to do so the very next day, on 3 December 2000, to claim
his salary.
The Court of Appeals validated the above conclusion
reached by the NLRC and further stated that petitioners positive
allegations that he was dismissed from service was negated by
substantial evidence to the contrary. Petitioners averments of what
transpired inside private respondents main office on 29 November
2000, when he was allegedly already dismissed from service, and
his claim that he was effectively banned from private respondents
premises are belied by the fact that he was able to claim his salary
for the period of 16-30 November 2000 at private respondents
training site.
In the present case, there is hardly any evidence on record
so as to meet the quantum of evidence required, i.e., substantial
evidence. Petitioners claim of illegal dismissal is supported by
uncorroborated allegations.
The fact alone that he was able to return to the training site
to claim his salary and benefits raises doubt as to his purported ban
from the premises.
Finally, the petitioners stance that he was dismissed by
private respondent was further weakened with the presentation of
private respondents payroll bearing petitioners name proving that
petitioner remained as private respondents employee up to
December 2000.

Furthermore, the Court noted that the law in protecting the rights of
the employees, authorizes neither oppression nor self-destruction of
the employer. It should be made clear that when the law tilts the
scales of justice in favor of labor, it is in recognition of the inherent
economic inequality between labor and management. The intent is to
balance the scales of justice; to put the two parties on relatively
equal positions. There may be cases where the circumstances
warrant favoring labor over the interests of management but never
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Leyte IV Electric Cooperative, Inc. vs Layeco IV
GR 157775 | 537 SCRA 154 | October 19, 2007
Petition for Review on Certiorari under Rule 45
Petitioner: Leyte IV Electric Cooperative, Inc.
Respondent: LEYECO IV Employees Union-ALU
(Management Rights Protected)
DOCTINE
While the Constitution is committed to the policy of social justice and
the protection of the working class, it should not be supposed that
every labor dispute would automatically be decided in favor of labor.
Management also has it own rights which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of
concern for those with less privileges in life, this Court has inclined
more often than not toward the worker and upheld his cause in his
conflicts with the employer.
FACTS
- Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV
Employees Union-ALU (respondent) entered into a CBA
covering petitioner rank-and-file employees, for a period of 5
years effective January 1, 1998.
- In June 2000, Vicente Casilan, VP of respondent union, sent
a letter to petitioner demanding holiday pay for all
employees, as provided for in the CBA.
- Petitioner insisted payment of the holiday pay in compliance
with the CBA provisions, stating that payment was presumed
since the formula used in determining the daily rate of pay of
the covered employees is Basic Monthly Salary divided by
30 days or Basic Monthly Salary multiplied by 12 divided by
360 days, thus with said formula, the employees are already
paid their regular and special days, the days when no work
is done, the 51 un-worked Sundays and the 51 un-worked
Saturdays.
- In March 2001, the Voluntary Labor Arbiter (LA) ruled in
favor of respondent, holding petitioner liable for payment of
unpaid holidays from 1998 to 2000 in the sum of
P1,054,393.07.
o He reasoned that petitioner miserably failed to show
that it complied with the CBA mandate that holiday
pay be reflected during any payroll period of
occurrence since the payroll slips did not reflect any
payment of the paid holidays.
o He found unacceptable not only petitioner's
presumption of payment of holiday pay based on a
formula used in determining and computing the daily
rate of each covered employee, but also petitioner's
further submission that the rate of its employees is
not less than the statutory minimum wage multiplied
by 365 days and divided by twelve.
- CA dismissed outright petitioner's Petition for Certiorari for
adopting a wrong mode of appeal.
ISSUES
Whether LA was correct in finding that petitioners did not pay holiday
pay based on the formula of petitioner - NO
RULING
NO.
- The Voluntary Arbitrators literal interpretation ignores the
admission of respondent that the employees were paid all
the days of the month even if not worked. In light of such
admission, petitioner's submission of its 360 divisor in the
computation of employees salaries gains significance.
- In this case, the employees are required to work only from
Monday to Friday. Thus, the minimum allowable divisor is
263, which is arrived at by deducting 51 un-worked Sundays
and 51 un-worked Saturdays from 365 days. Considering
that petitioner used the 360-day divisor, which is clearly
above the minimum, indubitably, petitioner's employees are
being given their holiday pay.
- The Supreme Court cited several cases adopting the same
interpretation in arriving at the correct computation.
- The Voluntary Arbitrator should not have simply brushed
aside petitioner's divisor formula. In granting respondent's
claim of non-payment of holiday pay, a double burden was
LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
imposed upon petitioner because it was being made to pay
twice for its employees' holiday pay when payment thereof
had already been included in the computation of their
monthly salaries.
- It is absurd to grant respondent's claim of non-payment
when they in fact admitted that they were being paid all of
the days of the month even if not worked. By granting
respondent's claim, the Voluntary Arbitrator sanctioned
unjust enrichment in favor of the respondent and caused
unjust financial burden to the petitioner.
- While the Constitution is committed to the policy of social
justice and the protection of the working class, it should not
be supposed that every labor dispute would automatically be
decided in favor of labor. Management also has it own rights
which, as such, are entitled to respect and enforcement in
the interest of simple fair play. Out of concern for those with
less privileges in life, this Court has inclined more often than
not toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded
us to the rule that justice is in every case for the deserving,
to be dispensed in the light of the established facts and the
applicable law and doctrine.

DISPOSITION
The petition for review is GRANTED. The Resolutions dated
September 4, 2002 and February 28, 2003 of the Court of Appeals in
CA-G.R. SP No. 72336 are REVERSED and SET ASIDE. The
Decision dated March 1, 2001 and Resolution dated June 17, 2002
of the Voluntary Arbitrator are declared NULL and VOID.
LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
LVN PICTURES, INC. v PHILIPPINE MUSICIANS Guild (FFW) and
COURT OF INDUSTRIAL RELATIONS
G.R. No. L-12582 January 28, 1961
SAMPAGUITA PICTURES, INC. v PHILIPPINE MUSICIANS Guild
(FFW) and COURT OF INDUSTRIAL RELATIONS
G.R. No. L-12598 January 28, 1961
Consolidated Petition: Petitioners herein, LVN Pictures, Inc. and
Sampaguita Pictures, Inc. seek a review by certiorari of an order of
the Court of Industrial Relations in Case No. 306-MC thereof,
certifying the Philippine Musicians Guild, petitioner therein and
respondent herein, as the sole and exclusive bargaining agency of
all musicians working with said companies, as well as with the
Premiere Productions, Inc., which has not appealed.
Petitioner: LVN Pictures and Sampaguita Pictures, Inc.
Respondents: CIR
DOCTRINE: Notwithstanding the fact that the employees are called
independent contractors, they will be considered employees under
the law where the extent of the employers control over them
indicates that the relationship is in reality one of employement.
RULING AND RATIO: The musical directors above referred to have
no such control over the musicians involved in the present case.
Said musical directors control neither the music to be played, nor the
musicians playing it. The film companies summon the musicians to
work, through the musical directors. The film companies, through the
musical directors, fix the date, the time and the place of work. The
film companies, not the musical directors, provide the transportation
to and from the studio. The film companies furnish meal at dinner
time. "during the recording sessions, the motion picture director who
is an employee of the company" not the musical director
"supervises the recording of the musicians and tells them what to do
in every detail". The motion picture director not the musical
director "solely directs and performance of the musicians before
the camera". It is well settled that "an employer-employee
relationship exists . . .where the person for whom the services are
performed reserves a right to control not only the end to be achieved
but also the means to be used in reaching such end . . . ."
DISPOSITION: WHEREFORE, the order appealed from is hereby
affirmed, with costs against petitioners herein. It is so ordered.

FACTS: LVN et al are engaged in the making of motion pictures and

in the processing and distribution thereof. LVN et al employ
musicians for the purpose of making music recordings for title music,
background music, musical numbers, finale music and other
incidental music, without which a motion picture is incomplete.
Ninety-five (95%) percent of all the musicians playing for the musical
recordings of said companies are members of the Guild. PMG (Phil.
Musicians Guild) applied for certification as the sole and exclusive
bargaining agency for all musicians working in LVN and Sampaguita
Pictures. LVN opposed the application stating that PMG are not their
employees, they are merely lessors of services and alleged that the
musical numbers in the filing of the companies are furnished by
independent contractors.

ISSUE: Was there Employer-Employee relationship?

LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
Rosario Bros. v. Ople
L53590, 31 July 1984
Petition: Certiorari to review the decision of the National Labor
Relations Commission
Petitioner: ROSARIO BROTHERS INC. (MANILA COD
DEPARTMENT STORE)
Respondent: HON. BLAS F. OPLE, THE NATIONAL LABOR
RELATIONS COMMISSION, and LEONARDO LOVERIA,
MARIETTA GALUT, LINDA TAPICERIA, JESUS S. OLIVER,
CLARITA SANGLE, RICARDO ROXAS, ANTONIO MABUTOL, LUZ
BAYNO, NESTOR SANCHEZ, TITO CASTALEDA, EDDIE
RODRIGUEZ, MANUEL MEJES, FRANCISCA TAPICERIA, EDITHA
BAYNO, ET. AL.
Doctrine: the existence of employer-employee relationship is
determined by the following elements, namely:
(1) THE SELECTION AND ENGAGEMENT OF THE EMPLOYEE
(2) THE PAYMENT OF WAGES
(3) THE POWER OF DISMISSAL AND
(4) THE POWER TO CONTROL EMPLOYEES CONDUCT ALTHOUGH THE
LATTER IS THE MOST IMPORTANT ELEMENT.
On the other hand, an independent contractor is one who exercises
independent employment and contracts to do a piece of work
according to his own methods and without being subjected to control
of his employer except as to the result of his work
Facts:
Private respondents are tailors, pressers, stitchers and similar
workers hired by the petitioner in its tailoring department. For their
services, they were paid weekly wages on piecework basis, minus
their SSS contributions and tax withholding. Private respondents
were likewise members of the union which had a CBA with the
petitioner.
Respondents were required report to the shop from Monday to
Saturday and record their attendance with a bundy clock. They were
required to stay in the shop premises for no less than 8 hours a day
unless no job is given them after waiting for two or three hours in
which case, they were allowed to leave.
Private respondents filed with the Regional Office of the Department
th
of Labor a complaint for non-payment of 13 month pay and
emergency leave allowance. Labor Arbiter dismissed complaint for
lack of merit, finding that respondents were not employees of herein
petitioner. Respondents were subsequently dismissed by the
petitioner.
Upon appeal to herein public respondent (Ople), the dismissal of the
complaint was reversed, finding that employee-employer relationship
exists.
Petitioner argued that, the respondent employees are excluded from
the coverage of PD 525, 851 and 1123 because of the nature of their
employment, there being no fixed time with regards to entry and exit
and no fixed number of days of work, with respect to said employees
Issue:
Whether or not an employer-employee relationship exists between
the petitioner and private respondents
Ruling&Ratio:
Yes, an employer-employee relation exists.
(1) THE SELECTION AND ENGAGEMENT OF THE EMPLOYEE
the selection and hiring of private respondents in this case were
done by the petitioner, through the master cutter of its tailoring
department who was a regular employee, and later done by
management itself with approval from the personnel department
(2) THE PAYMENT OF WAGES Private respondents received
their weekly wages from petitioner on piecework basis which is within
the scope and meaning of the term wage as defined under Article
97(f) of the New Labor Code
(3) THE POWER OF DISMISSAL Petitioner had the power to
dismiss private respondents, as shown by the various memoranda
issued for strict compliance by private respondents, violations of
which, in extreme cases, are grounds for outright dismissal. In fact,
they were dismissed on January 2, 1978, although, the dismissal
was declared illegal by the Labor Arbiter.
(4) THE POWER TO CONTROL EMPLOYEES CONDUCT
Private respondents conduct in the performance of their work was
controlled by petitioner, such as: (1) they were required to work from
Monday through Saturday (2) they worked on job orders without
waiting for the deadline (3) they were to observe cleanliness in their
place of work and were not allowed to bring out tailoring shop
patterns and (4) they were subject to quality control by petitioner.
LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
Furthermore, Private respondents were allowed to register with the
Social Security System (SSS) as employees of petitioner and
premiums were deducted from their wages just like its other
employees. And, withholding taxes were also deducted from their
wages for transmittal to the Bureau of Internal Revenue (BIR).

Dispositive: Petition is dismissed for lack of merit.

LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
G.R. No. 163700 : April 18, 2012
CHARLIE JAO, Petitioner, v. BCC PRODUCTS SALES INC., and
TERRANCE TY, Respondents.
BERSAMIN,J.:
FACTS:
Petitioner maintained that respondent BCC Product Sales Inc. (BCC)
and its President, respondent Terrance Ty (Ty), employed him as
comptroller starting from September 1995, to handle the financial
aspect of BCCs business. On October 19, 1995, the security guards
of BCC, acting upon the instruction of Ty, barred him from entering
the premises of BCC where he then worked.
Petitioner attempted to report to work on different occasions but the
same were frustrated because he continued to be barred from
entering the premises of BCC. Hence, he filed a complaint for illegal
dismissal, reinstatement with full backwages, non-payment of wages,
damages and attorneys fees.
Respondents countered that petitioner was not their employee but
the employee of Sobien Food Corporation (SFC), the major creditor
and supplier of BCC; and that SFC had posted him as its comptroller
in BCC to oversee BCCs finances and business operations and to
look after SFCs interests or investments in BCC.
The LA dismissed the complaint for lack of employer employee
relationship. NLRC reversed the LA decision. On appeal, the CA
held that there was no employer- employee relationship existed
between petitioner BCC and the private respondent. Hence, this
petition.
ISSUE: Whether or not there is an employer- employee relationship
HELD: No. CA Decision Affirmed.
Labor Law
In determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following
incidents, to wit: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the
employers power to control the employee on the means and
methods by which the work is accomplished. The last element, the
so-called control test, is the most important element.
Hereunder are some of the circumstances and incidents occurring
while petitioner was supposedly employed by BCC that debunked his
claim against respondents:
It can be deduced from the March 1996 affidavit of petitioner that
respondents challenged his authority to deliver some 158 checks to
SFC. Considering that he contested respondents challenge by
pointing to the existing arrangements between BCC and SFC, it
should be clear that respondents did not exercise the power of
control over him, because he thereby acted for the benefit and in the
interest of SFC more than of BCC.
In addition, petitioner presented no document setting forth the terms
of his employment by BCC. The failure to present such agreement
on terms of employment may be understandable and expected if he
was a common or ordinary laborer who would not jeopardize his
employment by demanding such document from the employer, but
may not square well with his actual status as a highly educated
professional.
Petitioners admission that he did not receive his salary for the three
months of his employment by BCC, as his complaint for illegal
dismissal and non-payment of wages and the criminal case for
estafa he later filed against the respondents for non-payment of
wages indicated, further raised grave doubts about his assertion of
employment by BCC. If the assertion was true, we are puzzled how
he could have remained in BCCs employ in that period of time
despite not being paid the first salary ofP20,000.00/month.
Moreover, his name did not appear in the payroll of BCC despite him
having approved the payroll as comptroller.
Lastly, the confusion about the date of his alleged illegal dismissal
provides another indicium of the insincerity of petitioners assertion of
employment by BCC. In the petition for review on certiorari, he
averred that he had been barred from entering the premises of BCC
LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
on October 19, 1995,and thus was illegally dismissed. Yet, his
complaint for illegal dismissal stated that he had been illegally
dismissed on December 12, 1995 when respondents security guards
barred him from entering the premises of BCC, causing him to bring
his complaint only on December 29, 1995, and after BCC had
already filed the criminal complaint against him. The wide gap
between October 19, 1995 and December 12, 1995 cannot be
dismissed as a trivial inconsistency considering that the several
incidents affecting the veracity of his assertion of employment by
BCC earlier noted herein transpired in that interval.
PETITION DENIED
LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
DIGITEL vs DIGITEL Employees Union
G.R. Nos. 184903: October 10, 2012
Petition: Petition for review filed by Digital Telecommunications
Philippines, Inc. (Digitel)
Petitioner: DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC.
Respondent: DIGITEL EMPLOYEES UNION (DEU)
DOCTRINE: Section 7 of the Implementing Rules holds that 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.
FACTS:
- By virtue of a certification election, Digitel Employees Union
(Union) became the exclusive bargaining agent of all rank
and file employees of Digitel in 1994.
- However, no CBA was forged between Digitel and the
Union. Some Union members abandoned their employment
with Digitel. The Union later became dormant
- Digitel was reluctant to negotiate with the Union and
demanded that the latter show compliance with the
provisions of the Unions Constitution and By-laws on union
membership and election of officers.
- During the pendency of the controversy, Digitel Service, Inc.
(Digiserv), a non-profit enterprise engaged in call center
servicing, filed with the Department of Labor and
Employment (DOLE) an Establishment Termination Report
stating that it will cease its business operation. The closure
affected at least 100 employees, 42 of whom are members
of the herein respondent Union
- Alleging that the affected employees are its members and in
reaction to Digiservs action, Esplana and his group filed
another Notice of Strike for union busting, illegal lock-out,
and violation of the assumption order.
- LA: The Regional Director ruled that it does not have
jurisdiction over the issue of non-compliance with the
reportorial requirements. He also held that Digitel failed to
adduce substantial evidence to prove misrepresentation and
the mixing of non-Digitel employees with the Union. Finally,
he declared that the inclusion of supervisory and managerial
employees with the rank and file employees is no longer a
ground for cancellation of the Unions certificate of
registration.
- SECRETARY OF LABOR: DIGITEL to commence collective
bargaining negotiation with DEU without further delay; and,
The issue of unfair labor practice, consisting of union-
busting, illegal termination/lockout and violation of the
assumption of jurisdiction, specifically the return-to-work
aspect of the 10 March 2005 and 03 June 2005 orders, be
CERTIFIED for compulsory arbitration to the NLRC
- CA: In addition to the order directing reinstatement and
payment of full backwages to the nine (9) affected
employees, Digital Telecommunications Philippines, Inc. is
furthered ORDERED, should reinstatement is no longer
feasible, to pay separation pay equivalent to one (1) month
pay, or one-half (1/2) month pay for every year of service,
whichever is higher.
ISSUE: Whether or not a employee-employer relationship exists
between DIGITEL AND members of the Union.
RULING AND RATIO: That the remaining thirteen (13) affected
employees are indeed employees of DIGITEL is sufficiently
established by the facts and evidence on record. It is undisputed that
the remaining affected employees, except for two (2), were already
hired by DIGITEL even before the existence of DIGISERV. (The
other two (2) were hired after the existence of DIGISERV). It is
equally undisputed that the remaining, affected employees
continuously held the position of Customer Service Representative,
which was earlier known as Traffic Operator, from the time they were
appointed on March 1, 1994 until they were terminated on May 30,
2005. Section 7 of the Implementing Rules holds that 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.
Accordingly, Digitel is considered the principal employer of
respondent employees
LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
LEGEND HOTEL MANILA vs. REALUYO
G.R. No. 153511 JULY 18, 2012
Petition: illegal dismissal/ Certiorari
Petitioner: Legend Hotel Manila owned by Titanium corporation
Respondent: Hernani Realuyo also known as Joey Roa
DOCTRINE: The power of the employer to control the work of the
employee is considered the most significant determinant of the
existence of an employer-employee relationship. This is the so-called
control test and is premised on whether the person for whom the
services are performed reserves the right to control both the end
achieved and the manner and means used to achieve that end.
FACTS:
August 9, 1999: Realuyo, whose stage name was Joey R. Roa, filed
a complaint for alleged unfair labor practice, constructive illegal
dismissal, and the underpayment/nonpayment of his premium pay
th
for holidays, separation pay, service incentive leave pay, and 13
month pay. He prayed for attorneys fees, moral damages of
P100,000.00 and exemplary damages for P100,000.00
Roa averred that he had worked as a pianist at the Legend Hotels
Tanglaw Restaurant from September 1992 with an initial rate of
P400.00/night and that it had increased to P750.00/night.
During his employment, he could not choose the time of
performance, which had been fixed from 7:00PM to 10:00pm for
three to six times a week.
On July 9, 1999 the management had notified him that as a cost-
cutting measure, his services as a pianist would no longer be
required effective July 30, 1999.
In its defense, petitioner denied the existence of an employer-
employee relationship with Roa, insisting that he had been only a
talent engaged to provide live music at Legend Hotels Madison
Coffee Shop for three hours/day on two days each week and stated
that the economic crisis that had hit the country constrained
management to dispense with his services.
Labor Arbiter: Dismissed the complaint for lack of merit upon finding
that the parties had no employer-employee relationship, because
Roa was receiving talent fee and not salary which was reinforced by
the fact that Roa received his talent fee nightly, unlike the regular
employees of the hotel who are paid monthly.
NLRC: Affirmed LAs decision
Court of Appeals: Set aside the decision of NLRC, stating that the
four elements of employer-employee relationship exist in the case at
bar. That the respondent was a regular employee of the private
respondents since the job of the petitioner was for furtherance of the
restaurant business of the hotel.
In other words, the dismissal was due to retrenchment in order to
avoid or minimize business losses, which is recognized by law under
Article 283 of the Labor Code
ISSUES:
1.) Whether or not there was an employer-employee relationship.
2.) If so, Whether or not Roa was validly terminated.
RULING:
1.) YES. Employer-employee relationship existed between the
parties.
Roa was undeniably employed as a pianist of the restaurant. The
hotel wielded the power of selection at the time it entered into the
service contract dated Sept. 1, 1992 with Roa. The hotel could not
seek refuge behind the service contract entered into with Roa. It is
the law that defines and governs an employment relationship, whose
terms are not restricted to those fixed in the written contract, for other
factors, like the nature of the work the employee has been called
upon to perform, are also considered.
2.) NO.
LABOR RELATIONS DIGEST COMPILATION
1ST SET ASSIGNMENT
In termination cases, the burden of proving that the dismissal was for
a valid or authorized cause rests upon the employer. Here, petitioner
did not submit evidence of the losses to its business operations and
the economic havoc it would thereby imminently sustain. It only
claimed that respondents termination was due to its present
business/financial condition. This bare statement fell short of the
norm to show a valid retrenchment. Hence, we hold that there was
no valid cause for the retrenchment of respondent.

DISPOSITION:

WHEREFORE, we DENY the petition for review on certiorari, and

AFFIRM the decision of the Court of Appeals promulgated on
February 11, 2002, subject to the modification that should
reinstatement be no longer feasible, petitioner shall pay to
respondent separation pay of one month for every year of service
computed from September 1992 until the finality of this decision, and
full backwages from the time his compensation was withheld until the
finality of this decision.
Danilo P. Javier (Bitoy Javier) v. Fly Ace Corporation
GR # 192558 | February 15, 2012
Petition: Petition under Rule 45 of the Rules of Civil Procedure
Petitioner: BITOY JAVIER (DANILO P. JAVIER)
Respondent: FLY ACE CORPORATION/ FLORDELYN CASTILLO
DOCTRINE
The onus probandi falls on petitioner (employee) to establish or
substantiate such claim by the requisite quantum of evidence.
Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto. The Court is of the considerable
view that on Javier (employee) lies the burden to pass the well-
settled tests to determine the existence of an employer-employee
relationship.
FACTS
- Javier filed a complaint before the NLRC against Fly Ace for
underpayment of salaries and other labor standard benefits
claiming that he performs tasks such as cleaning and
arranging the canned items before delivery, except in
instances when he would be ordered to accompany the
delivery as pahinante; He added that he reports for work
from Monday to Saturday, 7am to 5pm but was not issued
an i.d. and pay slips by the company;
- He further alleged that he was suddenly not allowed to enter
the company premises upon the instruction of his superior
Mr. Ong whom he approached and replied:Tanungin mo
anak mo.
- He then discovered that Mr. Ong had been courting his
daughter and that the two had problems causing Javier to be
terminated from his employment without notice..
- Javier presented an affidavit of one Bengie Valenzuela who
alleged that Javier was a stevedore or pahinante of Fly Ace
and subscribed such before the Labor Arbiter.
- Fly Ace on the other hand averes that it is engaged in the
business of importation and sales of groceries. That Javier
was contracted by its employee, Mr. Ong, as extra helper on
a pakyaw basis and was contracted roughly 5 to 6 times only
in a month whenever the vehicle of its contracted hauler was
not available.
- Fly Ace denies that he was their employee so there was no
illegal dismissal. Fly Ace submitted a copy of its agreement
with its hauler and copies of acknowledgment receipts
evidencing payment to Javier for his contracted services
bearing the words, daily manpower (pakyaw/piece rate pay)
and the latters signatures/initials.
- LA: Dismissed the complaint for lack of merit on the ground
that Javier failed to present proof that he was a regular
employee of Fly Ace
o No employee ID showing his employment nor any
document showing that he received the benefits
accorded to regular employees.
o Fly Ace is not engaged in trucking business but in
the importation and sales of groceries.
o The payroll presented by Fly Ace showing salaries
of workers on pakiao basis has evidentiary weight
because although the signature of the complainant
appearing thereon are not uniform, they appeared to
be his true signature.
- NLRC: Ruled that LA skirted the argument of Javier and
immediately concluded that he was not a regular employee.
It was of the view that a pakyaw-basis arrangement did not
preclude the existence of employer-employee relationship
for it is a method of computing compensation, not a basis for
determining the existence of an employer-employee
relationship
- CA: CA annulled the NLRC findings that Javier was indeed a
former employee of Fly Ace and reinstated the dismissal of
Javiers complaint as ordered by the LA.
Hence, this petition.
ISSUE/S
1. W/N the honorable Court of Appeals erred in holding that the
petitioner was not a regular employee of fly ace.
RULING & RATIO
- NO
o The Court affirms the assailed CA decision
22
 o The issue of the alleged illegal dismissal is anchored
on the existence of an employer-employee
relationship.
o The Court agrees with the finding of the LA and the
CA that Javiers claim of employment with Fly Ace is
wanting and deficient. Javier needs to show by
substantial evidence that he was indeed an
employee of the company against which he claims
illegal dismissal.
o No particular form of evidence is required to prove
the existence of such employer-employee
relationship. Any competent and relevant evidence
to prove the relationship may be admitted.
o The rule of thumb remains: the onus probandi falls
on petitioner to establish or substantiate such claim
by the requisite quantum of evidence. Whoever
claims entitlement to the benefits provided by law
should establish his or her right thereto.
o Sadly, Javier failed to adduce substantial evidence
as basis for the grant of relief.

DISPOSITION WHEREFORE, the petition is DENIED. The March

18, 2010 Decision of the Court of Appeals and its June 7, 2010
Resolution, in CA-G.R. SP No. 109975, are hereby AFFIRMED.

SO ORDERED.

23
BOMBO RADYO v SECRETARY OF LABOR
G.R. No. 179652 | May 8, 2009
Petition: for Certiorari under Rule 65
Petitioner: Bombo Radyo
Respondent: Secretary of Labor and Jandeleon Juezan
DOCTRINE
It can be assumed that the DOLE in the exercise of its
visitorial and enforcement power somehow has to make a
determination of the existence of an employer-employee
relationship. Such prerogatival determination, however, cannot
be coextensive with the visitorial and enforcement power
itself. Indeed, such determination is merely preliminary,
incidental and collateral to the DOLEs primary function of
enforcing labor standards provisions. The determination of the
existence of employer-employee relationship is still primarily
lodged with the NLRC. This is the meaning of the clause in
cases where the relationship of employer-employee still exists
in Art. 128 (b).
FACTS
Juezan filed a complaint against petitioner with DOLE Regional
Office No. VII, Cebu City, for illegal deduction, nonpayment of
service incentive leave, 13th month pay, premium pay for holiday
and rest day and illegal diminution of benefits, delayed payment of
wages and noncoverage of SSS, PAG-IBIG and Philhealth. After
summary investigations, DOLE found that Juezan was an employee
of petitioner, and was entitled to his money claims. Petitioner sought
reconsideration but failed. The Acting DOLE Secretary dismissed
petitioners appeal on the ground that petitioner submitted a Deed of
Assignment of Bank Deposit instead of posting a cash or surety
bond.
Petitioner brought the matter before CA claiming they have been
denied due process. Petitioner maintained that there is no employer-
employee relationship with respondent and that it was the drama
directors and producers who paid, supervised and disciplined
respondent. Petitioner also claimed that DOLE acted beyond its
jurisdiction because respondents claim exceeded Php 5,000.00.
CA held that petitioner was accorded due process as it had been
given the opportunity to be heard, and that DOLE Secretary had
jurisdiction over the matter.
ISSUE
Does the Secretary of Labor have the power to determine the
existence of an employer-employee relationship?
LAW
Article 128 (b) Notwithstanding the provisions of Articles 129 and 217
of this Code to the contrary, and in cases where the relationship
of employer-employee still exists, the Secretary of Labor and
Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor
legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the
course of inspection. The Secretary or his duly authorized
representative shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where
the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection.
HELD
NO.
To resolve this pivotal issue, one must look into the extent of
the visitorial and enforcement power of the DOLE found in Article
128 (b) of the Labor Code, as amended by Republic Act 7730.
The provision is quite explicit that the visitorial and
enforcement power of the DOLE comes into play only in cases when
the relationship of employer-employee still exists. It also underscores
the avowed objective underlying the grant of power to the DOLE
which is to give effect to the labor standard provision of this Code
and other labor legislation. Of course, a persons entitlement to labor
standard benefits under the labor laws presupposes the existence of
employer-employee relationship in the first place.
The clause in cases where the relationship of employer-
employee still exists signifies that the employer-employee
relationship must have existed even before the emergence of the
24
controversy. Necessarily, the DOLEs power does not apply in two
instances, namely: (a) where the employer-employee relationship
has ceased; and (b) where no such relationship has ever existed.
Clearly the law accords a prerogative to the NLRC over the
claim when the employer-employee relationship has terminated or
such relationship has not arisen at all. The reason is obvious. In the
second situation especially, the existence of an employer-employee
relationship is a matter which is not easily determinable from an
ordinary inspection, necessarily so, because the elements of such a
relationship are not verifiable from a mere ocular examination. The
intricacies and implications of an employer-employee
relationship demand that the level of scrutiny should be far above the
cursory and the
mechanical. While documents, particularly documents found in the e
mployers office are the primary source materials, what may
prove decisive are factors related to the history of the employers
business operations, its current state as well as accepted
contemporary practices in the industry. More often than not, the
question of employer-employee relationship becomes a battle of
evidence, the determination of which should be comprehensive and
intensive and therefore best left to the specialized quasi-judicial body
that is the NLRC.

DISPOSITION
WHEREFORE, the petition is GRANTED. The Decision dated 26
October 2006 and the Resolution dated 26 June 2007 of the Court of
Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET
ASIDE. The Order of the then Acting Secretary of the Department of
Labor and Employment dated 27 January 2005 denying petitioners
appeal, and the Orders of the Director, DOLE Regional Office No.
VII, dated 24 May 2004 and 27 February 2004, respectively,
are ANNULLED. The complaint against petitioner is DISMISSED.

25
Meteoro v. Creative Creatures (Short title)
GR # 171275 | July 13, 2009
Petition: Petition for review on certiorari
Petitioner: Victor Meteoro, et al
Respondent: Creative Creatures, Inc.
DOCTRINE
The visitorial and enforcement powers of the Secretary, exercised
thru his representatives, encompass compliance with all labor
standards laws and other labor legislation, regardless of the amount
of the claims filed by the workers. But in this case, the body that has
jurisdiction over petitioners money claims is the NLRC.
FACTS
- Creative Creatures is a domestic corporation engaged in the
businesss of producing, providing or procuring the
production of set designs and set construction services for
TV exhibitions, concerts, theatrical performances. It caters to
the production design requirements of ABS CBN
- On the other hand, petitioners were hired by Creative as
artists, carpenters and welders. They were tasked to design,
create, assemble, set up and dismantle props, and provide
sound effects to respondents various TV programs and
movies
- Petitioners filed their respective claims for non payment of
th
night shift, differential pay, overtime pay, holiday pay, 13
month pay, etc. before DOLE.
- Labor Inspector: noted that the records were not made
available at the time of inspection
- Respondents claimed that petitioners were contractual
employees and/or independent talent workers and that
petitioners were required to punch their cards
- Respondents argument: DOLE NCR had no jurisdiction
over the complaint of the petitioners because of the absence
of an EE relshp. Moreover, petitioners were freelance
individuals, performing special services with skills and
expertise inherently exclusive to them like actors, actresses,
directors, etc.
- Petitioners contention: they were employees of
respondent, as the elements of EE relshp existed
- Meanwhile, petitioners filed a complaint for illegal dismissal
against petitioner, with prayer of payment of overtime pay,
premium pay for holiday and rest day, holiday pay, service
incentive leave pay, etc. before NLRC.
- DOLE Regional Director: issued an Order directing
respondent to pay petitioners the amount of 2,694,709.
- DOLE Secretary Patricia Sto. Tomas: upheld the findings
of DOLE Regional Director
o She explained that the Secretary of Labor or his duly
authorized representative is allowed to use his visitorial
and enforcement powers to give effect to labor
legislation, regardless of the amount involved, pursuant
to Article 128 of the LC.
- Court of Appeals: orders issued by the Secretary of Labor
are declared NULL and VOID.
ISSUE/S
2. Which body/tribunal has jurisdiction over petitioners money
claims the DOLE Secretary or his duly authorized
representative or the NLRC?
RULING & RATIO
- NLRC
o The DOLE Secretary and his duly authorized
representatives have jurisdiction to enforce
compliance with labor standards laws under the
broad visitorial and enforcement powers conferred
by Art 128 of LC, and expanded by RA 7730.
o The visitorial and enforcement powers of the
Secretary, exercised thru his representatives,
encompass compliance with all labor standards law
and other labor legislation, regardless of the amount
of the claims filed by workers.
o In sum, respondent contested the findings of the
labor inspector during and after the inspection and
raised issues the resolution of which necessitated
the examination of evidentiary matters not verifiable
in the normal course of inspection. Hence, the
26
 Regional Director was divested of jurisdiction and
should have endorsed the case to the appropriate
arbitration branch of the NLRC.

DISPOSITION
WHEREFORE, premises considered, the Petition is DENIED for lack
of merit. The CA decision dated May 31, 2005 and its Resolution
dated January 27, 2006 are affirmed.

27
Smart Communications v. Astorga (Short title)
| 542 SCRA 434 | January 27, 2008
Petition: Three consolidated petitions for review on certiorari
under Rule 45 of
the Rules of Court
Petitioner: Smart Communications, INC.
Respondent: Regina M. Astorga
DOCTRINE
An employers demand for payment of the market value of the car or,
in the alternative, the surrender of the car, is not a labor, but a civil,
dispute. A dispute which involves the relationship of debtor and
creditor rather than employee-employer relations falls within the
jurisdiction of the regular courts.
FACTS
- Astorga was employed by respondent SMART on May 8,
1997 as District Sales Manager of Corporate Sales
Marketing Group (CSMG). One of her incentives is a car
plan in the amount of 455,000.00.
- In February 1998, SMART launched an organizational
realignment to achieve more efficient operations. Thus,
SMART entered a joint venture agreement with NTT of
Japan, and formed SMART-NTT Multimedia, Incorporated
(SNMI). Since SNMI was formed to do the sales and
marketing work, SMART abolished the CSMG.
- Astorga was offered a supervisory position in the Customer
Case Department, but she refused the offer. Despite the
abolition of her office, she continued reporting for work.
- SMART issued a memorandum advising Astorga of the
termination of her employment on ground of redundancy.
Thus, Astorga filed a complaint for illegal dismissal against
SMART.
- While there is a pending litigation, SMART sent a letter
demanding Astorga to Pay the current market value of the
Honda Civic Sedan or to surrender the same to the
company. Astorga did not comply. Thus, SMART filed a suit
for replevin with the RTC.
- Astorga moved to dismiss the complaint on grounds of lack
of jurisdiction she posited that the regular courts have no
jurisdiction over the complaint because the subject thereof
pertains to a benefit arising from an employment contract
hence, jurisdiction over the same is vested in the labor
tribunal and not in regular courts.
- RTC denied the motion to dismiss and held that the case is
to enforce a right of possession over a company car. The
recovery via replevin suit is allowed by the Rules of Civil
procedure, which is within the jurisdiction of RTC.
- CA reversed the RTC ruling and held that the case is
intertwined with Astorgas complaint for illegal dismissal.
Hence, this petition.
ISSUE/S
3. W/N the recovery of a car benefit via replevin suit is a labor
dispute.
RULING & RATIO
NO
RTC rightfully assumed jurisdiction over the suit and acted
well within its discretion in denying Astorgas motion to
dismiss. SMARTs demand for payment of the market value
of the car or, in the alternative, the surrender of the car, is
not a labor, but a civil, dispute. It involves the relationship of
debtor and creditor rather than employee-employer relations.
As such, the dispute falls within the jurisdiction of the regular
courts.
In Basaya, Jr. v. Militante, the court held that the labor
dispute involved is not intertwined with the issue in the
Replevin Case. The respective issues raised in each forum
can be resolved independently on the other.
DISPOSITION
WHEREFORE, the petition of SMART docketed as G.R. No. 148132
is GRANTED. The February 28, 2000 Decision and the May 7, 2001
Resolution of the Court of Appeals in
CA-G.R. SP. No. 53831 are SET ASIDE. The Regional Trial Court of
Makati City, Branch 57 is DIRECTED to proceed with the trial of Civil
Case No. 98-1936 and render its Decision with reasonable dispatch.
28
Grandteq Insdustrial Steel Products v. Edna Margallo (Short title)
GR # 181393 | 594 SCRA 223 | July 28, 2009
Petition: Petition for Review on Certiorari under Rule 45 of the
Rules of Court
Petitioner: GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC.
and ABELARDO M. GONZALES
Respondent: EDNA MARGALLO
DOCTRINE
The Court cannot, in any way, uphold a car loan agreement that
threatens the employee with the forfeiture of all the car loan
payments he/she had previously made, plus loss of the possession
of the car, should the employee wish to resign; otherwise, said
agreement can then be used by the employer as an instrument to
either hold said employee hostage to the job or punish him/her for
resigning.
FACTS
- Grandteq employed Margallo as Sales Engineer beginning 3
August 1999.
- Margallo claimed that on an unstated date, she availed
herself of the car loan program offered to her by Grandteq as
a reward for being Salesman of the Year. (Toyota Corolla,
she paid downpayment, amortization to be shared)
- Margallo received a letter signed by Gonzales and de Leon
(Pres and VP of Grandteq), accusing her of moonlighting,
sabotage, and breach of trust and confidence.
o Margallo also works with JVM Industrial Supply and
Allied Services, who supplies steel products to Moog
Control Corp. Phils. Branch which is also a client of
Grandteq.
- Margallo replied to the letter, claiming that she did nothing
wrong and denied the allegations.
- Margallo claimed that De Leon asked her to just resign,
promising that if she did, she would still be paid her
commissions and other benefits, as well as be reimbursed
her car loan payments.
- Margallo was never paid her benefits and other claims. She
filed a complaint before the Labor Arbiter.
- Grandteq maintained that Margallo was not entitled to sales
commissions because the computation thereof, according to
company policy, should be based on actual collections within
180 days from invoice date. All of Margallos credit sales
transactions were unpaid, outstanding, and past due.
- LA: Dismissed for lack of merit.
o Not able to prove by substantial evidence her
entitlement to the sales commission, cash
incentives.
o Margallo had no right to the reimbursement of her
car loan payments under her car loan agreement
with Grandteq.
- Margallo appealed to the NLRC.
- NLRC: Reversed LA. Granted claims for sales commission,
reimbursement of her car loan payments, and attorneys
fees.
- Grandteq appealed to the CA.
- CA: Affirmed NLRC.
Hence, this petition.
- Grandteq and Gonzales assert that the Court of Appeals
erred in declaring the car loan agreement between Grandteq
and Margallo, particularly the provision therein on the
forfeiture of car loan payments in favor of Grandteq should
Margallo resign from the company, as null and void.
ISSUE/S
4. W/N Margallo is entitled to be reimbursed of the car loan
payments
RULING & RATIO
- YES
o Said provisions plainly are contrary to the
fundamental principles of justice and fairness. It
must be remembered that Margallo herself paid for
the down payment and her share in the monthly
amortization of the car. However, she did not get to
leave with the car when she resigned from
Grandteq.
29
 o The principle against unjust enrichment obliges
Grandteq and Gonzales to refund to Margallo the
car loan payments she had made, since she has not
actually acquired the car. To relieve Grandteq and
Gonzales of their obligation to reimburse Margallo
would, indeed, be to sanction unjust enrichment in
favor of the first two and cause unjust poverty to the
latter.
o Although not strictly a labor contract, the car loan
agreement herein involves a benefit extended by the
employers, Grandteq and Gonzales, to their
employee, Margallo. It should benefit, and not
unduly burden, Margallo. The Court cannot, in any
way, uphold a car loan agreement that threatens the
employee with the forfeiture of all the car loan
payments he/she had previously made, plus loss of
the possession of the car, should the employee wish
to resign; otherwise, said agreement can then be
used by the employer as an instrument to either hold
said employee hostage to the job or punish him/her
for resigning.

DISPOSITION
WHEREFORE, premises considered, the Petition is DENIED for lack
of merit. The Decision dated 21 January 2008 of the Court of
Appeals in CA-GR SP No. 100012 is AFFIRMED. Costs against
petitioners Grandteq Industrial Steel Products, Inc. and Abelardo M.
Gonzales.

30
Roberto Domondon v. NLRC
GR # 154376 | September 30, 2005
Petition: Petition for Review on Certiorari under Rule 45 of the
Rules of Court
Petitioner: Roberto Domondon
Respondent: NATIONAL LABOR RELATIONS COMMISSION,
VAN MELLE PHILS.,INC. and NIELS H.B. HAVE
DOCTRINE
Since the transfer of ownership of the company car to the employee
is connected with his resignation and arose out of the parties
employer-employee relations, the employers counterclaim for
damages falls within the jurisdiction of the Labor Arbiter.
FACTS
Petitioner Domondon alleged that VMPI, a manufacturing company
engaged in the production and distribution of confectionaries and
related products, hired him as Materials Manager. He was tasked to
supervise the Inventory Control, Purchasing, and Warehouse and
Distribution Sections of the company. He was given a guaranteed
monthly salary of ninety-eight thousand (P98,000.00) pesos for
fourteen (14) months with annual merit adjustment, profit sharing
bonus from 0-2 months based on individual, company and corporate
performance, and a brand new 1600cc Honda VTEC with 300 liters
monthly gas allowance. Petitioner claimed that things worked out
well for him in the beginning until the companys president was
transferred to China and was replaced by private respondent Have, a
Dutch national. According to Domondon, Have immediately set a
one-on-one meeting with him and requested his courtesy
resignation, because allegedly the Asia Regional Office wanted Have
to reorganize and put his people in management. Domondon refused
to resign and life got difficult for him.
Domondon alleged that in another one-on-one meeting, Have
informed him that things would get more difficult for him if he does
not resign. Have threw a veiled threat at petitioner to the effect that a
dignified resignation would be infinitely better than being fired for a
fabricated lawful cause. Have offered financial assistance if petitioner
would leave peacefully but the offer must be accepted immediately
or it would be withdrawn. Thus, petitioner signed a ready-made
resignation letter without deliberation and evaluation of the
consequences. His main concern then was to prevent the end of his
professional career. Domondon claimed that to lend a semblance of
credibility to his forced resignation, private respondents released to
him a portion of the offered financial package.
Respondents admitted hiring Domondon but denied illegally
dismissing him. They claimed that he voluntarily resigned to embark
on management consultancy in the field of strategic planning and
import/export. They stated that Domondon informed them about his
intention to resign and requested a soft landing financial support in
the amount of three hundred thousand (P300,000.00) pesos on top
of accrued benefits due him upon resignation. Private respondents
granted the request. Subsequently, however, petitioner proposed the
transfer of ownership of the car assigned to him in lieu of the
financial assistance from the company. Since company policy
prohibits disposition of assets without valuable consideration, the
parties agreed that petitioner shall pay for the car with the
P300,000.00 soft landing financial assistance from private
respondent VMPI. Respondents also averred that Domondon
effected the registration of the car in his name. In accordance with
their agreement above, P300,000.00 was credited to Domondons
payroll account but he did not use it to pay for the car as agreed
upon. Repeated demands for payment were unheeded. In its letter of
demand dated October 28, 1998, private respondent VMPI gave
petitioner an option to apply the P169,368.32 total cash conversion
of his sick and vacation leave credits, 13th and 14th months pay less
taxes as partial payment for the car and pay the balance of
P130,631.68, or return the car to the company. Domondon did not
exercise either option, and instead filed a complaint for illegal
dismissal against private respondents.
The Labor Arbiter dismissed Domdons complaint, and ruled that
complainant has the option to reconvey to respondents the car sold
to him and thus retain full credit of the P300,000.00 soft landing
assistance, or retain ownership of the car by paying respondents the
purchase price of P300,000.00 minus any amount due him
corresponding to his accrued benefits that has been applied by
respondents as partial payment for the car. The NLRC affirmed the
31
said Decision and denied his motion for reconsideration. He went to
the Court of Appeals on a special civil action for certiorari but failed
for the third time; hence, this petition for review on certiorari.
Domondon questions the jurisdiction of the Labor Arbiter to resolve
the issue of the transfer of car-ownership by his employer.
ISSUE/S
W/N THE LABOR ARBITER HAS JURISDICTION TO RESOLVE
THE ISSUE OF THE TRANSFER OF CAR-OWNERSHIP?
is ORDERED to pay private respondent Van Melle Phils., Inc. the
amount of P130,631.68, representing the balance of the purchase
price of the car in his custody after deducting his entitlement to 14th
month pay, cash conversion of accrued sick and vacation leaves and
profit share in the total amount of P169,368.32 from the P300,000.00
soft-landing financial assistance he received from private
respondent. SO ORDERED.

RULING & RATIO

Yes, because the Labor Code provides that Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide all other
claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.

The records show that the initial agreement of the parties was that
petitioner would be extended a soft-landing financial assistance in
the amount of P300,000.00 on top of his accrued benefits at the time
of the effectivity of his resignation. However, petitioner later changed
his mind. He requested that he be allowed to keep the car assigned
to him in lieu of the financial assistance. However, company policy
prohibits transfer of ownership of property without valuable
consideration. Thus, the parties agreed that petitioner shall still be
extended the P300,000.00 financial support, which he shall use to
pay for the subject car. Private respondent VMPI deposited the
agreed amount in petitioners account. Despite having registered the
car in his name and repeated demands from private respondents,
petitioner failed to pay for it as agreed upon. Petitioner did not also
return the car. Without doubt, the transfer of the ownership of the
company car to petitioner is connected with his resignation and
arose out of the parties employer-employee relations. Hence, private
respondents claim for damages falls within the jurisdiction of the
Labor Arbiter.

DISPOSITION
IN VIEW WHEREOF, the decision of the Court of Appeals is
AFFIRMED with MODIFICATION. Petitioner Roberto T. Domondon
32
PRUDENTIAL BANK and TRUST COMPANY vs. CLARITA T. REYES
G.R. No. 141093
Complaint for Illegal Dismissal and Illegal Suspension

Facts: Respondent Clarita Tan Reyes filed a complaint for illegal dismissal and
suspension with prayer for moral and exemplary damages, gratuity, fringe benefits
and attorneys fees against Prudential Bank. Prior to her dismissal, she held the
position of AVP in the foreign department of Prudential Bank.
The LA found that the dismissal of Reyes is without factual and legal basis, so the
Bank was ordered to pay Reyes the following: backwages for 3 years and in lieu
of reinstatement, separation pay of one month salary for every year of service,
unpaid fringe benefits and profit sharing and attorneys fees. Not satisfied with the
decision, Prudential appealed to the NLRC which reversed the LAs decision.
Reyes sought for reconsideration but was denied. Aggrieved, Reyes, commenced
a Petition for Certiorari before the SC.

Issue: W/N the NLRC has jurisdiction over the complaint for illegal dismissal

Held: YES. Prudential Bank alleged that what was involved in this case was non-
election of Reyes to the position of the AVP of the bank, an intra-corporate
controversy which fell under the exclusive jurisdiction of the SEC (now the RTC),
however, the SC said that the bank could no longer raise the issue of jurisdiction
under the principle of estoppel. The bank participated in the proceedings from start
to finish.

33
Yrasuegui vs. PAL
[G.R. No. 168081. Oct. 17, 2008]
Complainant was an international flight steward who was dismissed
because of his failure to adhere to the weight standards of the airline
company.
Issue:
SC upheld the legality of dismissal. Separation pay, however, should
be awarded in favor of the employee as an act of social justice or
based on equity. This is so because his dismissal is not for
seriousmisconduct. Neitherisitreflectiveofhismoralcharacter.
The obesity of petitioner, when placed in the context of his work as
flight attendant, becomes an analogous cause under Article 282(e) of
the Labor Code. His obesity may not be unintended, but is
nonethelessvoluntary.
[v]oluntarinessbasicallymeansthatthejustcauseissolelyattributableto
theemployeewithoutanyexternalforceinfluencingorcontrollinghisaction
s. Thiselementruns through all just causes under Article 282,
whether they be in the nature of a wrongful action or omission. Gross
and habitual neglect, a recognized just cause, is considered
voluntary although it lacks the element of intent found in Article
282(a), (c), and (d).
Employment in particular jobs may not be limited to persons of a
particular sex, religion, or national origin unless the employer can
show that sex, religion, or national origin is an actual qualification for
performing the job.
Bona fide occupational qualification (BFOQ)
The Constitution, the Labor Code, and RA No. 7277 or the Magna
Carta for Disabled Persons contain provisions similar to BFOQ.
Argument that BFOQ is a statutory defense must fail
Meiorin Test (US jurisprudence) in determining whether an
employment policy is justified.
(1) the employer must show that it adopted the standard for a
purpose rationally connected to
the performance of the job;
(2) the employer must
accomplishment of that work-related purpose; and
establish that
(3) the employer must establish that the standard is reasonably
necessary in order to accomplish
the legitimate work-related purpose.
the standard is
reasonably necessary to
the
In Star Paper Corporation v. Simbol, this Court held that in order to
justify a BFOQ, the employer must prove:
(1) the employment qualification is reasonably related to the
essential operation of the job involved; and
(2) that there is factual basis for believing that all or substantially all
persons meeting the qualification would be unable to properly
perform the duties of the job.
In short, the test of reasonableness of the company policy is used
because it is parallel to BFOQ. BFOQ is valid provided it reflects an
inherent quality reasonably necessary for satisfactory job
performance.
The weight standards of PAL are reasonable. A common carrier,
from the nature of its business and for reasons of public policy, is
bound to observe extraordinary diligence for the safety of the
passengers it transports.
The primary objective of PAL in the imposition of the weight
standards for cabin crew is flight safety. It cannot be gainsaid that
cabin attendants must maintain agility at all times in order to inspire
passenger confidence on their ability to care for the passengers
when something goes wrong.
Exceptionally, separation pay is granted to a legally dismissed
employee as an act social justice, or basedonequity.
Providedthedismissal:
Entitled to separation pay, even if terminated for just cause
(1) was not for serious misconduct; and
(2) does not reflect on the moral character of the employee.
Thus, he was granted separation pay equivalent to one-half (1/2)
months pay for every year of
34
Matling Industrial and Commercial Corporation v. Ricardo R.
Coros (MICC v. Coros)
GR # 157802 | 633 SCRA 12
Petition: Petition for Certiorari under Rule 45 of the Rule of
Court
Petitioner: MICC, Richard K. Spencer and Catherine Spencer
Respondents: Ricardo R. Coros
DOCTRINE: A position must be expressly mentioned in the By-Laws
in order to be considered as a corporate office. Thus, the creation of
an office pursuant to or under a By-Law enabling provision is not
enough to make a position a corporate office.
FACTS
- Following his dismissal from MICC as its Vice President for
Finance and Administration, Coros filed a case of illegal
suspension and dismissal against the former in the NLRC.
- MICC moved to dismissed the complaint on the grounds that such
complaint belong to the jurisdiction of the Securities and Exchange
Commission (SEC) due to the issue being intra-corporate in
nature because the Coros was a member of MICCs Board of
Directors (BoD) while also being VP for Finance and
Administration.
- Coros contended that his status as BoD was doubtful considering
he was not formally elected as such and he did own a single share
of MICC.
- LA ruled to dismiss the case because due to his positions, he is
considered as a corporate officer, therefore SEC has jurisdiction
over the case pursuant to PD 902.
- NLRC set aside the dismissal because he was not a corporate
officer, though albeit it is one of a high rank, such was not among
the positions listed in the By-Laws of MICC, therefore said case is
cognizable by the LA.
- A motion for reconsideration was filed with the NLRC but was
subsequently dismissed this was then elevated to the CA on the
ground that the NLRC committed GADALEJ.
- CA dismissed the case and ruled that for a position to be
considered as a corporate office, or for one to be considered as a
corporate officer, the position must, if not listed in the by-laws,
have been created by the corporations board of directors, and the
occupant thereof appointed or elected by the same board of
directors or stockholders.
- The CA Dismissed the motion for reconsideration. Then elevated
to the SC under these arguments.
(Read this part for better understanding but not really
necessary to get the point of the case)
- MICC contends that the power to create corporate offices and to
appoint the individuals to assume the offices was delegated by
Matlings Board of Directors to its President through By-Law No.
V, as amended; and that any office the President created, like the
position of the respondent, was as valid and effective a creation as
that made by the Board of Directors, making the office a corporate
office.
- Coros contends that the By-Laws did not list his position as Vice
President for Finance and Administration as one of the corporate
offices; that Matlings By-Law No. III listed only four corporate
officers, namely: President, Executive Vice President, Secretary,
and Treasurer; that the corporate offices contemplated in the
phrase and such other officers as may be provided for in the by-
laws found in Section 25 of the Corporation Code should be
clearly and expressly stated in the By-Laws.
- The fact that Matlings By-Law No. III dealt with Directors &
Officers while its By-Law No. V dealt with Officers proved that
there was a differentiation between the officers mentioned in the
two provisions, with those classified under By-Law No. V being
ordinary or non-corporate officers; and that the officer, to be
considered as a corporate officer, must be elected by the Board of
Directors or the stockholders, for the President could only appoint
an employee to a position pursuant to By-Law No. V.
ISSUE
1. W/N Coros was a corporate officer of MICC.
RULING & RATIO
- NO
35
 The SC ruled that pursuant to Sec. 25 of the Corporation Code
a position must be expressly mentioned in the By-Laws in order
to be considered as a corporate office. Thus, the creation of an
office pursuant to or under a By-Law enabling provision is not
enough to make a position a corporate office.

The Board of Directors of MICC could not validly delegate the
power to create a corporate office to the President, in light of
Section 25 of the Corporation Code requiring the Board of
Directors itself to elect the corporate officers. Verily, the power
to elect the corporate officers was a discretionary power that
the law exclusively vested in the Board of Directors, and could
not be delegated to subordinate officers or agents.
The office of Coros was therefore not a corporate office but that
of an ordinary office.
The power to create new offices and the power to appoint the
officers to occupy them vested by By-Law No. V merely allowed
MICCs President to create non-corporate offices to be
occupied by ordinary employees of MICC. Such powers were
incidental to the Presidents duties as the executive head of
MICC to assist him in the daily operations of the business.

DISPOSITION
WHEREFORE, we deny the petition for review on certiorari, and
affirm the decision of the Court of Appeals.

NOTES
1. Whoever are the corporate officers enumerated in the by-laws are
the exclusive Officers of the corporation and the Board has no power
to create other Offices without amending first the corporate By-laws.
However, the Board may create appointive positions other than the
positions of corporate Officers, but the persons occupying such
positions are not considered as corporate officers within the meaning
of Section 25 of the Corporation Code and are not empowered to
exercise the functions of the corporate Officers, except those
functions lawfully delegated to them. Their functions and duties are
to be determined by the Board of Directors/Trustees.

36

Arsenio Z. Locsin v Nissan Lease Phils. Inc. and Luis Banson
G.R. No. 185567 October 20, 2010
Petition: Petition for review on certiorari
PETITIONER: Arsenio Z. Locsin
RESPONDENTS: Nissan Lease Phils. Inc. and Luis Banson
DOCTRINE: Corporate Officers are those officers of a corporation
who are given that character either by the Corporation Code or by
2
the Corporation's by-laws
FACTS:
January 1, 1992: Petitioner Arsenio Locsin was elected as
Executive Vice President and Treasurer (EVP/ Treasurer) of
respondent Nissan Lease Phils. Inc. (NCPLI). He held the
position for 13 years until his election as Chairman of
NCPLI's Board of Directors.
A little over seven (7) months after his election as the
NCPLI's Chairman, the NCPLI held a meeting.
In the meeting, an election of a new set of officers was held.
However, petitioner was not re-elected as Chairman nor was
he reinstated to his position as EVP/Treasurer.
This resulted to petitioner filing a complaint for illegal
dismissal before the Labor Arbiter against petitioners NCPLI
and Luis Banson who was its president.
Respondents filed a motion to dismiss before the Labor
Arbiter contending that the Labor Arbiter did not acquire
jurisdiction over the case since petitioner's removal was an
inter-corporate dispute.
Labor Arbiter in a Order, denied the motion to dismiss,
holding that the Labor Arbiter acquired the jurisdiction to
arbitrate and/or decide the case.
Respondents elevated the case to the Court of Appeals
which held that Locsin was a corporate officer and that his
removal as EVP/Treasurer is an inter-corporate dispute
2 Presidential Decree 902-A
which is under the jurisdiction of the Regional Trial Court.
Hence, this petition.
Petitioner, using the four-fold test, submits that he is a
regular employee of respondents.
1. NCPLI had the power to engage his services as EVP/Treasurer.
2. He received regular wages from NCPLI, from which his SSS and
Philhealth contributions, as well as his withholding taxes were
deducted.
3. NCPLI had the power to terminate his employment.
4. NCPLI had control over the manner of the performance of his
functions as EVP/Treasurer.
ISSUE: W/N Petitioner Arsenio Locsin is a corporate officer?
COURT:
YES.
Locsin was undeniably Chairman and President, and
was elected to these positions by the Nissan board
pursuant to its By-laws.As such, he was a corporate
officer, not an employee. The CA reached this
conclusion by relying on the submitted facts and on
Presidential Decree 902-A, which defines corporate
officers as those officers of a corporation who are
given that character either by the Corporation Code
or by the corporations by-laws. Likewise, Section 25
of Batas Pambansa Blg. 69, or the Corporation Code
of the Philippines (Corporation Code) provides that
corporate officers are the president, secretary,
treasurer and such other officers as may be
provided for in the by-laws.
Even as Executive Vice-President/Treasurer, Locsin
already acted as a corporate officer because the
position of Executive Vice-President/Treasurer is
provided for in Nissans By-Laws.
DISPOSITION:
WHEREFORE, we DISMISS the petitioners petition for review on
certiorari, and AFFIRM the Decision of the Court of Appeals, in CA-
G.R. SP No. 103720, promulgated on August 28, 2008, as well as its
Resolution of December 9, 2008, which reversed and set aside the
March 10, 2008 Order of Labor Arbiter Concepcion in NLRC NCR
37
Case No. 00-06-06165-07. This Decision is without prejudice to
petitioner Locsins available recourse for relief through the
appropriate remedy in the proper forum.
Renato Real vs. Sangu Philippines
G.R. No. 168757/ January 19, 2011
Petition: This Petition for Review on Certiorari assails the
[1]
Decision dated June 28, 2005 of the Court of Appeals (CA) in CA-
G.R. SP. No. 86017 which dismissed the petition for certiorari filed
before it.
Petitioner: RENATO REAL
Respondent: SANGU PHILIPPINES, INC. and/ or KIICHI ABE
Doctrine: Petitioner negates his status as a corporate officer by pointing out
that although he was removed as Manager through a board resolution, he
was never elected to said position nor was he appointed thereto by the
Board of Directors. While the By-Laws of respondent corporation provides
that the Board may from time to time appoint such officers as it may deem
necessary or proper, he avers that respondents failed to present any board
resolution that he was appointed pursuant to said By-Laws. He instead
alleges that he was hired as Manager of respondent corporation solely by
respondent Abe. For these reasons, petitioner claims to be a mere
employee of respondent corporation rather than as a corporate officer. We
find merit in petitioners contention.
FACTS:
- Petitioner Renato Real was the Manager of respondent
corporation Sangu Philippines, Inc., a corporation engaged in the
business of providing manpower for general services, like janitors,
janitresses and other maintenance personnel, to various clients. In
2001, petitioner, together with 29 others who were either janitors,
janitresses, leadmen and maintenance men, all employed by
[2]
respondent corporation, filed their respective Complaints for
illegal dismissal against the latter and respondent Kiichi Abe, the
corporations Vice-President and General Manager. These
complaints were later on consolidated.
- With regard to petitioner, he was removed from his position as
Manager through Board Resolutionfor the following reasons: (1)
continuous absences at his post at Ogino Philippines Inc. for
several months which was detrimental to the corporations
operation; (2) loss of trust and confidence; and, (3) to cut down
operational expenses to reduce further losses being experienced
by respondent corporation.
[5]
- The Labor Arbiter in a Decision dated June 5, 2003 declared
petitioner and his co-complainants as having been illegally
dismissed and ordered respondents to reinstate complainants to
their former positions without loss of seniority rights and other
privileges and to pay their full backwages from the time of their
dismissal until actually reinstated and furthermore, to pay them
attorneys fees.
- Respondents thus appealed to the National Labor Relations
Commission (NLRC) and raised therein as one of the issues the
lack of jurisdiction of the Labor Arbiter over petitioners
complaint. Respondents claimed that petitioner is both a
stockholder and a corporate officer of respondent corporation,
hence, his action against respondents is an intra-corporate
controversy over which the Labor Arbiter has no jurisdiction.
- NLRC: found such contention of respondents to be
meritorious. Aside from petitioners own admission in the pleadings
that he is a stockholder and at the same time occupying a
managerial position.
- CA: sided with respondents and affirmed the NLRCs finding
Hence this Petition: Petitioner elevated the case to us through this Petition
for Review on Certiorari to insist that he is not a corporate officer. He argues
that a corporate officer is one who holds an elective position as provided in
the Articles of Incorporation or one who is appointed to such other positions
by the Board of Directors as specifically authorized by its By-Laws. And,
since he was neither elected nor is there any showing that he was
appointed by the Board of Directors to his position as Manager, petitioner
maintains that he is not a corporate officer contrary to the findings of the
NLRC and the CA.
ISSUE: W/N Petitioner is a corporate officer, so as to remove jurisdiction of
Labor Arbiter and nullify the latters ruling which favors Petitioner
RULING & RATIO: - NO
. We find merit in petitioners contention. Corporate officers in the
context of Presidential Decree No. 902-A are those officers of the
corporation who are given that character by the Corporation Code
or by the corporations by-laws. Article IV of respondent
corporations By-Laws which provides: Section
1. Election/Appointment: Board, may from time to time,
appoint such other officers as it may determine to be
38
necessary or proper. We have however examined the records of
this case and we find nothing to prove that petitioners appointment
was made pursuant to the above-quoted provision of respondent
corporations By-Laws. No copy of board resolution appointing
petitioner as Manager or any other document showing that he was
appointed to said position by action of the board was submitted by
respondents. What we found instead were mere allegations of
respondents in their various pleadings that petitioner was
appointed as Manager of respondent corporation and nothing
more. (Renato Real was merely hired as the manager of
respondent-appellant Sangu.)
. We now go to the nature of controversy test. As earlier stated,
respondents terminated the services of petitioner for the following
reasons: (1) his continuous absences at his post at Ogino
Philippines, Inc (2) respondents loss of trust and confidence on
petitioner and, (3) to cut down operational expenses to reduce
further losses being experienced by the corporation. From these, it
is not difficult to see that the reasons given by respondents for
dismissing petitioner have something to do with his being a
Manager of respondent corporation and nothing with his being a
director or stockholder.
of their controversy. In the absence of any one of these factors, the
SEC will not have jurisdiction. Furthermore, it does not necessarily
follow that every conflict between the corporation and its
stockholders would involve such corporate matters as only SEC (now
the Regional Trial Cour) can resolve in the exercise of its adjudicatory
or quasi-judicial powers.
2. Nature of the controversy test.: We declared in this case that it is
not the mere existence of an intra-corporate relationship that gives
rise to an intra-corporate controversy; to rely on the relationship test
alone will divest the regular courts of their jurisdiction for the sole
reason that the dispute involves a corporation, its directors, officers,
or stockholders. the incidents of that relationship must also be
considered for the purpose of ascertaining whether the controversy
itself is intra-corporate. The controversy must not only be rooted in
the existence of an intra-corporate relationship, but must as well
pertain to the enforcement of the parties correlative rights and
obligations under the Corporation Code and the internal and intra-
corporate regulatory rules of the corporation.

DISPOSITION: WHEREFORE, the petition is hereby GRANTED. The

assailed June 28, 2005 Decision of the Court of Appeals insofar as it
affirmed the National Labor Relations Commissions dismissal of petitioners
complaint for lack of jurisdiction, is hereby REVERSED and SET
ASIDE. The June 5, 2003 Decision of the Labor Arbiter with respect to
petitioner Renato Real is AFFIRMED and this case is
ordered REMANDED to the National Labor Relations Commission for the
computation of petitioners backwages and attorneys fees in accordance
with this Decision.

*Two-tier test in determining the existence of intra-corporate

controversy:
1. The better policy to be followed in determining jurisdiction over a
case should be to consider concurrent factors such as the status or
relationship of the parties or the nature of the question that is subject
39

Manliguez v. CA, 232 SCRA 427 (1994)
G.R. No. 127718. March 2, 2000
Petition: Appeal by Certiorari
Petitioners: Purificacion Manliguez Et. Al
Respondents: Court of Appeals Et. Al
Doctrine: When no employer-employee relationship exists, or when
the main issue does not involve employer-employee relationship,
jurisdiction devolves with the regular courts.
FACTS:
DOLE Region 7 ordered Inductocast Cebu, a partnership based in
Mandaue City, to pay its former employees a total of P232,908.00.
As a consequence of the judgment, the labor department's regional
sheriff levied the buildings and improvements standing on Lot 109,
Plan 11-5121-Amd., at Tipolo, Mandaue City. The levied properties
(hereinafter referred to as the "Tipolo properties") were subsequently
sold at public auction to said employees.
Petitioners filed with the RTC of Cebu City, 7th Judicial Branch, a
Complaint 3 which sought the lifting of the levy over, and
annulment of the sale of, the Tipolo properties. Petitioners therein
alleged that: they are the owners of the Lot 109; they entered into a
lease agreement with Inductocast Cebu over Lot 109; the lease
contract provided that, except for machineries and equipment, all
improvements introduced in the leased premises shall automatically
be owned by the Lessor (petitioners) upon the
expiration/termination of the contract; 4 the lease agreement was
terminated by petitioners in November, 1980 due to non-
payment of rentals by Inductocast Cebu; 5thereafter, petitioners took
actual possession of and occupied the Tipolo properties. Petitioners
likewise alleged in their Complaint that they became aware of the
labor dispute involving Inductocast only after the impugned public
auction sale
Atty Pilapil and the buyers of the Tipolo properties, filed a motion to
dismiss on the ground that the trial court had no jurisdiction over the
case.
RTC: Denied the motion to dismiss.
The buyers of the Tipolo properties moved for reconsideration of the
denial.
RTC: Granted the motion and dismissed Civil Case No. Ceb-6917. It
held that the civil case "is actually in the nature of a quashal of the
levy and the certificate of sale, a case arising out of a dispute that
was instituted by the previous employees of Inductocast before the
Department of Labor and Employment, Region 7." 7 Citing Pucan vs.
Bengzon, 155 SCRA 692 (1987), it held it had no jurisdiction over the
case since the levy and sale "are connected with the case within the
exclusive jurisdiction of the Department of Labor and Employment
Petitioners filed a petition for certiorari and preliminary injunction with
the CA.
CA: Denied the petition for certiorari and preliminary injunction. The
issue in the case at bar concerns the levy of a property in pursuance
to a writ of execution, arising out of labor disputes. There can be no
doubt that jurisdiction pertains to the Department of Labor
Petitioners filed an appeal with the SC.
Issue: WON, RESPONDENT APPELLATE COURT ERRED IN
HOLDING THAT THE DEPARTMENT OF LABOR HAS
JURISDICTION ON THE SUBJECT MATTER AND
NATURE OF THE CASE AS AGAINST THE CIVIL COURT
Held: We find merit in the appeal. Firstly, respondent court erred in
holding that the trial court does not have jurisdiction over the case
filed by petitioners. It is at once evident that the Civil Case No. Ceb-
6917 is not a labor case. No employer-employee relationship exists
between petitioners and the other parties, and no issue is involved
which may be resolved by reference to the Labor Code, other labor
statutes, or any collective bargaining agreement. Neither can we
40
characterize petitioner's action before the trial court as arising
out of a labor dispute. It was not brought to reverse or modify the
judgment of the Department of Labor and Employment (DOLE).
Neither did it question the validity of, or pray for, the quashal of the
writ of execution against Inductocast.
What is to be litigated in Civil Case No. Ceb-6917 is the
issue of ownership over the Tipolo properties. Clearly it is the RTC
and not the labor department which can take cognizance of the case,
as provided by B.P. Blg. 129 ("An Act Reorganizing the Judiciary,
Appropriating Funds Therefor, and For Other Purposes"),
thus: LLphil
"Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall
exercise exclusive original jurisdiction:
xxx xxx xxx
(2) In all civil actions which involve the title to, or possession of real
property, or any interest therein, except actions for forcible entry into
and unlawful detainer oflands or buildings, original jurisdiction over
which is conferred upon Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts;
Where the civil case is to lift levy over and annulment of the sale of
the property on the ground that it was not owned by the respondent
in the labor case, the civil court has jurisdiction. Where the action
attacked the regularity of the issuance of the writ of execution in the
labor case, the labor officials have jurisdiction. If the action does not
attack the issuance, but the manner of execution, the civil courts
have jurisdiction.

Disposition: The petition for review is GRANTED. The

Decision of the Court of Appeals in CA-G.R. SP No. 18017, dated
November 16, 1989, is REVERSED and SET ASIDE. The Regional
Trial Court of Cebu City, Branch 8 is ordered to try Civil Case Ceb-
6917 on its merit||| (Manliguez v. Court of Appeals, G.R. No. 92598,
[May 20, 1994])

41

Georg Grotjahn GMBH & Co. v. Isnani
G.R. No. 109272 235 SCRa 216
Petitioner impugns the dismissal of its Complaint for a sum of money
by the respondent judge for lack of jurisdiction and lack of capacity to
sue.
Petitioner: GEORG GROTJAHN GMBH & CO
Respondents: HON. LUCIA VIOLAGO ISNANI, Presiding Judge,
Regional Trial Court, Makati, Br. 59; ROMANA R.
LANCHINEBRE; and TEOFILO A. LANCHINEBRE
Doctrine: In Georg Grotjahn GMBH & Co. v. Isnani, this Court held
that not every dispute between an employer and employee involves
matters that only labor arbiters and the NLRC can resolve in the
exercise of their adjudicatory or quasi-judicial powers. The
jurisdiction of labor arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an employer-employee
relationship which can only be resolved by reference to the Labor
Code, other labor statutes, or their collective bargaining agreement.
Facts:
Petitioner is a multinational corporation (employer). Private
respondent Lanchinebre (employee) worked as its sales
representative from 1983 to mid-1992. Employee obtained loans
and cash advances, a total of P12,170.37 remained unpaid.
On July 22, 1992, private respondent Romana Lanchinebre
filed with the Arbitration Branch of the National Labor Relations
Commission (NLRC) in Manila, a complaint for illegal suspension,
dismissal and non-payment of commissions against petitioner.
On August 18, 1992, petitioner in turn filed against private
respondent a Complaint for damages amounting to one hundred
twenty thousand pesos (P120,000.00) also with the NLRC Arbitration
Branch (Manila). The two cases were consolidated.
On September 2, 1992, petitioner filed another Complaint for
collection of sum of money against private respondents spouses
Romana and Teofilo Lanchinebre which was docketed as Civil Case
No. 92-2486 and raffled to the sala of respondent judge. Instead of
filing their Answer, private respondents moved to dismiss the
Complaint.
The RTC under respondent judge dismissed the case.
Hence this petition for review wherein said petitioner raised
the following error:
THE TRIAL COURT GRAVELY ERRED IN HOLDING THAT
THE REGULAR COURTS HAVE NO JURISDICTION OVER
DISPUTES BETWEEN AN EMPLOYER AND AN EMPLOYEE
INVOLVING THE APPLICATION PURELY OF THE GENERAL
CIVIL LAW.
Issue: Whether or not the RTC has jurisdiction over the Collection
Case.
Provisions: Under Article 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship which can only be
resolved by reference to the Labor Code, other labor statutes, or
their collective bargaining agreement.
Ruling:
Yes. The Court noted that while the loans and cash
advances were contracted between employee and employer during
the subsistence of their relationship, it does not follow that Article
217 of the Labor Code covers their relationship.
It was further stated that not every dispute between an
employer and employee involves matters that only labor arbiters and
the NLRC can resolve in the exercise of their adjudicatory or quasi-
judicial powers. The jurisdiction of labor arbiters and the NLRC under
Article 217 of the Labor Code is limited to disputes arising from an
employer-employee relationship which can only be resolved by
42
reference to the Labor Code, other labor statutes, or their collective
bargaining agreement.

Civil Case No. 92-2486 is a simple collection of a sum of

money brought by petitioner, as creditor, against Romana
Lanchinebre, as debtor. The fact that they were employer and
employee at the time of the transaction does not negate the civil
jurisdiction of the trial court. The case does not involve adjudication
of a labor dispute but recovery of a sum of money based on our civil
laws on obligation and contract.

It was stated that the test in this instance is the test of

relevance, specifically, whether or not the Labor Code has any
relevance to the reliefs being sought by the parties. If none, the case
may be considered as intrinsically a civil dispute.

Disposition: IN VIEW WHEREOF, the instant Petition is GRANTED.

The Orders, dated December 21, 1992 and March 8, 1993, in Civil
Case No. 92-2486 are REVERSED AND SET ASIDE. The RTC of
Makati, Br. 59, is hereby ordered to hear the reinstated case on its
merits. No costs.

SO ORDERED.

43

Eviota v. Court of Appeals
GR 152121 | 407 SCRA 394 | July 29, 2003
Petition for review on certiorari under Rule 45
Petitioner: EDUARDO G. EVIOTA
Respondent: THE HON. COURT OF APPEALS, THE HON. JOSE
BAUTISTA, Presiding Judge of Branch 136, Regional Trial Court
of Makati, and STANDARD CHARTERED BANK
(Effect when NO employer-employee relationship exists/ when
main issue does not involve ER-EE relationship)
DOCTRINE
It is evident that the causes of action of the private respondent
against the petitioner do not involve the provisions of the Labor Code
and other labor laws but the New Civil Code. Thus, the said causes
of action are intrinsically civil. There is no causal relationship
between the causes of action of the private respondents causes of
action against the petitioner and their employer-employee
relationship.
FACTS
- Eduardo G. Eviota was employed by the respondent bank as
Compensation and Benefits Manager.
- On June 19, 1998, the respondent bank filed a complaint
against the petitioner with the RTC of Makati City, alleging:
o On December 22, 1997, Eviota began negotiating
with the Bank on his possible employment with the
latter. Taken up during these negotiations were not
only his compensation and benefit package, but also
the nature and demands of his prospective position.
The Bank made sure that Eviota was fully aware of
all the terms and conditions of his possible job with
the Bank.
o On January 26, 1998, Eviota indicated his
conformity with the Banks Offer of Employment by
signing a written copy of such offer dated January
22, 1998 (the Employment Contract).
o The bank made the following expenses, pursuant to
the contract of employment: (a) payment of signing
bonus; renovated and refurbished the room which
was to serve as Eviotas office (b) purchased a
1998 Honda CR-V for Eviotas use (c) purchased a
desktop IBM computer for Eviotas use (d) arranged
the takeout of Eviotas loans with Eviotas former
employer (e) released Eviotas signing bonus in the
net amount of P300,000.00 (f) booked Eviotas
participation in a Singapore conference on Y2K
project scheduled; and (g) introduced Eviota to the
local and regional staff and officers of the Bank via
personal introductions and electronic mail.
o Eviota suddenly resigned his employment with
immediate effect to re-join his previous employer.
His resignation did not comply with the 30-day prior
notice rule under the law and under the Employment
Contract.
o There is evidence to show that in his attempts to
justify his hasty departure from the Bank and
conceal the real reason for his move, Eviota has
resorted to falsehoods derogatory to the reputation
of the Bank. He has been maliciously purveying the
canard that he had hurriedly left the Bank because it
had failed to provide him support. His untruthful
remarks have falsely depicted the Bank as a
contract violator and an undesirable employer, thus
damaging the Banks reputation and business
standing in the highly competitive banking
community, and undermining its ability to recruit and
retain the best personnel in the labor market
o Eviota never complied with the Banks demand that
he reimburse the latter for the other expenses
incurred on his account
- The respondent bank alleged its causes of action against the
petitioner:
o Eviotas actions constitute a clear violation of Articles
19, 20 and 21 of the Civil Code
44
 o Under Article 285 (a) of the Labor Code, an
employee may terminate without just cause the
employer-employee relationship by serving written
notice on the employer at least one (1) month in
advance. In addition, Section 13 of the Employment
Contract specifically provides that: Your employment
may be terminated by either party giving notice of at
least one month
o Eviotas false and derogatory statements that the
Bank had failed to deliver what it had purportedly
promised have besmirched the Banks reputation
and depicted it as a contract violator and one which
does not treat its employees properly
- The petitioner filed a motion to dismiss on the ground that
the action for damages was within the exclusive jurisdiction
of the Labor Arbiter.
- The RTC denied this motion.
- CA held that it was the Trial Court that had jurisdiction and
not the LA.
ISSUES
Whether the LA has jurisdiction over this case NO
PROVISIONS
ART. 217. Jurisdiction of Labor Arbiters and the Commission.(a)
Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide
within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations.
RULING
- NO. The trial Court has jurisdiction.
- Not every controversy or money claim by an employee
against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter. A money claim by a worker
against the employer or vice-versa is within the exclusive
jurisdiction of the labor arbiter only if there is a reasonable
causal connection between the claim asserted and
employee-employer relation. Absent such a link, the
complaint will be cognizable by the regular courts of justice.
- Actions between employees and employer where the
employer-employee relationship is merely incidental and the
cause of action precedes from a different source of
obligation is within the exclusive jurisdiction of the regular
court.
o Jurisdiction of the Labor Arbiter under Article 217 of
the Labor Code, as amended, is limited to disputes
arising from an employer-employee relationship
which can only be resolved by reference to the
Labor Code, other labor laws or their collective
bargaining agreements.
o In Singapore Airlines v. Pao, we stated that the
action was for breach of a contractual obligation,
which is intrinsically a civil dispute. We further stated
that while seemingly the cause of action arose from
employer-employee relations, the employers claim
for damages is grounded on wanton failure and
refusal without just cause to report to duty coupled
with the averment that the employee maliciously and
with bad faith violated the terms and conditions of
the contract to the damage of the employer. Such
averments removed the controversy from the
coverage of the Labor Code of the Philippines and
brought it within the purview of the Civil Law.
- In this case, the private respondents first cause of action for
damages is anchored on the petitioners employment of
deceit and of making the private respondent believe that he
would fulfill his obligation under the employment contract
with assiduousness and earnestness.
45
 o The petitioner when, without the requisite thirty-day
notice under the contract and the Labor Code, he
abandoned his office and rejoined his former
employer; thus, forcing the private respondent to
hire a replacement. The private respondent was left
in a lurch, and its corporate plans and program in
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 petitioner simply walked
away from his employment with the private respondent
absent any written notice, to the prejudice of the private
respondent, its banking operations and the conduct of its
business.
- On its third cause of action, the petitioner made false and
derogatory statements that the private respondent reneged
on its obligations under their contract of employment; thus,
depicting the private respondent as unworthy of trust.
- It is evident that the causes of action of the private
respondent against the petitioner do not involve the
provisions of the Labor Code and other labor laws but the
New Civil Code. Thus, the said causes of action are
intrinsically civil. There is no causal relationship between the
causes of action of the private respondents causes of action
against the petitioner and their employer-employee
relationship. The fact that the private respondent was the
erstwhile employer of the petitioner under an existing
employment contract before the latter abandoned his
employment is merely incidental.

DISPOSITION
The Petition is DENIED. The Decision of the Court of Appeals
dismissing the petition of the petitioner is AFFIRMED.

46

ASIAN ALCOHOL CORPORATION v NLRC
G.R. No. 131108. March 25, 1999
Petition: petition for certiorari, a scribing grave abuse of discretion to
NLRC when it set aside the decision of the Labor Arbiter. LA
dismissed the illegal termination complaints filed by private
respondents.
Petitioner: ASIAN ALCOHOL CORPORATION
Respondents: NATIONAL LABOR RELATIONS COMMISSION,
FOURTH DIVISION, CEBU CITY and ERNESTO A. CARIAS,
ROBERTO C. MARTINEZ, RAFAEL H. SENDON, CARLOS A.
AMACIO, LEANDRO O. VERAYO and ERENEO S. TORMO
DOCTRINE:
An employers good faith in implementing a redundancy program is
not necessarily put in doubt by the availment of the services of an
independent contractor to replace the services of terminated
employees to promote economy and efficiency.
The right of management to dismiss workers during periods of
business recession and to install labor saving devices to prevent
losses is governed by Art. 283 of the Labor Code, as amended.
Under this provisions, retrenchment and redundancy are just causes
for the employer to terminate the services of workers to preserve the
viability of the business. In exercising its right, however,
management must faithfully comply with the substantive and
procedural requirements laid down by law and jurisprudence.
FACTS: Private respondents, water pump tenders in AAC, filed
complaints for illegal dismissal with prayer for reinstatement with
backwages, moral damages and attorneys fees. They alleged that
petitioner used the retrenchment program as a subterfuge for union
busting. They also alleged that petitioner was not bankrupt as it has
engaged in an aggressive scheme of contractual hiring. The Labor
Arbiter dismissed the complaints ruling that the dismissal of private
respondents on ground of redundancy/retrenchment was valid.
The Labor Arbiter found petitioners claim that it incurred substantial
losses in its business operations prior to the implementation of its
retrenchment program as supported by documents such as audited
Balance Sheet and Statement of Income and Deficit as well as
Income Tax Return indicating an accumulated deficit.
Private respondents appealed to the NLRC. The NLRC, in its
decision, rejected the evidence offered by petitioner to prove its
business reversals. It faulted petitioner for retrenching private
respondents on the ground of mere possible future
losses. Moreover, the NLRC ruled that the positions of private
respondents were not redundant for the simple reason that they were
casuals. Thus, the NLRC declared that private respondents were
illegally dismissed and directed their reinstatement with full
backwages, and attorneys fees. Petitioners motion for
reconsideration was denied. Hence, this petition.
ISSUE: Was there a valid retrenchment, thus making the dismissal
of private respondents illegal?
RULING AND RATIO:
Article 283 of the Labor Code, as amended, governs the right of
management to dismiss workers during the period of business
recession and to install labor saving devices to prevent losses. The
condition of business losses is normally shown by audited financial
documents. In the instant case, private respondents never contested
the veracity of the audited financial documents offered by
petitioner. Neither did they object to their admissibility. They show
that petitioner had accumulated losses and showing no sign of
abating in the near future. The Supreme Court also found that
petitioners reorganizational plan and comprehensive cost saving
program to turn the business around were not designed to bust the
union. Union and non-union members were treated alike.
An employers good faith in implementing a redundancy program is
not necessarily destroyed by availment of the services of an
independent contractor to replace the services of the terminated
47
employees. The reduction of the number of workers in a company
made necessary by the introduction of the services of an
independent contractor is justified when the latter is undertaken in
order to effectuate more economic and efficient methods of
production. Private respondents failed to proffer any proof that the
management acted in malicious or arbitrary manner in engaging the
services of an independent contractor.
Absent any such proof, the Court had no basis to interfere with the
bonafide decision of management to effect more and efficient
methods of production. Thus, the Supreme Court dismissed the
complaints for illegal dismissal filed by private respondents.

DISPOSITION: IN VIEW WHEREOF, the petition is GRANTED. The

Decision of the National Labor Relations Commission dated May 30,
1997 and its Resolution dated September 25, 1997 are ANNULED
AND SET ASIDE. The Decision of the Executive Labor Arbiter dated
January 10, 1996 in RAB Case No. 06-12-10893-92 is ORDERED
REINSTATED. The complaints for illegal dismissal filed by private
respondents against Asian Alcohol Corporation are hereby
ORDERED DISMISSED FOR LACK OF MERIT

48

Meralco v. Quisumbing
G.R. No. 127598, 22 February 2000
Petition: Motion for Reconsideration of a decision of the Supreme
Court
Doctrine: Hiring of workers is within the employers inherent
freedom to regulate and is a valid exercise of its management
prerogative SUBJECT ONLY TO SPECIAL LAWS AND AGREEMENTS ON THE
MATTER AND THE FAIR STANDARDS OF JUSTICE. While there should be
mutual consultation, eventually deference is to be paid to what
management decides. Contracting out of services is an exercise of
business judgment or management prerogative. Absent proof that
management acted in a malicious or arbitrary manner, the Court will
not interfere with the exercise of judgment by an employer.
JURISPRUDENCE ALSO PROVIDES ADEQUATE LIMITATIONS, SUCH THAT THE
EMPLOYER MUST BE MOTIVATED BY GOOD FAITH AND THE CONTRACTING
OUT SHOULD NOT BE RESORTED TO CIRCUMVENT THE LAW OR MUST NOT
HAVE BEEN THE RESULT OF MALICIOUS OR ARBITRARY ACTIONS.
Facts: This MR was filed by herein petitioner pursuant to the courts
decision relative to public respondents (Quisumbing as Sec. of
Labor) decision regarding the CBA of Meralco and its employees. In
Public Respondents decision, he held that Contracting out of
Services required consultation with the union. The assailed
Supreme Court Decision on the other hand held that no
consultation with the union was required.
Ratio: The added requirement of consultation imposed by the
Secretary in cases of contracting out for six (6) months or more has
been rejected by the Court. Suffice it to say that the employer is
allowed to contract out services for six months or more. However, a
line must be drawn between management prerogatives regarding
business operations per se and those which affect the rights of
employees, and in treating the latter, the employer should see to it
that its employees are at least properly informed of its decision or
modes of action in order to attain a harmonious labor management
relationship and enlighten the workers concerning their rights.
Hiring of workers is within the employers inherent freedom
to regulate and is a valid exercise of its management prerogative
subject only to special laws and agreements on the matter and the
fair standards of justice. The management cannot be denied the
faculty of promoting efficiency and attaining economy by a study of
what units are essential for its operation. It has the ultimate
determination of whether services should be performed by its
personnel or contracted to outside agencies. While there should be
mutual consultation, eventually deference is to be paid to what
management decides.
CONTRACTING OUT OF SERVICES IS AN EXERCISE OF BUSINESS
JUDGMENT OR MANAGEMENT PREROGATIVE. ABSENT PROOF THAT
MANAGEMENT ACTED IN A MALICIOUS OR ARBITRARY MANNER, THE
COURT WILL NOT INTERFERE WITH THE EXERCISE OF JUDGMENT BY AN
EMPLOYER. As mentioned in the previous decision, the law already
sufficiently regulates this matter. Jurisprudence also provides
adequate limitations, such that the employer must be motivated by
good faith and the contracting out should not be resorted to
circumvent the law or must not have been the result of malicious or
arbitrary actions. These are matters that may be categorically
determined only when an actual suit on the matter arises.
G.R. No. 160506 : March 9, 2010
49

JOEB M. ALIVIADO, et al., Petitioners, v. PROCTER & GAMBLE
PHILS., INC., and PROMM-GEM INC., Respondents.
DEL CASTILLO, J.:
FACTS:
Petitioners worked as merchandisers of P&G from various dates,
allegedly starting as early as 1982 or as late as June 1991, to either
May 5, 1992orMarch 11, 1993.
They all individually signed employment contracts with either
Promm-Gem or SAPS for periods of more or less five months at a
time. They were assigned at different outlets, supermarkets and
stores where they handled all the products of P&G. They received
their wages from Promm-Gem or SAPS.
SAPS and Promm-Gem imposed disciplinary measures on erring
merchandisers for reasons such as habitual absenteeism,
dishonesty or changing day-off without prior notice.
P&G is principally engaged in the manufacture and production of
different consumer and health products, which it sells on a wholesale
basis to various supermarkets and distributors. To enhance
consumer awareness and acceptance of the products, P&G entered
into contracts with Promm-Gem and SAPS for the promotion and
merchandising of its products.
In December 1991, petitioners filed a complaint against P&G for
regularization, service incentive leave pay and other benefits with
damages. The complaint was later amended to include the matter of
their subsequent dismissal.
On November 29, 1996, the Labor Arbiter dismissed the complaint
for lack of merit and ruled that there was no employer-employee
relationship between petitioners and P&G.He found that the selection
and engagement of the petitioners, the payment of their wages, the
power of dismissal and control with respect to the means and
methods by which their work was accomplished, were all done and
exercised by Promm-Gem/SAPS.He further found that Promm-Gem
and SAPS were legitimate independent job contractors. On appeal,
the NLRC dismissed the same. Petitioners filed a motion for
reconsideration but the motion was denied in the November 19,
1998Resolution.
Petitioners likewise failed to have a favrable decision in the CA
hence, this petition.
ISSUE:
Whether or not Promm-Gem and SAPS are labor-only contractors or
legitimate job contractors?
HELD:
The petition is granted.
LABOR LAW
Article 106 of the Labor Code and its implementing rules allow
contracting arrangements for the performance of specific jobs, works
or services. Indeed, it is management prerogative to farm out any of
its activities, regardless of whether such activity is peripheral or core
in nature. However, in order for such outsourcing to be valid, it must
be made to an independent contractor because the current labor
rules expressly prohibit labor-only contracting.
To emphasize, there is labor-only contracting when the contractor or
sub-contractor merely recruits, supplies or places workers to perform
a job, work or service for a principalandanyof the following elements
are present: (i) The contractor or subcontractor does not have
substantial capital or investment which relates to the job, work or
service to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing activities
which are directly related to the main business of the principal; or (ii)
50
The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
In the instant case,thefinancialstatementsof Promm-Gem show that it
has authorized capital stock ofP1 million and a paid-in capital, or
capital available for operations, ofP500,000.00 as of 1990. It also
has long term assets worthP432,895.28 and current assets
ofP719,042.32.Promm-Gem has also proven that it maintained its
own warehouse and office space with a floor area of 870 square
meters. It also had under its name three registered vehicles which
were used for its promotional/merchandising business. Promm-Gem
also has other clients aside from P&G. Under the circumstances,
Promm-Gem has substantial investment which relates to the work to
be performed.These factors negate the existence of the element
specified in Section 5(i) of DOLE Department Order No. 18-02.
The records also show that Promm-Gem supplied its complainant-
workers with the relevant materials, such as markers, tapes, liners
and cutters, necessary for them to perform their work. Promm-Gem
also issued uniforms to them. It is also relevant to mention that
Promm-Gem already considered the complainants working under it
as its regular, not merely contractual or project, employees. This
circumstance negates the existence of element (ii) as stated in
Section 5 of DOLE Department Order No. 18-02, which speaks
ofcontractual employees. This, furthermore, negates on the part of
Promm-Gem bad faith and intent to circumvent labor laws which
factors have often been tipping points that lead the Court to strike
down the employment practice or agreement concerned as contrary
to public policy, morals, good customs or public order.
Under the circumstances, Promm-Gem cannot be considered as a
labor-only contractor. Thus, it is a legitimate independent contractor.
On the other hand, the Articles of Incorporation of SAPS shows that
it has a paid-in capital of onlyP31,250.00.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.
It is clear that SAPS having a paid-in capital of onlyP31,250 - has no
substantial capital. SAPS lack of substantial capital is underlined by
the records which show that its payroll for its merchandisers alone
for one month would already totalP44,561.00.It had 6-month
contracts with P&G. Yet SAPS failed to show that it could complete
the 6-month contracts using its own capital and investment. Its
capital is not even sufficient for one months payroll. SAPS failed to
show that its paid-in capital ofP31,250.00 is sufficient for the period
required for it to generate its needed revenue to sustain its
operations independently. Substantial capital refers to capitalization
used in the performance or completion of the job, work or service
contracted out.In the present case, SAPS has failed to show
substantial capital.
Furthermore, the petitioners have been charged with the
merchandising and promotion of the products of P&G, an activity that
has already been considered by the Court as doubtlessly directly
related to the manufacturing business, which is the principal
business of P&G. Considering that SAPS has no substantial capital
or investment and the workers it recruited are performing activities
which are directly related to the principal business of P&G, we find
that the former is engaged in labor-only contracting.
Where labor-only contracting exists, the Labor Code itself
establishes an employer-employee relationship between the
employer and the employees of the labor-only contractor. The statute
establishes this relationship for a comprehensive purpose: to prevent
a circumvention of labor laws. The contractor is considered merely
an agent of the principal employer and the latter is responsible to the
employees of the labor-only contractor as if such employees had
been directly employed by the principal employer.
LABOR LAW
In cases of regular employment, the employer shall not terminate the
services of an employee except for a just or authorized cause.
In the instant case, the termination letters given by Promm-Gem to
its employees uniformly specified the cause of dismissal as grave
misconduct and breach of trust.
51

Misconduct has been defined as improper or wrong conduct; the
transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, unlawful in character implying
wrongful intent and not mere error of judgment.The misconduct to be
serious must be of such grave and aggravated character and not
merely trivial and unimportant.To be a just cause for dismissal, such
misconduct (a) must be serious; (b) must relate to the performance
of the employees duties; and (c) must show that the employee has
become unfit to continue working for the employer.
In the instant 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 only found them 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.A breach
of trust is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently.
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.As such,
he must be invested with confidence on delicate matters, such as
custody, handling or care and protection of the property and assets
of the employer. 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 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. Thus, there
was no valid cause for the dismissal of petitioners-employees of
Promm-Gem.
While Promm-Gem had complied with the procedural aspect of due
process in terminating the employment of petitioners-employees,i.e.,
giving two notices and in between such notices, an opportunity for
the employees to answer and rebut the charges against them, it
failed to comply with the substantive aspect of due process as the
acts complained of neither constitute serious misconduct nor breach
of trust. Hence, the dismissal is illegal.
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&Gs letter terminating their Merchandising
Services Contact effective March 11, 1993, they in turn verbally
informed the concerned petitioners not to report for work anymore.
Neither SAPS nor P&G dispute the existence of these
circumstances. Parenthetically, unlike Promm-Gem which dismissed
its employees for grave misconduct and breach of trust due to
disloyalty, SAPS dismissed its employees upon the initiation of P&G.
It is evident that SAPS does not carry on its own business because
the termination of its contract with P&G automatically meant for it
also the termination of its employees services. It is obvious from its
act that SAPS had no other clients and had no intention of seeking
other clients in order to further its merchandising business. From all
indications SAPS, existed to cater solely to the need of P&G for the
supply of employees in the latters merchandising concerns only.
Under the circumstances prevailing in the instant case, we cannot
consider SAPS as an independent contractor.
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.
CIVIL LAW
Moral and exemplary damages are recoverable where the dismissal
52
of an employee was attended by bad faith or fraud or constituted an
act oppressive to labor or were done in a manner contrary to morals,
good customs or public policy.
With regard to the employees of Promm-Gem, there being no
evidence of bad faith, fraud or any oppressive act on the part of the
latter, we find no support for the award of damages.
As for P&G, the records show that it dismissed its employees
through SAPS in a manner oppressive to labor. The sudden and
peremptory barring of the concerned petitioners from work, and from
admission to the work place, after just a one-day verbal notice,
andfor no valid cause bellows oppression and utter disregard of the
right to due process of the concerned petitioners. Hence, an award
of moral damages is called for.
Attorneys fees may likewise be awarded to the concerned petitioners
who
wereillegallydismissedinbadfaithandwerecompelledtolitigateorincur
expenses to protect their rights by reason of the oppressive act of
P&G.
LABOR LAW
Lastly, under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges, inclusive of
allowances, and other benefits or their monetary equivalent from the
time the compensation was withheld up to the time of actual
reinstatement. Hence, all the petitioners, having been illegally
dismissed are entitled to reinstatement without loss of seniority rights
and with full back wages and other benefits from the time of their
illegal dismissal up to the time of their actual reinstatement.
The decision and resolution of the Court of Appeals are reversed and
set aside. The case is remanded to the NLRC.
GOYA, INC., Petitioner, v. GOYA, INC. EMPLOYEES UNION-
FFW, Respondent. PERALTA, J.:
G.R. No. 170054 : January 21, 2013
FACTS: Petitioner Goya Inc. (Goya) hired contractual employees
from PESO Resources Development Corporation (PESO). This
prompted Goya, Inc. Employees Union-FFW (Union) to request for a
grievance conference on the ground that the contractual workers do
not belong to the categories of employees stipulated in their CBA.
The Union also argued that hiring contractual employees is contrary
to the union security clause embodied in the CBA. When the matter
remained unresolved, the grievance was referred to the NCMB for
voluntary arbitration. The Union argued that Goya is guilty of ULP for
gross violation of the CBA. The voluntary arbitrator dismissed the
Unions charge of ULP but Goya was directed to observe and comply
with the CBA. While the Union moved for partial consideration of the
VA decision, Goya immediately filed a petition for review before the
Court of Appeals to set aside the VAs directive to observe and
comply with the CBA commitment pertaining to the hiring of casual
employees. Goya argued that hiring contractual employees is a valid
management prerogative. The Court of Appeals dismissed the
petition.
ISSUE: Whether the act of hiring contractual employees is a valid
exercise of management prerogative?
HELD: The petition must fail. LABOR LAW: management
prerogative; ULP; collective bargaining agreement The CA did not
commit serious error when it sustained the ruling that the hiring of
contractual employees from PESO was not in keeping with the intent
and spirit of the CBA. In this case, a complete and final adjudication
of the dispute between the parties necessarily called for the
resolution of the related and incidental issue of whether the
Company still violated the CBA but without being guilty of ULP as,
needless to state, ULP is committed only if there is gross violation of
the agreement. Goya kept on harping that both the VA and the CA
conceded that its engagement of contractual workers from PESO
was a valid exercise of management prerogative. It is confused. To
emphasize, declaring that a particular act falls within the concept of
management prerogative is significantly different from
acknowledging that such act is a valid exercise thereof. What the VA
and the CA correctly ruled was that the Companys act of contracting
out/outsourcing is within the purview of management prerogative.
Both did not say, however, that such act is a valid exercise thereof.
Obviously, this is due to the recognition that the CBA provisions
agreed upon by Goya and the Union delimit the free exercise of
53
management prerogative pertaining to the hiring of contractual
employees. A collective bargaining agreement is the law between
the parties. A collective bargaining agreement or CBA refers to the
negotiated contract between a legitimate labor organization and the
employer concerning wages, hours of work and all other terms and
conditions of employment in a bargaining unit. As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and
conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order or public policy.
Thus, where the CBA is clear and unambiguous, it becomes the law
between the parties and compliance therewith is mandated by the
express policy of the law. As repeatedly held, the exercise of
management prerogative is not unlimited; it is subject to the
limitations found in law, collective bargaining agreement or the
general principles of fair play and justice. Petition is DENIED.

54

ESCANIAS VS. SHANGRI-LAS MACTAN
G.R. No. 178827 July 5, 2010
Petition: Complaint for regularization
Petitioners: Jeromie Escasinas and Evan Rigor Singco
Respondent: Shangri-Las Mactan Island Resort and Dr. Jessica
J.R. Pepito
DOCTRINE: The existence of an independent and permissible
contractor relationship is generally established by considering the
following determinants: whether the contractor is carrying on an
independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign
the performance of a specified piece of work; the control and
supervision of the work to another; the employer's power with
respect to the hiring, firing and payment of the contractor's workers;
the control of the premises; the duty to supply the premises, tools,
appliances, materials and labor; and the mode, manner and terms of
payment.
On the other hand, existence of an employer- employee relationship
is established by the presence of the following determinants: (1) the
selection and engagement of the workers; (2) power of dismissal; (3)
the payment of wages by whatever means; and (4) the power to
control the worker's conduct, with the latter assuming primacy in the
overall consideration.
FACTS:
Jeromie Escasinas and Evan Rigor Singco were registered nurses,
engaged by respondent Dr. Jessica Joyce R. Pepito to work in her
clinic at respondent Shangri-Las Mactan Island Resort. Escasinas
and Singco filed with the National Labor Relations Commission
(NLRC) a complaint for regularization, underpayment of wages, non-
payment of holiday pay, night shift differential and 13th month pay
against Shangrila et al., claiming that they are regular employees of
Shangri-La.
Shangri-la claimed that Escasinas and Singco were not its
employees but of Dr. Pepito, whom it retained via Memorandum of
Agreement (MOA) pursuant to Article 157 of the Labor Code. Dr.
Pepito for her part claimed that Escasinas and Singco were already
working for the previous retained physicians of Shangri-la before she
was retained.
Escasinas and Singco, however, insist that under Article 157 of the
Labor Code, Shangri-la is required to hire full-time registered nurse,
hence their engagement should be deemed as regular employment.
They maintain that Dr. Pepito is a labor-only contractor for she has
no license or business permit and no business name registration as
mandated by Sec. 19 and 20 of the Implementing Rules and
Regulations of the Labor Code.
Labor Arbiter: Declared petitioners to be regular employees of
Shangri-la. The Arbiter thus ordered Shangri-la to grant them the
wages and benefits due them as regular employees from the time
their services were engaged.
NLRC: Granted Shangri-las and respondent doctors appeal and
dismissed petitioners complaint for lack of merit, it finding that no
employer-employee relationship exists between petitioner and
Shangri-la.
CA: Affirmed NLRCs decision
ISSUE:
Whether or not Escasinas and Singco are regular employees of
Shangri-la and Dr. Pepito
HELD/RULING:
The Court holds that Dr. Pepito is a legitimate independent
contractor. That Shangri-la provides the clinic premises and medical
supplies for use of its employees and guests do not necessarily
prove that respondent doctor lacks substantial capital and
investment. Besides, the maintenance of a clinic and provision of
medical services to its employees is required under Art. 157, which
55
are not directly related to Shangri- las principal business operation
of hotels and restaurants.

DISPOSITIVE PORTION: WHEREFORE, the petition is hereby

DENIED. The Decision of the Court of Appeals dated May 22, 2007
and the Resolution dated July 10, 2007 are AFFIRMED.

SO ORDERED.

56
Babas v. Lorenzo Shipping Corporation
GR # 186091 | December 15, 2010
Petition: Appeal by certiorari under Rule 45 of the Rules of
Court
Petitioner: Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin,
Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano,
Jr., Arsenio Estorque, And Felixberto Anajao
Respondent: Lorenzo Shipping Corporation
DOCTRINE
The Certificate of Registration is not sufficient proof that it is an
independent contractor. The fact of registration simply prevents the
legal presumption of being a mere labor-only contractor from arising.
FACTS
- Lorenzo Shipping Corporation (LSC) entered into a General
Equipment Maintenance Repair and Management Services
Agreement with Best Manpower Services, Inc. (BMSI). BMSI
undertook to provide maintenance and repair services to
LSCs container vans, heavy equipment, trailer chassis, and
generator sets. BMSI further undertook to provide checkers
to inspect all containers received for loading to and/or
unloading from its vessels. LSC simultaneously leased its
equipment, tools, and tractors to BMSI. The period of lease
was coterminous with the Agreement.
- BMSI then hired petitioners on various dates to work at LSC
as checkers, welders, utility men, clerks, forklift operators,
motor pool and machine shop workers, technicians, trailer
drivers, and mechanics. Six years later, LSC entered into
another contract with BMSI, this time, a service contract.
- Petitioners then filed with the Labor Arbiter (LA) a complaint
for regularization against LSC and BMSI. LSC then
terminated the Agreement, so consequently, petitioners lost
their employment.
- BMSI asserted that it is an independent contractor and that it
was willing to regularize petitioners but some of them lacked
the requisite qualifications for the job. BMSI was willing to
reassign petitioners who were willing to accept
reassignment. BMSI also denied petitioners claim for
underpayment of wages and non-payment of 13th month
pay and other benefits.
- LSC, on the other hand, averred that petitioners were
employees of BMSI and were assigned to LSC by virtue of
the Agreement and that BMSI is an independent job
contractor with substantial capital or investment in the form
of tools, equipment, and machinery necessary in the conduct
of its business. The Agreement between LSC and BMSI
constituted legitimate job contracting. Thus, petitioners were
employees of BMSI and not of LSC.
- LA: Dismissed petitioners complaint ruling that petitioners
were employees of BMSI for it was BMSI which hired
petitioners, paid their wages, and exercised control over
them
- NLRC: Reversed LA. Ruling that from the records, BMSI is
not engaged in legitimate job contracting for it engaged in
prohibited labor-only-contracting and finding respondent
Lorenzo Shipping Corp. as the employer of the petitioners.
o no equipment, no office premises, no capital and no
investments as shown in the Agreement itself
o no independent business or activity or job to perform
in respondent LSC free from the control of LSC
except as to the results thereof
o BMSI has no other client but LSC
- CA: Reversed the NLRC.
o CA relied on the provisions of the Agreement,
wherein BMSI warranted that it is an independent
contractor, with adequate capital, expertise,
knowledge, equipment, and personnel necessary for
the services rendered to LSC.
o The fact that BMSI entered into a contract of lease
with LSC did not ipso facto make BMSI a labor-only
contractor; on the contrary, it proved that BMSI had
substantial capital which qualified it as an
independent contractor.
o Even under the control test, BMSI would be the real
employer of petitioners, since it had assumed the
entire charge and control of petitioners services.
o BMSIs Certificate of Registration as an independent
contractor was sufficient proof that it was an
57
 independent contractor. Hence, the CA absolved
LSC from liability and instead held BMSI as SO ORDERED.
employer of petitioners
Hence, this petition.

ISSUE/S
5. W/N court of appeals erred in ignoring the clear evidence of
record that respondent was engaged in labor-only contracting to
defeat petitioners right to security of tenure.

RULING & RATIO

- YES
o In distinguishing between prohibited labor-only
contracting and permissible job contracting, the
totality of the facts and the surrounding
circumstances of the case are to be considered.
o The CA erred in considering BMSIs Certificate of
Registration as sufficient proof that it is an
independent contractor. For it is not conclusive
evidence of such status because it simply prevents
the legal presumption of being a mere labor-only
contractor from arising.
o Consequently, the workers that BMSI supplied to
LSC became regular employees of the latter. Having
gained regular status, petitioners were entitled to
security of tenure and could only be dismissed for
just or authorized causes and after they had been
accorded due process.

DISPOSITION WHEREFORE, the petition is GRANTED. The

Decision and the Resolution of the Court of Appeals in CA-G.R. SP.
No. 103804 are REVERSED and SET ASIDE. Petitioners Emmanuel
Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi
Bermeo, Rex Allesa, and Arsenio Estorque are declared regular
employees of Lorenzo Shipping Corporation. Further, LSC is ordered
to reinstate the seven petitioners to their former position without loss
of seniority rights and other privileges, and to pay full backwages,
inclusive of allowances, and other benefits or their monetary
equivalent, computed from the time compensation was withheld up
to the time of actual reinstatement.
58
NORKIS TRADING CORPORATION v JOAQUIN BUENAVISTA
G.R. NO. 182018 | October 10, 2012
Petition: for Review on Certiorari
Petitioner: Norkis Trading Corporation
Respondents: Joaquin Buenavista, Henry Fabroa, Ricardo
Cape, Bertuldo Tulod, Willy Dondoyano and Glen Villariasa
FACTS
Respondents were hired by and worked for Norkis as skilled workers
assigned in the operation of industrial and welding machinese owned
and used by Norkis for its business, they were not treated as regular
employees by Norkis. Instead, Norkis regarded them as members of
Panaghiusa sa Kauswagan Multi-Purpose Cooperative (PASAKA)
which was deemed an independent contractor that merely deployed
the respondents to render services for Norkis. Respondents
believing that they are employees of Norkis filed with DOLE a
complaint against petitioner and PAKASA for labor-only contracting
and non-payment of minimum wage and overtime pay. PASAKA
issued a memorandum to respondents charging them with violations
of its rules and regulations.
Respondents were suspended by PASAKA which prompted them to
file a case with the NLRC against Norkis and PASAKA for illegal
suspension.
During the pendency of the NLRC case, respondents were informed
by PASAKA that they will be transferred to the sister company of
Norkis, Porta Coelli, as washers.
Respondents opposed the transfer as it would allegedly result in
change of employers. Respondents also believed that it would result
to demotion since from being skilled workers in Norkis to being a
utility worker. It made respondents amend their complaint to include
the charges of unfair labor practice, illegal dismissal, damages and
attorneys fees.
The labor arbiter and NLRC ruled in favor of Norkis.
CA reversed the decision of NLRC.
ISSUE
WON PASAKA is a labor-only contractor.
HELD
YES
PASAKA is a labor-only contractor. Labor-only contracting, a
prohibited act, is an arrangement where the contractor or
subcontractor merely recruits, supplies, or places workers to perform
a job, work, or service for a principal. In labor-only contracting, the
following elements are present: (a) the contractor or subcontractor
does not have substantial capital or investment to actually perform
the job, work, or service under its own account and responsibility;
and (b) the employees recruited, supplied or placed by such
contractor or subcontractor perform activities which are directly
related to the main business of the principal. These differentiate it
from permissible or legitimate job contracting or subcontracting,
which refers to an arrangement whereby a principal agrees to put out
or farm out with the contractor or subcontractor the performance or
completion of a specific job, work, or service within a definite or
predetermined period, regardless of whether such job, work, or
service is to be performed or completed within or outside the
premises of the principal. A person is considered engaged in
legitimate job contracting or subcontracting if the following conditions
concur: (a) the contractor carries on a distinct and independent
business and partakes the contract work on his account under his
own responsibility according to his own manner and method, free
from the control and direction of his employer or principal in all
matters connected with the performance of his work except as to the
results thereof; (b) the contractor has substantial capital or
investment; and (c) the agreement between the principal and the
contractor or subcontractor assures the contractual employees
entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and
social welfare benefits.
We emphasize that the petitioners arguments against the
respondents claim that PASAKA is a labor-only contractor, which is
thus to be regarded as a mere agent of Norkis Trading for which the
respondents rendered service, are already mooted by the finality of
this Courts Resolutions dated December 5, 2007 and April 14, 2008
in G.R. Nos. 180078-79, which stems from the CAs and the DOLE
Secretarys review of the DOLE Regional Directors Order dated
August 22, 2000 in LSED Case No. RO700-9906-CI-CS-168.
59
To recapitulate, Regional Director Balanag issued on August 22,
50
2000 its Order in LSED Case No. RO700-9906-CI-CS-168 and
declared PASAKA as a mere labor-only contractor, and Norkis
Trading as the true employer of herein respondents. He explained
that PASAKA failed to prove during the conduct of a summary
investigation that the cooperative had substantial capital or
investment sufficient to enable it to perform the functions of an
independent contractor. The respondents claim that the machinery,
equipment and supplies they used to perform their duties were
owned by Norkis Trading, and not by PASAKA, was undisputed.
While PASAKA reflected in its Statement of Financial Condition for
the year 1996 property and equipment net of accumulated
depreciation at P 344,273.02, there was no showing that the
properties covered thereby were actually and directly used in the
conduct of PASAKAs business.

DISPOSITION
WHEREFORE, premises considered, the petition is DENIED.

Additional facts
PAKASA charged respondents of (1) serious misconduct or willful
disobedience of superiors instructions or orders (2) gross and
habitual neglect of duties by abandoning work without permission;
(3) absences without filing leave of absence; and (4) wasting time or
loitering on companys time or leaving their post temporarily without
permission during office hours.

60
Semblante v. CA (Short title)
GR # 196426 | August 15, 2011
Petition: Petition for review on certiorari under Rule 45
Petitioner: Marticio Semblante and Dubrick Pilar
Respondent: Gallera de Mandaue/Sps Vicente and Maria Luisa
Loot
DOCTRINE
While the respondents had failed to post their bond within the 10 day
period provided above, it is evident, on the other hand, that
petitioners are not employees of respondents since their relationship
fails to pass muster the four fold test of employment.
FACTS
- Petitioners Marticio Semblante (Semblante) and DubrickPilar
(Pilar) assert that they were hired by respondents-spouses
Vicente and Maria Luisa Loot, the owners of Gallera de
Mandaue(the cockpit), as the official
masiadorandsentenciador, respectively, of the cockpit
sometime in 1993.
- As the masiador, Semblante calls and takes the bets from
the gamecock owners and other bettors and orders the start
of the cockfight. He also distributes the winnings after
deducting the arriba, or the commission for the cockpit.
Meanwhile, as the sentenciador, Pilar oversees the proper
gaffing of fighting cocks, determines the fighting cocks
physical condition and capabilities to continue the cockfight,
and eventually declares the result of the cockfight.
- On November 14, 2003, however, petitioners were denied
entry into the cockpit upon the instructions of respondents,
and were informed of the termination of their services
effective that date. This prompted petitioners to file a
complaint for illegal dismissal against respondents.
- In answer, respondents denied that petitioners were their
employees and alleged that they were associates of
respondents independent contractor, Tomas Vega.
Respondents claimed that petitioners have no regular
working time or day and they are free to decide for
themselves whether to report for work or not on any
cockfighting day. In times when there are few cockfights
inGallera de Mandaue, petitioners go to other cockpits in the
vicinity. Lastly, petitioners, so respondents assert, were only
issued identification cards to indicate that they were free
from the normal entrance fee and to differentiate them from
the general public.
- Labor Arbiter Julie C. Rendoque found petitioners to be
regular employees of respondents as they performed work
that was necessary and indispensable to the usual trade or
business of respondents for a number of years. The Labor
Arbiter also ruled that petitioners were illegally dismissed,
and so ordered respondents to pay petitioners their
backwages and separation pay.
- Respondents counsel received the Labor Arbiters Decision
on September 14, 2004. And within the 10-day appeal
period, he filed the respondents appeal with the NLRC on
September 24, 2004, but without posting a cash or surety
bond equivalent to the monetary award granted by the Labor
Arbiter.
- It was only on October 11, 2004 that respondents filed an
appeal bond dated October 6, 2004. Hence, in a Resolution
dated August 25, 2005, the NLRC denied the appeal for its
non-perfection.
- Subsequently, however, the NLRC, acting on respondents
Motion for Reconsideration, reversed its Resolution on the
postulate that their appeal was meritorious and the filing of
an appeal bond, albeit belated, is a substantial compliance
with the rules. The NLRC held in its Resolution of October
18, 2006 that there was no employer-employee relationship
between petitioners and respondents, respondents having
no part in the selection and engagement of petitioners, and
that no separate individual contract with respondents was
ever executed by petitioners.
- The appellate court found for respondents, noting that
referees and bet-takers in a cockfight need to have the kind
of expertise that is characteristic of the game to interpret
messages conveyed by mere gestures. Hence, petitioners
are akin to independent contractors who possess unique
skills, expertise, and talent to distinguish them from ordinary
employees.
- The CA refused to reconsider its Decision.
61
 - Hence, petitioners came to this Court, arguing in the main private respondents constrain the relaxation of the rules. In this
that the CA committed a reversible error in entertaining an regard, we find no grave abuse attributable to the administrative
appeal, which was not perfected in the first place. body.

ISSUE/S
6. Whether CA erred in entertaining an appeal which was not
perfected.

RULING & RATIO

- Petitioners are not employees of respondents.
o As found by both the NLRC and the CA,
respondents had no part in petitioners selection and
management; petitioners compensation was paid
out of the arriba (which is a percentage deducted
from the total bets), not by petitioners; and
petitioners performed their functions as masiador
and sentenciador free from the direction and control
of respondents. In the conduct of their work,
petitioners relied mainly on their expertise that is
characteristic of the cockfight gambling, and were
never given by respondents any tool needed for the
performance of their work.
o Respondents, not being petitioners employers, could
never have dismissed, legally or illegally, petitioners,
since respondents were without power or
prerogative to do so in the first place. The rule on
the posting of an appeal bond cannot defeat the
substantive rights of respondents to be free from an
unwarranted burden of answering for an illegal
dismissal for which they were never responsible.
o Strict implementation of the rules on appeals must
give way to the factual and legal reality that is
evident from the records of this case. After all, the
primary objective of our laws is to dispense justice
and equity, not the contrary.

DISPOSITION
As elucidated by the NLRC, the circumstances obtaining in this case
wherein no actual EE relationship exists between the petitioners and
62
Temic Automotive Phils, INC v. Temic Automotive Phils, INC
Employees Union
GR No. 186965 | 609 SCRA 355 | December 23, 2009
Petition: Petition for review on certiorari
Petitioner: Temic Automotive Phils, INC
Respondent: Temic Automotive Phils, INC Employees Union-
FFW
DOCTRINE
The skills requirements and job content between forwarders jobs
and bargaining unit jobs may be the same, and they may even work
on the same company products, but they work for different purposes
and for different entities completely distinguish and separate
forwarder and company employees from one another.
FACTS
- The petitioner is a corporation engaged in the manufacture
of electronic brake systems and comfort body electronics for
automotive vehicles.
- By practice established since 1998, the petitioner contracts
out some of the work in the warehouse department. These
forwarders also have their own employees. The regular
employees of the petitioner and those of the forwarders
share the same work area and use the same equipment,
tools and computer all belonging to the petitioner.
- This outsourcing arrangement gave rise to a union grievance
on the issue of the scope and coverage of the collective
bargaining unit. Thus, demanded that the forwarders
employees be absorbed into the petitioners regular
employee force and be given positions within the bargaining
unit.
- The petitioner, argued that contracting arrangement with the
forwarders is a valid exercise of its management prerogative.
- Petitioner also argued that the forwarders have substantial
capital and are fully equipped with the technical knowledge,
facilities, equipment, materials, tools and manpower to
service the companys forwarding, packing and loading
requirements.
Voluntary Arbitration:
- Held that the outsourcing of forwarding work is expressly
allowed by the rules implementing the Labor Code.
However, the petitioner went beyond the limits of the legally
allowable contracting out because the forwarders
employees encroached upon the functions of the petitioners
regular rank-and-file workers.
- The petitioner sought relief from the CA
CA:
- Affirmed the Voluntary Arbitrators decision.
- Held that the petitioner has the right to enter into the
forwarding agreements, but these agreements should be
limited to forwarding services.
Hence, this petition.
ISSUE/S
7. W/N the company validly contracted out or outsourced the
services involving forwarding, packing, loading and clerical
activities related thereto
8. W/N the functions of the forwarders employees are functions
being performed by regular rank-and-file employees covered by
the bargaining Unit
RULING & RATIO
1. YES
Significantly, both the voluntary arbitrator and the CA
recognized that the petitioner was within its right in entering
the forwarding agreements with the forwarders as an
exercise of its management prerogative.
In Meralco v. Quisumbing, the court held that a company
can determine in its best judgment whether it should contract
out a part of its work for as long as the employer is motivated
by good faith the contracting is not for purposes of
circumventing the law and does not involve or be the result
of malicious or arbitrary action.
The forwarding arrangement has been in place since 1998
and no evidence has been presented showing that any
regular employee has been dismissed or displaced by the
forwarders employees since then.
63
2. NO
The job of forwarding, consists not only of a single activity
but of several services that complement one another and
can best be viewed as one whole process involving a
package of services
The regular company employees, work for the company
under its supervision and control, but forwarder employees
work for the forwarder in the forwarders own operation that
is itself a contracted work from the company.
The forwarding agreements were already in place when the
current CBA was signed. In this sense, the union accepted
the forwarding arrangement, albeit implicitly, when it signed
the CBA with the company.
The skills requirements and job content between forwarders
jobs and bargaining unit jobs may be the same, and they
may even work on the same company products, but their
work for different purposes and for different entities
completely distinguish and separate forwarder and company
employees from one another.

DISPOSITION
WHEREFORE, premises considered, we hereby NULLIFY and SET
ASIDE the assailed Court of Appeals Decision in CA-G.R. SP No.
99029 dated October 28, 2008, together with the Voluntary
Arbitrators Decision of May 1, 2007 declaring the employees of
forwarders Diversified Cargo Services, Inc., Airfreight 2100 and
Kuehne & Nagel, Inc., presently designated and functioning as
clerks, material handlers, system or data encoders and general
clerks, to be regular company employees. No costs.

64
Sonza vs ABS-CBN (Short title)
GR # 138051 | 431 SCRA 583 | June 10, 2004
Petition: PETITION for review on certiorari of a decision of the
Court of Appeals
Petitioner: Jose Y. Sonza
Respondent: ABS-CBN Broadcasting Corporation
DOCTRINE
FACTS
- ABS-CBN signed an Agreement with the Mel and Jay
Management and Development Corporation (MJMDC),
where Sonza is President and General Manager.
o ABS-CBN agreed to pay for SONZAs services a
monthly talent fee of P310,000 for the first year and
P317,000 for the second and third year of the
Agreement. ABS-CBN would pay the talent fees on
the 10th and 25th days of the month.
- On April 1, 1996, Sonza irrevocably resigned and waived his
right to recovery of the amount in the contract but reserved
the right to seek recovery of the other benefits in the
Agreement.
- SONZA filed a complaint against ABS-CBN before the
Department of Labor and Employment, National Capital
Region in Quezon City. SONZA complained that ABS-CBN
did not pay his salaries, separation pay, service incentive
leave pay, 13th month pay, signing bonus, travel allowance
and amounts due under the Employees Stock Option Plan
(ESOP).
- ABS-CBN filed a Motion to Dismiss on the ground that no
employer-employee relationship existed.
- Meanwhile, ABS-CBN continued to remit SONZAs monthly
talent fees through his account at PCIBank, Quezon Avenue
Branch, Quezon City. In July 1996, ABS-CBN opened a new
account with the same bank where ABS-CBN deposited
SONZAs talent fees and other payments due him under the
Agreement.
- LA: Dismissed for lack of jurisdiction.
o No employer-employee relationship.
- SONZA appealed to the NLRC.
- NLRC: Affirmed LA.
- CA: Affirmed NLRC.
Hence, this petition.
- THE CA gravely erred in affirming the NLRC decision and
refusing to find that and EE relationship existed between
SONZA and ABSCBN
-
ISSUE/S
9. W/N Sonza is an employee of ABSCBN
RULING & RATIO
- No.
o Applying the control test to the present case, we find
that SONZA is not an employee but an independent
contractor.
o ABS-CBN was not involved in the actual
performance that produced the finished product of
SONZAs work.ABS-CBN did not instruct SONZA
how to perform his job. ABS-CBN merely reserved
the right to modify the program format and airtime
schedule for more effective programming. ABS-
CBNs sole concern was the quality of the shows and
their standing in the ratings. Clearly, ABS-CBN did
not exercise control over the means and methods of
performance of SONZAs work.
o Sonzas claim that he is an employee of ABSCBN
because MJMDC is a labor-only contractor. NO
MERIT. As SONZA admits, MJMDC is a
management company devoted exclusively to
managing the careers of SONZA and his broadcast
partner, TIANGCO. MJMDC is not engaged in any
other business, not even job contracting. MJMDC
does not have any other function apart from acting
as agent of SONZA or TIANGCO to promote their
careers in the broadcast and television industry.
- With regard to Sonzas monetary claims, said claims are
based all based on the May 1994 Agreement and stock
option plan, and not on the Labor Code. In effect, SONZAs
65
 cause of action is for breach of contract which is intrinsically
a civil dispute cognizable by the regular courts.

DISPOSITION
WHEREFORE, we DENY the petition. The assailed Decision of the
Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is
AFFIRMED. Costs against petitioner.

66
ABS-CBN v. Nazareno
GR # 164156 | September 26, 2006
Petition: Petition for Review on Certiorari under Rule 45 of the
Rules of Court
Petitioner: ABS-CBN BROADCASTING CORPORATION
Respondent: MARLYN NAZARENO, MERLOU GERZON,
JENNIFER DEIPARINE, and JOSEPHINE LERASAN
DOCTRINE
The presumption is that when the work done is an integral part of the
regular business of the employer and when the worker, relative to
the employer, does not furnish an independent business or
professional service, such work is a regular employment of such
employee and not an independent contractor. Respondents cannot
be considered talents because they are not actors or actresses or
radio specialists or mere clerks or utility employees. They are regular
employees who perform several different duties under the control
and direction of ABS-CBN executives and supervisors.
FACTS
Petitioner ABS-CBN employed respondents as production assistants
(PAs) on different dates. They were assigned at the news and public
affairs, for various radio programs in the Cebu Broadcasting Station,
with a monthly compensation of P4,000. They were issued ABS-CBN
employees identification cards and were required to work for a
minimum of eight hours a day, including Sundays and holidays.
ABS-CBN and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA) to be effective during the
period from December 11, 1996 to December 11, 1999. However,
since ABS-CBN refused to recognize PAs as part of the bargaining
unit, respondents were not included to the CBA. Respondents then
filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service
Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages
against the ABS-CBN before the NLRC. The Labor Arbiter directed
the parties to submit their respective position papers. Upon
respondents failure to file their position papers within the
reglementary period, their complaint was dismissed without prejudice
for lack of interest to pursue the case.
Instead of re-filing their complaint with the NLRC, the respondents
filed an Earnest Motion to Refile Complaint with Motion to Admit
Position Paper and Motion to Submit Case For Resolution, which
was granted by the Labor Arbiter. Respondents insisted that they
belonged to a work pool from which petitioner chose persons to be
given specific assignments at its discretion, and were thus under its
direct supervision and control regardless of nomenclature. They
prayed that judgment be rendered in their favor.
For its part, ABS-CBN maintained that as program employees, a PAs
engagement is coterminous with the completion of the program, and
may be extended/renewed provided that the program is on-going; a
PA may also be assigned to new programs upon the cancellation of
one program and the commencement of another. As such program
employees, their compensation is computed on a program basis, a
fixed amount for performance services irrespective of the time
consumed. At any rate, petitioner claimed, as the payroll will show,
respondents were paid all salaries and benefits due them under the
law.
The Labor Arbiter then rendered judgment in favor of the
respondents, and declared that they were regular employees of
ABS-CBN; as such, they were awarded monetary benefits. The
NLRC also ruled that respondents were entitled to the benefits under
the CBA because they were regular employees who contributed to
the profits of ABS-CBN through their labor. ABS-CBNs motion for
reconsideration was denied by the NLRC.
ABS-CBN thus filed a petition for certiorari under Rule 65 of the
Rules of Court before the CA, raising as an issue whether or not
respondents were its regular employees. The CA dismissed the
said petition, and held that respondents are not mere project
employees, but regular employees who perform tasks necessary and
desirable in the usual trade and business of petitioner and not just its
project employees. Moreover, the CA added, the award of benefits
accorded to rank-and-file employees under the 1996-1999 CBA is a
necessary consequence of the NLRC ruling that respondents, as
PAs, are regular employees. ABS-CBNs motion for reconsideration
was also denied by the CA.
67
ABS-CBN thus filed the instant petition for review on certiorari and Appeals in CA-G.R. SP No. 76582 are AFFIRMED. Costs against
raises that the CA erred in affirming the ruling of the NLRC that the petitioner. SO ORDERED.
respondents were its regular employees.

ISSUE/S
W/N RESPONDENTS SHOULD BE CONSIDERED AS TALENTS
OF ABS-CBN, AND THUS NOT ITS REGULAR EMPLOYEES?

RULING & RATIO

No, the respondents are not talents of ABS-CBN, as the employer-
employee relationship between them has been proven. First, in the
selection and engagement of respondents, no peculiar or unique
skill, talent or celebrity status was required from them because they
were merely hired through petitioners personnel department just like
any ordinary employee; Second, the so-called talent fees of
respondents correspond to wages given as a result of an employer-
employee relationship. Respondents did not have the power to
bargain for huge talent fees, a circumstance negating independent
contractual relationship; Third, Petitioner could always discharge
respondents should it find their work unsatisfactory, and respondents
are highly dependent on the petitioner for continued work; Fourth,
the degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that
respondents are independent contractors.

The presumption is that when the work done is an integral part of the
regular business of the employer and when the worker, relative to
the employer, does not furnish an independent business or
professional service, such work is a regular employment of such
employee and not an independent contractor. The Court will peruse
beyond any such agreement to examine the facts that typify the
parties actual relationship. It follows then that respondents are
entitled to the benefits provided for in the existing CBA between
petitioner and its rank-and-file employees. As regular employees,
respondents are entitled to the benefits granted to all other regular
employees of petitioner under the CBA.

DISPOSITION
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for
lack of merit. The assailed Decision and Resolution of the Court of
68
FARLEY FULACHE vs ABS-CBN W/N Petitioners were illegally dismissed.
GR No. 183810
Complaint for illegal dismissal HELD: As regular employees, the petitioners fall within the coverage
of the bargaining unit and are therefore entitled to CBA benefits as a
FACTS: The petitioners alleged that on December 17, 1999, ABS- matter of law and contract. The LA decision found petitioners to be
CBN and the ABS-CBN Rank-and-File Employees Union executed a regular employees and not independent contractors. This declaration
collective bargaining agreement (CBA) effective December 11, 1999 unequivocally settled the petitioners' employment status: they are
to December 10, 2002. When they obtained copies of the ABS-CBNs regular employees entitled to the benefits and privileges
agreement, they learned that they had been excluded from its of regular employees. The petitioners are members of the
coverage as ABS-CBN considered them temporary and not regular appropriate bargaining unit because they are regular rank-and-file
employees, in violation of the Labor Code. They claimed they had employees and do not belong to any of the excluded categories.
already rendered more than a year of service in the company and, Specifically, nothing in the records shows that they are supervisory
therefore, should have been recognized as regular employees or confidential employees; neither are they casual nor probationary
entitled to security of tenure and to the privileges and benefits employees. Thus, as regular rank-and-file employees, they fall within
enjoyed by regular employees. They asked that they be paid CBA coverage under the CBAs express terms and are entitled to its
overtime, night shift differential, holiday, rest day and service benefits. The termination of employment of the four drivers occurred
incentive leave pay. They also prayed for an award of moral under highly questionable circumstances and with plain and
damages and attorneys fees.Labor Arbiter rendered his decision unadulterated bad faith.
holding that the petitioners were regular employees of ABS-CBN, not
independent contractors, and are entitled to the benefits and
privileges of regular employees. While the appeal before the NLRC
was pending, ABS-CBN dismissed Fulache, Jabonero, Castillo,
Lagunzad and Atinen (all drivers) for their refusal to sign up contracts
of employment with service contractor Able Services. The four
drivers and Atinen responded by filing a complaint for illegal
dismissal (illegal dismissal case). In defense, ABS-CBN alleged that
even before the labor arbiter rendered his decision of January 17,
2002 in the regularization case, it had already undertaken a
comprehensive review of its existing organizational structure to
address its operational requirements.Labor Arbiter upheld the validity
of ABS-CBN's contracting out of certain work or services in its
operations. The labor arbiter found that petitioners Fulache,
Jabonero, Castillo, Lagunzad and Atinen had been dismissed due to
redundancy, an authorized cause under the law. The NLRC reversed
the labor arbiters ruling in the illegal dismissal case; it found that
petitioners Fulache, Jabonero, Castillo, Lagunzad and Atinen had
been illegally dismissed and awarded them backwages and
separation pay in lieu of reinstatement.

ISSUE: W/N Petitioners are entitled to CBA benefits. YES

69
Insular Life Assurance Co. v. NLRC and Melecio Basiao
GR # 84484 | 179 SCRA 459
Petition: Petition for certiorari and prohibition to review the
resolution of the National Labor Relations Commissions.
Petitioner: Insular Life
Respondents: NLRC and Melecio Basiao
DOCTRINE: When an insurance agent is free to adopt his own
selling methods or is free to sell insurance at his own time, he is an
independent contractor.
FACTS
- Insular and Basiao entered into a contract by which the latter was
authorised to solicit within the Philippines applications for
insurance policies and annuities in accordance with the rules set
forth by Insular.
- Basiao would receive compensation in the form of commissions.
The contract also includes the relations of the parties, duties of
the agents and the acts prohibited to him and the modes of
terminations.
- 4 (Four) years later, in 1972, the parties entered into another
contract (Agency Managers Contract) while concurrently fulfilling
his previous contract.
- In 1979, Insular terminated the Agency Managers Contract. Due
to such, Basiao filed a civil action against the former which
prompted Insular to terminate their first contract and to stop
payment of his commissions.
- Basiao filed a case with the LA but Insular contended that the LA
has no jurisdiction over the case because the former was not a
company employee.
- LA ruled in favor of Basiao because the underwriting agreement
had established an employer-employee relationship between him
and the Company, and this conferred jurisdiction on the Ministry of
Labor to adjudicate his claim.
- The LA decision was affirmed by the NLRC.
Hence, this petition.
ISSUE
2. W/N Basiao was a company employee by the virtue of the
contract, thereby entitling him to his claim for unpaid
commissions. (Note: This issue is important because the answer
to said issue would determine whether the LA has jurisdiction
over the case)
RULING & RATIO
- NO
Rules and regulations governing the conduct of the business
are provided for in the Insurance Code. These rules merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it. Its aim is only to promote the result,
thereby creating no employer-employee relationship. It is usual
and expected for an insurance company to promulgate a set of
rules to guide its commission agents in selling its policies which
prescribe the qualifications of persons who may be insured.
None of these really invades the agents contractual prerogative
to adopt his own selling methods or to sell insurance at his own
time and convenience, hence cannot justifiable be said to
establish an employer-employee relationship between Basiao
and the company.
The respondents limit themselves to pointing out that Basiaos
contract with the company bound him to observe and conform
to such rules. No showing that such rules were in fact
promulgated which effectively controlled or restricted his choice
of methods of selling insurance.
Basiao was not an employee of the petitioner, but a commission
agent, an independent contract whose claim for unpaid
commissions should have been litigated in an ordinary civil
action not with the Labor Arbiter.
DISPOSTION
WHEREFORE, the appealed Resolution of the National Labor
Relations Commission is set aside, and that complaint of private
respondent Melecio T. Basiao in RAB Case No. VI-0010-83 is
dismissed. No pronouncement as to costs.
70
Philippine Daily Inquirer v. Magtibay standards. Reason is that a probationary has the duty to prove his
Facts: worth to the employer to become a permanent employee. The due
Philippine Daily Inquirer, Inc. (PDI) hired Leon Magtibay (Magtibay) process here is in the constant observance and evaluation of
as a contractual worker for 5 months. After the expiration of the said Magtibays performance, in which he failed by violating certain
contract, PDI hired him again with a probationary period of 6 months. company rules and regulations.
A week before the end of the second contract, PDI handed him his
termination letter due to failure in meeting company standards.
Magtibay then filed a complaint for illegal dismissal before the Labor
Arbiter stating that he has now become a regular employee by
working for more than 6 months. The PDI union supported him
stating unfair labor practice. Saying that he did not know he was
supposed to follow company standards and that he was not given
due process in his termination.
PDI explained that his 5-month contract should not be included with
his 6-month contract allowing him to be considered a regular
employee, and that he was in fact given an orientation on what the
company standards were. The Labor Arbiter agreed with PDI and
dismissed his complaint and acquitted PDI of illegal dismissal
and unfair labor practice.
When the case was brought to the NLRC, it reversed the Arbiters
decision and charged PDI with illegal dismissal due to the fact
that Magtibay was now considered a regular employee. Also,
Magtibay was not told that he must abide by company
standards.
The Court of Appeals agreed with the NLRC. PDI filed a motion
for reconsideration to no avail.
Issue:
Whether or not a probationary employees failure to follow company
standards is ground for illegal dismissal. WON PDI is liable for
violating procedural due process in terminating Magtibay.
Ruling:
The NLRC and CAs decisions were reversed and set aside thereby
reinstating the Labor Arbiters decision to acquit PDI of illegal
dismissal and unfair labor practice.
The SC ruled that company standards are meant to be followed even
if an employee is not made aware of them. It is inherent that
company standards are always in effect and employees,
probationary or regular, are expected to meet them.
Also, PDI is did not violate procedural process due to the fact the
Magtibay was on a probationary period and was not up to company
71
Tongko v Manufacturers' Life and Insurance Company and
Renato Vergel De Dios
G. R. NO. 167622 June 29, 2010
PETITION: Motion for Reconsideration filed by respondent to
reverse the November 2008 decision of the Court which ruled that
there exists an employer-employee relationship between petitioner
and respondent.
PETITIONER: Gregorio V. Tongko
RESPONDENT: The Manufacturers Life Insurance Co. (Phils.), Inc.
and Renato A. Vergel De Dios
DOCTRINE: , An important lesson that the first Insular Life case
teaches us is that a commitment to abide by the rules and
regulations of an insurance company does not ipso facto make the
insurance agent an employee. Neither do guidelines somehow
restrictive of the insurance agents conduct necessarily indicate
"control" as this term is defined in jurisprudence.
FACTS:
The contractual relationship of petitioner and respondent had
two basic phases.
First phase began on July 1, 1977 under a Career Agent's
Agreement. It provided:
> It is understood and agreed that the Agent is an independent
contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between
the Company and the Agent.
> duties of the Agent (such as canvassing for applications for Life
Insurance, Annuities and Group policies; collecting money due to the
insurance company);
>that the company may terminate the agreement at any time for
breach or violation of its provisions;
>that either parties may terminate the agreement at any time without
cause by giving the other party fifteen (15) days notice in writing.
Second phase started in 1963 when petitioner was named
Unit Manager in Manulifes Sales Agency Organization. In
1990, he became a Branch Manager. Six years later (or in
1996), Tongko became a Regional Sales Manager.
Petitioner's gross earnings consisted of commissions,
persistency income, and management overrides.
Since the beginning, Tongko consistently declared himself
self-employed in his income tax returns.
In November 2001, Respondent Insurance Company
instituted manpower development programs at the regional
sales management level. Therefore, respondent Renato
Vergel de Dios wrote petitioner a letter.
> that Petitioner's region was the lowest performer.
>that respondent Renato Vergel de Dios sought a meeting with
petitioner and the rest of its management team.
>that petitioner hires at his expense a competent assistant who can
unload him of much of the routine tasks which can be easily
delegated.
In December 2001, another letter from respondent came
which contained the termination of petitioner's services.
Petitioner filed a case for illegal dismissal with the NLRC
3
alleging that despite the terms of the Agency Agreement , he
was respondent's regular employee before he was illegally
dismissed.
LABOR ARBITER: no employer-employee relationship
existed between the parties.
NLRC: reversed the labor arbiters decision on appeal it
found the existence of an employer-employee relationship
and concluded that Tongko had been illegally dismissed.
CA: reverted to the labor arbiters decision that no employer-
employee relationship existed between Tongko and
Manulife.
SUPREME COURT: In its November 2008 decision ruled
that there is an employer-employee relationship.
Hence, this petition by Respondents for Motion for
Reconsideration on the November 2008 decision.
3 It is understood and agreed that the Agent is an independent contractor and nothing
contained herein shall be construed or interpreted as creating an employer-employee relationship
between the Company and the Agent.
72
 Under the general law on agency as applied to insurance, an
Respondents argue that the November 2008 Decision agency must be express in light of the need for a license and
ignores the findings of the CA on the three elements of the for the designation by the insurance company.
four-fold test other than the "control" test, reverses well- By the Agreements express terms, Tongko served as an
settled doctrines of law on employer-employee relationships, "insurance agent" for Manulife, not as an employee.
and grossly misapplies the "control test," by selecting, Guidelines indicative of labor law "control," should not
without basis, a few items of evidence to the exclusion of merely relate to the mutually desirable result intended by the
more material evidence to support its conclusion that there is contractual relationship they must have the nature of
"control." dictating the means or methods to be employed in attaining
the result, or of fixing the methodology and of binding or
ISSUE: W/N petitioner is a regular employee of respondent. restricting the party hired to the use of these means.
Manulifes codes of conduct, all of which do not intrude into
COURT: NO. the insurance agents means and manner of conducting their
The main issue of whether an agency or an employment sales and only control them as to the desired results and
relationship exists depends on the incidents of the Insurance Code norms, cannot be used as basis for a finding
relationship. that the labor law concept of control existed between
Thus, under the Insurance Code, the agent must, as a Manulife and Tongko.
matter of qualification, be licensed and must also act within
the parameters of the authority granted under the license
and under the contract with the principal. Other than the
need for a license, the agent is limited in the way he offers
and negotiates for the sale of the companys insurance DISPOSITION:
products, in his collection activities, and in the delivery of the WHEREFORE, considering the foregoing discussion, we REVERSE
insurance contract or policy. Rules regarding the desired our Decision of November 7, 2008,GRANT Manulifes motion for
results (e.g., the required volume to continue to qualify as a reconsideration and, accordingly, DISMISS Tongkos petition. No
company agent, rules to check on the parameters on the costs.
authority given to the agent, and rules to ensure that
industry, legal and ethical rules are followed) are built-in
elements of control specific to an insurance agency and
should not and cannot be read as elements of control
that attend an employment relationship governed by the
Labor Code.
Generally, the determinative element is the control exercised
over the one rendering service. The employer controls the
employee both in the results and in the means and manner
of achieving this result. The principal in an agency
relationship, on the other hand, also has the prerogative to
exercise control over the agent in undertaking the assigned
task based on the parameters outlined in the pertinent laws.

73
BESA vs. TRAJANO
G.R. No. 72409/ 146 SCRA 501/ December 29, 1986
Petition: Petition questions the decision of the Director of the
Bureau of Labor Relations in BLR Case No. A-8-165-85, which
affirmed the appealed order of the Med-Arbiter.
Petitioner: MAMERTO S. BESA, doing business under the name
and style of BESA'S CUSTOMBUILT SHOES
Respondents: THE HONORABLE CRESENCIANO B. TRAJANO,
DIRECTOR OF THE BUREAU OF LABOR RELATIONS,
MINISTRY OF LABOR AND EMPLOYMENT, AND KAISAHAN NG
MANGGAGAWANG PILIPINO (KAMPIL-KATIPUNAN)
DOCTRINE: Existence of employer-employee relationship is
determined by the following elements, namely, a] selection and
engagement of the employee; b] payment of wages; c] powers of
dismissal; and d] power to control the employee's conduct although
the latter is the most important element.
FACTS:
- Sometime in January, 1985, private respondent Kaisahan ng
Mangagawang Pilipino KAMPIL for short) a legitimate labor
union duly registered with the Ministry of Labor and
Employment (MOLE, for short), filed a Petition for
Certification Election in the National Labor Relations Division
of NCR. Petitioner Besa opposed it alleging that: 1. There is
no employer-employee relationship between Besa's and the
petitioners-signatories to the petition; 2. The subject of the
present petition had previously been decided by the defunct
Court of Industrial Relations, and is therefore barred under
the principle of res judicata; 3. The petition fails to comply
with the mandatory formal requirements under Sec. 2, Book
V, of the Omnibus Rules Implementing the Labor Code.
- The main thrust of the instant petition is the question of
employer-employee relationship between petitioner BESAS
and 17 of the members of the herein respondent Union who
are designated as shoeshiners. During the certification
election held on Nov. 26, 1985 at BESAS of the 53 eligible
voters, 49 cast their votes. 33 voted for the union while 16
voted for no union. Among the 33 voters who opted for a
union 17 persons are shoeshiners while 16 persons are non-
shoeshiners.
- The question of employer-employee relationship became a
primodial consideration in resolving whether or not the
subject shoeshiners have the juridical personality and
standing to present a petition for certification election as well
as to vote therein. It is the position of petitioner that if the
shoeshiners are not considered as employees of Besa's the
basic petition for certification election must necessarily be
dismissed for failure to comply with the mandatory
requirements of the Labor Code, as amended, that at least
thirty (30%) percent of the employees must support the
petition for certification election and that in order to be
certified as the sole and exclusive bargaining agent, the
union must be obtained a majority of the valid votes cast by
eligible voters. In the instant case, if the 17 shoeshiners are
declared ineligible and their votes are consequently nullified
the result of the certification election would be 16 "Yes"
votes (33 minus 17) and 16 "No" votes, which is a tie. Since
the respondent union did not obtain a clear majority for the
"Yes" votes as required under Rule IV Sec. 8(f) of the
Omnibus Rules of the Labor Code, it necessarily follows that
the respondent union cannot be certified as the sole and
exclusive bargaining agent of the workers of Besa's.
- The Med-Arbiter: issued an order declaring that there was
an employer-employee relationship between the parties and
directed that an election be conducted.
- Director of Bureau of Labor Relations: upholding the
finding of the Med-Arbiter that supervisors were appointed to
oversee the bootblacks' performance. It declared that such is
a finding of fact that is entitled to respect and that res
judicata does not apply as the parties and the causes of
action in the certification election case are different from the
parties and causes of action in Court of Industrial Relations
(CIR) cases.
Hence, this Petition appealing the order to the Director of
BLR citing among others the following reason: That the
subject of the present petition has previously been decided
by the defunct Court of Industrial Relations (CIR), and is
therefore barred under the principle of res judicata (Ruling of
CIR: Consequently, employer-employee relationship
between members of the Petitioning union and respondent
74
MAMERTO B. BESA being absent the latter could not be Director of the Bureau of Labor Relations dated September
held guilty of the unfair Labor practice acts imputed against 27, 1985.
him)
ISSUE: W/N there is an employer-employee relationship to
allow Pet. For Certification Employment

RULING & RATIO: NO

. SC citing CIR ruling: The shoe shiner is distinct from a
piece worker because while the latter is paid for work
accomplished, he does not, however, contribute anything to
the capital of the employer other than his service. It is the
employer of the piece worker who pays his wages, while the
shoe shiner in this instance is paid directly by his customer.
The piece worker is paid for work accomplished without
regard or concern to the profit as derived by his employer,
but in the case of the shoe shiners, the proceeds derived
from the trade are always divided share and share alike with
respondent BESA. The shoe shiner can take his share of the
proceeds everyday if he wanted to or weekly as is the
practice. The employer of the piece worker supervises and
controls his work, but in the case of the shoe shiner,
respondent BESA does not exercise any degree of control or
supervision over their person and their work.
. The most important condition to be considered is the
exercise of control and supervision over the employees, per
our conversation, the persons concerned under your query
are the shoe shiners and based on the decision rendered by
Associate Judge Emiliano Tabigne of the defunct Court of
Industrial Relations, these shoe shiners are not employees
of the company, but are partners instead. This is due to the
fact that the owner/manager does not exercise control and
supervision over the shoe shiners. That the shiners have
their own customers from whom they charge the fee and
divide the proceeds equally with the owner, which make the
owner categorized them as on purely commission basis.

DISPOSITION:
WHEREFORE, judgment is hereby rendered giving due
course to the Petition and declaring VOID the decision of the

75
MAFINCO vs. OPLE
March 25, 1976; G.R. No. L-37790
Topic: Valid job contracting arrangements; examples.
Petition: Petition for Certiorari and Prohibition
Petitioners: MAFINCO TRADING CORPORATION
Respondents: HON. BLAS OPLE Et. Al
Doctrine: Among the factors to be considered are whether the
contractor is carrying on an independent business; whether the work
is part of the employer's general business; the nature and extent of
the work; the skill required; the term and duration of the relationship;
the right to assign the performance of the work to another; the power
to terminate the relationship; the existence of a contract for the
performance of a specified piece of work; the control and supervision
of the work; the employer's powers and duties with respect to the
hiring, firing, and payment of the contractor's servants; the control of
the premises; the duty to supply the premises, tools, appliances,
material and labor; and the mode, manner, and terms of payment
FACTS:
MAFINCO was a distributor of Cosmos soft drinks in Manila. Private
respondents Repomata and Moralde executed a peddling contract
where they agreed to buy and sell Cosmos soft drinks Rey Moralde
entered into a similar contract. The contracts were to remain in force
for one year unless sooner terminated by either party upon five days'
notice to the other.
MAFINCO sent private respondents a letter terminating the contract
before the end of its effectivity. Private respondents, through their
labor union filed an illegal dismissal case against Mafinco with the
NLRC.
MAFINCO filed a motion to dismiss contending that private
respondents were not employees but were independent contractors,
thus the NLRC did not have jurisdiction over the case. Specifically,
the arrangement between MAFINCO and the private respondents
under the peddling contract may be described as:
the latter buy from the former at a special price, and
sell in Manila, the former's soft drink products. The
distributor provides the peddler with a delivery truck
with the distributor answering for the cost of fuel and
maintenance. If a peddler buys a certain number of
cases or more a day, he is entitled to a fixed amount
of peddler's discount.
The peddler himself drives the truck but if he
engages a driver or helpers, the latter are his
employees and he assumes all the responsibilities of
an employer in relation to them. He also obtains at
his own expense all licenses and permits required
by law of salesmen.
The peddler clears his accounts with the distributor
at the end of each day, and unpaid accounts are
charged against the cash deposit or bond which he
gives the distributor upon the execution of the
peddling contract. He answers for damages caused
by him or his employees to third persons.
Old NLRC: Denied the illegal dismissal case filed the private
respondents and held no employer-employee relationship
exists.
On appeal to the Secretary of Labor, the NLRC order was
reversed. The public respondent held that Repomata and
Moralde were employees, specifically, driver-salesmen. The
Secretary relied on this Court's ruling that a person who
possesses no capital or money of his own to pay his
obligations to his workers but relies entirely upon the contract
price to be paid by the company, falls short of the requisites or
conditions necessary for an independent contractor
(Mansal vs. Gocheco Lumber Co., 96 Phil. 941).
MR Denied by the Secretary of Labor.
Mafinco filed the instant actions on November 14, 1973. It prayed for
a declaration that the Secretary of Labor and the NLRC had no
76
jurisdiction to entertain the complaints of Repomanta and Moralde:
that the Secretary's decision should be set aside, and that the NLRC
and the Secretary be enjoined from further proceeding in NLRC
Case No. LR-086
ISSUES:
Whether or not the contract between MAFINCO and private
respondents is not an employment contract.
HELD:
YES. It is not an employment contract. Private respondents
Repomata and Moralde are independent contractors. An
independent contractor, as explained in the case is:
Lastly, the peddlers are doing business for themselves since they
took out licenses in the City of Manila, and have paid their
corresponding professional or occupation tax to the Bureau of
Internal Revenue.
Disposition: The decision, order and resolution of the Secretary of
Labor in NLRC Case No. LR-086 dated April 16, July 16 and October
18, 1973, respectively, are set aside and the order of the NLRC
dated February 2, 1973, dismissing the case for lack of jurisdiction, is
affirmed

An independent contractor is one who exercises independent

employment and contracts to do a piece of work according to his
own methods and without being subject to control of his employer
except as to the resuIt of thework. A person who has no capital or
money of his own to pay his laborers or to comply with his
obligations to them, who files no bond to answer for the fulfillment of
his contract with his employer, falls short of the requisites or
conditions necessary to classify him as independent contractor.

Thus, Peddlers contract to sell and buy Cosmos products from

Cosmos or Mafinco, the latter furnishing the delivery truck, but the
former sell Cosmos products according to their own methods,
subject to the pre-arranged routes, areas and zones, and go back to
the Company compound to return the delivery truck and to make
accounting of the day's sales collection at any time in the morning or
in the afternoon. Thus, control is only ever exercised in the following
of traffic regulations and in the liquidation of sales collection. All
other details are left to the peddler.

Furthermore, the peddlers may hire their own peddlers within their
prerogative and it is they who pay for their wages. Peddlers are also
responsible for their own acts or omissions or those of their
employees inflicted on third persons.

The peddlers also have to make a deposit on consignment which

can be taken to mean capital in this context.
77
Singer Sewing Machine Co. Vs Drilon
G.R. No. 91307, January 24, 1991 , 193 SCRA 270
Petition for certiorari assailing the order of Med-Arbiter Designate
Felix B. Chaguile, Jr., the resolution of then Labor Secretary Franklin
M. Drilon affirming said order on appeal and the order denying the
motion for reconsideration in the case entitled "In Re: Petition for
Direct Certification as the Sole and Exclusive Collective Bargaining
Agent of Collectors of Singer Sewing Machine Company-Singer
Machine Collectors Union-Baguio (SIMACUB)" docketed as OS-MA-
A-7-119-89 (IRD Case No. 02-89 MED).
Petitioner: Singer Sewing Machine Company
Respondents: Hon. Franklin Drilon, Med-Arbiter Felix Chaguile, Jr.,
and Singer Machine Collectors Union-Baguio
Ponente: Gutierrez, Jr.
Doctrine: The provision on job contracting requires that for one
to be considered an independent contractor, he must have
"substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials
which are necessary in the conduct of his business.
Facts:
This is a petition for certiorari assailing the order of Med-
Arbiter, Chaguile and Drilon denying the motion for reconsideration
in the case of the certification of Singer Sewing Machine Company-
Singer Machine Collectors Union-Baguio (SIMACUB) as the sole and
collective bargaining agent.
On February 1989, SIMACUB filed a petition for direct
certification as the sole and exclusive bargaining agent of all
collectors of the singer company, Baguio City branch. The company
opposed the petition on the ground that union members are
actually not employees but independent contractors of the
company.
Med-Arbiter, Chaguile, found that there exist an employee-
employer relationship between the union members and company,
thus he granted the petition for certification. On appeal, Drilon
affirmed the same.
This led to the petition, alleging that Drilon and Chaguile
acted in excess of jurisdiction and/or committed grave abuse of
discretion in that:
(1) DOLE has no jurisdiction over cases where there is employee-
employer relationship,
(2) right to due process was denied when the evidence of the union
members' being commission agents was disregarded by Drilon,
(3) that Drilon and Chaguile erred in finding the existence of
employee-employer relationship,
(4) Drilon and Chaguile disregarded the well-settled rule that
commission agents are not employees but are independent
contractors.
Respondents insist that the provisions of Collective Agency
Agreement contradict the company's position that the union
members are independent contractors. Proving that union members
are performing the most desirable and necessary activities for the
continuous and effective operations of the company. Citing also that
the union members will not qualify as independent contractors
because they are not free from control of the alleged employer, who
have substantial capital or investment in the equipment, tool and
other necessities of the business.
Issues:
1) Whether or not there is an employer-employee relationship
2) Whether or not the commission agents are independent
contractors
3) Whether or not they are entitled to form a labor union
Provisions: Section 8, Rule 8, Book III of the Omnibus Rules
Implementing the Labor Code in relation to Article 106 of the Labor
Code
Ruling:
1) No. The following elements are generally considered in the
determination of the employer-employee relationship; "(1) the
78
selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct although the latter is the most important
element"
The petitioner relies on the following stipulation in the
agreement: (a) a collector is designated as a collecting agent" who is
to be considered at all times as an independent contractor and not
employee of the Company; While the respondents rely on Paragraph
4 on the monthly collection quota required by the Company is
deemed by respondents as a control measure over the means by
which an agent is to perform his services.
Because of the agreement's confirmation of the status of the
collecting agent as independent contractor, court ruled in favor of the
petitioner. Saying also that the monthly collection qouta is a normal
requirement in contractual agreements (among other reasons like,
collectors are not bound to report on a daily basis, they are not
prohibited to seek another employment, and they are paid in a
commission basis, etc). Thus concluding also that there is no
employer-employee relationship. Denying the contention that the
alleged employees are performing activities that are necessary for
the business is not determinative in this case, due to the agreement.
The last and most important element of the control test is not
satisfied by the terms and conditions of the contracts. There is
nothing in the agreement which implies control by the Company not
only over the end to be achieved but also over the means and
methods in achieving the end (LVN Pictures, Inc. v. Philippine
Musicians Guild, 1 SCRA 132 [1961])
2) No. The Court stated that even Section 8, Rule 8, Book III of the
Omnibus Rules Implementing the Labor Code does not apply to this
case. Respondents assert that the said provision on job
contracting requires that for one to be considered an
independent contractor, he must have "substantial capital or
investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the
conduct of his business." There is no showing that a collection
agent needs tools and machineries. Moreover, the provision must
be viewed in relation to Article 106 of the Labor Code which
provides:
Art. 106. Contractor or subcontractor. Whenever an
employer enters into a contract with another person for the
performance of the former's work, the employees of the
contractor and of the latter's subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay
the wages of his employees in accordance with this Code,
the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent
of the work performed under the contract, in the same
manner and extent that he is liable to employees directly
employed by him.
xxx xxx xxx
There is "labor-only" contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others,
and the workers recruited and placed by such persons
are performing activities which are directly related to the
principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were
directly employed by him." (p. 20)
3) No. The Court finds that since private respondents are not
employees of the Company, they are not entitled to the constitutional
right to join or form a labor organization for purposes of collective
bargaining. Accordingly, there is no constitutional and legal basis for
their "union" to be granted their petition for direct certification.
Disposition: WHEREFORE, the Order dated June 14,1989 of Med-
Arbiter Designate Felix B. Chaguile, Jr., the Resolution and Order of
Secretary Franklin M. Drilon dated November 2, 1989 and December
14, 1989, respectively are hereby REVERSED and SET ASIDE. The
petition for certification election is ordered dismissed and the
temporary restraining order issued by the Court on December 21,
1989 is made permanent.
79
Sy v. Court of Appeals
GR 142293 | 398 SCRA 301 | February 27, 2003
Petition for review seeks the reversal of the CA decision
Petitioner: VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING
CORPORATION, and SBTTRUCKING CORPORATION
Respondent: HON. COURT OF APPEALS and JAIME SAHOT
(Industrial partner v. employee)
DOCTRINE
In termination cases, the burden is upon the employer to show by
substantial evidence that the termination was for lawful cause and
validly made. For an employees dismissal to be valid, (a) the
dismissal must be for a valid cause and (b) the employee must be
afforded due process.
FACTS
- In 1958, private respondent Jaime Sahot started working as
a truck helper for petitioners family-owned trucking business
named Vicente Sy Trucking. In 1965, he became a truck
driver of the same family business, renamed T. Paulino
Trucking Service, later 6Bs Trucking Corporation in 1985,
and thereafter known as SBT Trucking Corporation since
1994. Throughout all these changes in names and for 36
years, private respondent continuously served the trucking
business of petitioners.
- In 1994, Sahot was already 59 years old. He had been
incurring absences as he was suffering from various
ailments. Particularly causing him pain was his left thigh,
which greatly affected the performance of his task as a
driver. He inquired about his medical and retirement benefits
with the SSS but discovered that his premium payments had
not been remitted by his employer.
- Sahot had filed a week-long leave sometime in May 1994.
th
On May 27 , he was medically examined and treated for
EOR, presleyopia, hypertensive retinopathy HPM, UTI,
Osteoarthritis, and heart enlargement.
- At the end of his week-long absence, Sahot applied for
extension of his leave for the whole month of June, 1994. It
was at this time when petitioners allegedly threatened to
terminate his employment should he refuse to go back to
work.
- On September 13, 1994, Sahot filed with the NLRC a
complaint for illegal dismissal. He prayed for the recovery of
separation pay and attorneys fees against Vicente Sy and
Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T.
Paulino Trucking Service, 6Bs Trucking and SBT Trucking,
herein petitioners.
- Petitioners denied employing helpers and drivers contended
that Sahot was not illegally dismissed as a driver because he
was an industrial partner.
o Petitioners add that due to Sahots refusal to work
after the expiration of his authorized leave of
absence, he should be deemed to have voluntarily
resigned from his work.
o They add that it was not until the year 1994, when
SBT Trucking Corporation was established, and only
then did respondent Sahot become an employee of
the company.
- NLRC ruled that there was no illegal dismissal. Private
respondent had failed to report to work.
- On appeal, NRLC modified the judgment and declared that
private respondent was an employee, not an industrial
partner, since the start. Private respondent Sahot did not
abandon his job but his employment was terminated on
account of his illness
- CA affirmed with modification the judgment of the NLRC. It
held that private respondent was indeed an employee of
petitioners since 1958. It also increased the amount of
separation pay awarded.
ISSUES
Whether Sahot was an employee who was illegally dismissed - YES
PROVISIONS
LABOR CODE
Art. 284. Disease as a ground for termination- An employer may
terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is
prohibited by law or prejudicial to his health as well as the health of
his co-employees xxx
80

OMNIBUS IMPLEMENTING RULES OF THE LABOR CODE
Sec. 8. Disease as a ground for dismissal- Where the employee
suffers from a disease and his continued employment is prohibited
by law or prejudicial to his health or to the health of his co-
employees, the employer shall not terminate his employment unless
there is a certification by competent public health authority that the
disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment.
If the disease or ailment can be cured within the period, the employer
shall not terminate the employee but shall ask the employee to take
a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health.
CIVIL CODE
Article 1767. By the contract of partnership two or more persons bind
themselves to contribute money, property or industry to a common
fund, with the intention of dividing the profits among themselves.
RULING
YES, illegally dismissed.
- Private respondent denies that he was ever an industrial
partner of petitioners. There was no written agreement, no
proof that he received a share in petitioners profits, nor was
there anything to show he had any participation with respect
to the running of the business.
- As found by the appellate court, petitioners owned and
operated a trucking business since the 1950s and by their
own allegations, they determined private respondents wages
and rest day. Records of the case show that private
respondent actually engaged in work as an employee.
During the entire course of his employment he did not have
the freedom to determine where he would go, what he would
do, and how he would do it. He merely followed instructions
of petitioners and was content to do so, as long as he was
paid his wages. As ruled by the CA, private respondent had
worked as a truck helper and driver of petitioners not for his
own pleasure but under the latters control.
- The Civil Code states that in a contract of partnership two or
more persons bind themselves to contribute money, property
or industry to a common fund, with the intention of dividing
the profits among themselves.
o Not one of these circumstances is present in this
case. No written agreement exists to prove the
partnership between the parties. Private respondent
did not contribute money, property or industry for the
purpose of engaging in the supposed business.
There is no proof that he was receiving a share in
the profits as a matter of course, during the period
when the trucking business was under operation.
o Neither is there any proof that he had actively
participated in the management, administration and
adoption of policies of the business.
- In termination cases, the burden is upon the employer to
show by substantial evidence that the termination was for
lawful cause and validly made. For an employees dismissal
to be valid, (a) the dismissal must be for a valid cause and
(b) the employee must be afforded due process.
o From the records, it clearly appears that procedural
due process was not observed in the separation of
private respondent by the management of the
trucking company. The employer is required to
furnish an employee with two written notices before
the latter is dismissed: (1) the notice to apprise the
employee of the particular acts or omissions for
which his dismissal is sought, which is the equivalent
of a charge; and (2) the notice informing the
employee of his dismissal, to be issued after the
employee has been given reasonable opportunity to
answer and to be heard on his defense.
- An employee who is terminated because of disease is
entitled to separation pay equivalent to at least one month
salary or to one-half month salary for every year of service,
whichever is greater.
DISPOSITION
The petition is DENIED and the decision of the Court of Appeals
dated February 29, 2000 is AFFIRMED. Petitioners must pay private
respondent Jaime Sahot his separation pay for 36 years of service at
the rate of one-half monthly pay for every year of service, amounting
to P74,880.00, with interest of six per centum (6%) per annum from
finality of this decision until fully paid.
81
FELIX vs. DR. BUENASEDA
G.R. No. 109704 January 17, 1995
Petition: This petition, on its surface, seems to be an ordinary
challenge against the validity of the conversion of petitioners
position from permanent resident physician status to that of a
temporary resident physician pursuant to the government
reorganization after the EDSA Revolution.
Petitioner: ALFREDO B. FELIX
Respondent: DR. BRIGIDA BUENASEDA, in her capacity as
Director, and ISABELO BAEZ, JR., in his capacity as Administrator,
both of the National Center for Mental Health, and the CIVIL
SERVICE COMMISSION.
DOCTRINE: A residency or resident physician position in a medical
specialty is never a permanent one and as such, is not covered by
security of tenure.
FACTS: Petitioner assails his dismissal as Medical Specialist I of the
National Center for Mental Health (NCMH) as illegal and violative of
the constitutional provision on security of tenure.
Employment history:
June 1979 - Petitioner joined the NCMH as a Resident
Physician. Shortly, after reorganization, he was promoted
through appointment as Senior Resident Physician until the
Ministry of Health reorganized the NCMH pursuant to E.O.
119.
August 1988 - elevated to the position of Medical Specialist
I (Temporary Status) which was renewed the following year.
The Dept. of Health issued Department Order No. 347 which
required board certification as prerequisite for renewal of specialist
positions in various medical centers and it also extend appointments
of Medical Specialist positions in cases where the termination of
medical specialist who failed to meet the requirements for board
certification.
On August 20, 1991, after reviewing petitioner's service
record, non-renewal of petitioners appointment as
Medical Specialist I was recommended. He was,
however, allowed to continue in the service, and receive
his salary, allowances and other benefits even after
being informed of the termination of his appointment.
Soon, he was advised by the hospital authorities to
vacate his cottage.
The petitioner filed a petition with the Merit System Protection Board
alleging harassment by respondents; however, it was later
dismissed for lack of merit.
Said decision was appealed to the Civil Service
Commission which dismissed the same including the Motion for
Reconsideration the petitioner has filed after which brought this
appeal.
ISSUE: WON petitioner was illegally dismissed from his position and
that it is not a
violative of his constitutional right of security of tenure.
RULING AND RATIO:
NO. The petitioner was not illegally dismissed. He is under a contract
on a fixed term employment basis which is a valid temporary
appointment.
The patent absurdity of petitioner's posture is readily obvious.
A residency or resident physician position in a medical
specialty is never a permanent one. Residency connotes
training and temporary status. It is the step taken by a physician
right after post-graduate internship (and after hurdling the
Medical Licensure Examinations) prior to his recognition as a
specialist or sub-specialist in a given field.cral
aw
Petitioner's insistence on being reverted back to the status quo prior
to the reorganizations made pursuant to Executive Order No. 119
would therefore be akin to a college student asking to be sent back
to high school and staying there. From the position of senior resident
82
physician, which he held at the time of the government
reorganization, the next logical step in the stepladder process was
obviously his promotion to the rank of Medical Specialist I, a position
which he apparently accepted not only because of the increase in
salary and rank but because of the prestige and status which the
promotion conferred upon him in the medical community. Such
status, however, clearly carried with it certain professional
responsibilities including the responsibility of keeping up with the
minimum requirements of specialty rank, the responsibility of keeping
abreast with current knowledge in his specialty and in Medicine in
general, and the responsibility of completing board certification
requirements within a reasonable period of time. The evaluation
made by the petitioner's peers and superiors clearly showed that he
was deficient in a lot of areas, in addition to the fact that at the time
of his non-renewal, he was not even board-certified.cralaw

He is estopped from insisting upon a right or claim which he

had plainly abandoned when he, from all indications,
enthusiastically accepted the promotion. It bears emphasis
that at the time of petitioner's promotion to the position of Medical
Specialist I (temporary) in August of 1988, no objection was raised
by him about the change of position or the temporary nature of
designation. The failure to assert a claim or the voluntary acceptance
of another position in government, obviously without reservation,
leads to a presumption that the civil servant has either given up his
claim of has already settled into the new position. Finally, it is crystal
clear, from the facts ofthe case at bench, that the petitioner accepted
a temporary appointment (Medical Specialist I). As respondent Civil
Service Commission has correctly pointed out, the appointment was
for a definite and renewable period which, when it was not renewed,
did not involve a dismissal but an
expiration of the petitioner's term.

DISPOSITION: DISMISSED, for lack of merit.cralaw

83
UERM Memorial Medical Center Resident Doctors Union vs
Laguesma
Facts:
The existence of an employer-employee relationship between the
resident physicians of the University of the East Ramon Magsaysay
Medical Center and the hospital became the crux of the matter in its
petition for certification.
The resident physicians formed a union called the UERMMC-
Resident Doctors Union and filed the petition for certification so that
it will be recognized as the exclusive bargaining agent of all the
resident physicians in the hospital for purposes of collective
bargaining.
The petition for certification was dismissed by the Undersecretary,
acting under the authority of the Secretary of Labor, on the ground
that there exist no employer-employee relationship between the
resident doctors and the hospital.
Issue:
Whether or not resident doctors are
employees of the hospital
Ruling/Ratio:
It is clear that physicians undergo residency training in order to hone
their skills and develop or improve their knowledge in a specialized
medical field or discipline. Hence, residency is basically and simply a
continuation of their medical course. However, they are not required
or mandated under any law to further undergo a residence training
program. Having passed the medical board examinations, they are
already licensed physicians and could very well engage in the
general practice of medicine. It is for the practice of highly
specialized medical disciplines which necessitates further on-the-job
training thereon.
Viewed from this perspective, residency training clearly amounts to a
pursuit of further education on a specific discipline. Thus, the
relationship between the teaching/training hospital and the resident
doctor is not one of employer-employee. The training/teaching
hospital may simply be likened to a medical school/university, but in
this instance, the emphasis is on the practical application and
training of its students, the resident doctors."
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, GODOFREDO
MORILLO, JR., SUNDAY BACEA, ALFREDO COS and ROGELIO
VILLANUEVA, respondents.
FACTS:
Private respondents Godofredo Morillo, Sunday Bacea, Alfredo Cos
and Rogelio Villanueva were hired as security guards by Confidential
Investigation and Security Corporation ("CISCOR"). They were
assigned to secure the premises of Development Bank of the
Philippines ("DBP")- Riverside Mills Corporation.
Respondents resigned from CISCOR and claimed the return of their
cash bond and payment of their 13th month pay and service
incentive leave pay, but CISCOR failed to pay. CISCOR claimed that
it incurred losses when respondents secured the premises of
Riverside Mills Corporation. Hence, they were asked to first secure
an individual/agency clearance from petitioner to show that no losses
were incurred while they were guarding Riverside Mills Corporation.
Instead of getting such clearance from the petitioner, private
respondents secured their clearance from CISCORs detachment
commander. Hence, for failure to secure the required clearance,
private respondents cash bond deposit, their proportionate 13th
month pay and service incentive leave pay were withheld to answer
for liabilities incurred while private respondents were guarding
Riverside Mills Corporation.
CISCOR filed a motion with leave to implead petitioner bank and
averred therein that in view of its contract with the petitioner
whereby, for a certain service fee, CISCOR undertook to guard
petitioners premises, both CISCOR and petitioner, under the Labor
Code, are jointly and severally liable to pay the salaries and other
statutory benefits due the private respondents, petitioner being an
indispensable party to the case. Respondents filed their opposition
and alleged, among others, that petitioner, not being an employer of
the private respondents, was not a proper, necessary or
indispensable party to the case.
ISSUE: Whether or not the DBP is really liable for any of the claims
of private respondents
HELD: Petitioners interpretation of Article 106 of the Labor Code is
quite misplaced. Nothing in said Article 106 indicates that insolvency
or unwillingness to pay by the contractor or direct employer is a
prerequisite for the joint and several liability of the principal or
indirect employer. In fact, the rule is that in job contracting, the
84
principal is jointly and severally liable with the contractor. The
statutory basis for this joint and several liability is set forth in Articles
107 5 and 109 6 in relation to Article 106 of the Labor Code. 7 There
is no doubt that private respondents are entitled to the cash benefits
due them. The petitioner is also, no doubt, liable to pay such benefits
because the law mandates the joint and several liability of the
principal and the contractor for the protection of labor. In Eagle
Security Agency, Inc. vs. NLRC, this Court, explaining the aforesaid
liability, held:
This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage [Article 99, Labor
Code]. The contractor is made liable by virtue of his status as direct
employer. The principal, on the other hand, is made the indirect
employer of the contractors employees for purposes of paying the
employees their wages should the contractor be unable to pay them.
This joint and several liability facilitates, if not guarantees, payment
of the workers performance of any work, task, job or project, thus
giving the workers ample protection as mandated by the 1987
Constitution [See Article II Sec. 18 and Article XIII Sec. 3]. (FAITH)

85
UNITED VS CA
G.R. No. 152476 July 8, 2003
PETITIONER: UNITED SPECIAL WATCHMAN AGENCY
RESPONDENT: COURT OF APPEALS ET AL
DOCTRINE: Assailed in this petition for certiorari under Rule 45 of
the Revised Rules of Court is the decision of the Court of Appeals
which dismissed the petition for certiorari filed by petitioner, United
Special Watchman Agency ("USWA").Pursuant to a legitimate job
contracting, USWA and BF are jointly and severally liable in the
payment of the wages of the employees, and for violation of any
provision of the Labor Code.
FACTS: - A complaint for illegal dismissal and payment of money
claims was filed by respondent employees against USWA and Banco
Filipino Savings and Mortgage Bank ("BF"). It stemmed from the
1
termination of the Contract for Security Services entered into
between USWA and BF. The parties agreed that "the party
terminating the CONTRACT shall give (a) THIRTY (30)-day notice
prior to the date of termination to the other party.
- The contract took effect on 1 June 1994. However, on 3
June 1994, or two (2) days later, BF terminated the contract.
The termination letter dated 3 June 1994, but received on
June 17, advised USWA of the termination to take effect 30
days from receipt thereof
- USWA alleged that, upon receipt of the letter, Mr. Angel
Baliwag, its Operations Manager, immediately notified all the
affected employees stationed at the BF branches about the
termination of their contract. H
- The employees claimed that they were put on a floating
status. They denied that USWA, represented by Mr. Baliwag,
notified them of the standing offer of the agency to reassign
them to other clients after the termination of the contract with
BF. Due to their dismissal, they prayed for separation pay.
- LA: On 8 January 1998, the Labor Arbiter ordered USWA to
pay the employees separation pay, and both USWA and BF
to pay the salary differential and attorney's fees
- NLRC: On appeal, the NLRC, on 23 July 1998, remanded
the case, finding the conclusions on the issues of illegal
dismissal and wage differential by the Arbiter without
6
sufficient basis.
- However, on 2 March 2000, a compromise settlement was
7
reached between BF and the employees. The Arbiter
approved the settlement in its decision dated 15 March
2000, and dismissed the complaint for illegal dismissal for
lack of merit.
- Aggrieved, the employees filed an appeal with the NLRC.
The NLRC ordered USWA to pay the employees their
separation pay in light of its conclusion that there was no
proof that the employees were notified to report for
reassignment after the termination of the contract.
- Aggrieved, the employees filed an appeal with the NLRC.
The NLRC ordered USWA to pay the employees their
separation pay in light of its conclusion that there was no
proof that the employees were notified to report for
reassignment after the termination of the contract.
- The motion for reconsideration was denied on 14 September
2001.
- CA: Thus, on 16 November 2001, USWA filed with the Court
of Appeals a Petition for Certiorari under Rule 65 of the
Revised Rules of Court. The petition was dismissed outright
11
in a resolution by the appellate court because Gen.
Rodrigo Ordoyo, the Managing Director who signed the
certification of non-forum shopping, was not authorized by a
board resolution of USWA and its co-petitioner BF. USWA
filed a Motion for Reconsideration to which was attached its
board resolution authorizing Ordoyo to sign the certification.
ISSUE: WHETHER OR NOT the Court of Appeals erred when it did
not give due course to its petition and prayed that the
aforementioned resolutions of the appellate court dismissing the
petition be annulled and the case be remanded to the same court.
HELD/RATIO: NO. We cannot countenance the over stretched
argument of USWA. Its two motions for reconsideration pray that the
Court of Appeals give due course to the petition for certiorari filed
before it. It is the contention of USWA that the respondents were not
illegally dismissed, but that they refused to report to the office after
the termination of the contract with BF. Allegedly, it was the fault of
the respondents that they did not have any work assignment. There
being no illegal dismissal, they argue that the NLRC erred in
awarding separation pay to the employees. Again, we do not
86
subscribe to this argument. This is a petition for review on certiorari
under Rule 45 of the Revised Rules of Court where only questions of
law are allowed. It is fundamental that "(f)indings of facts of
administrative bodies charged with their specific field of expertise,
are afforded great weight by the courts, and in the absence of
substantial showing that such findings are made from an erroneous
estimation of the evidence presented, they are conclusive, and in the
interest of stability of the governmental structure, should not be
disturbed. Proceeding from the fact that the dismissal of the
employees was illegal, we next rule on the liability of USWA.
Pursuant to a legitimate job contracting, USWA and BF are jointly
and severally liable in the payment of the wages of the employees,
and for violation of any provision of the Labor Code.

DISPOSITION: WHEREFORE, the petition of USWA is dismissed

87
NEW GOLDEN CITY BUILDERS vs. CA
G.R. No. 154715 December 11, 2003
Petition: Petition for review under rule 45
Petitioner: New Golden City Builders and Development
Corporation and Manuel Sy
Respondent: CA, NLRC, Lito Gallo, Teofanes Anora, Ricardo
Centinales, Roberto Quirino, Lorenzo Divinigraciaetc
DOCTRINE:
In legitimate job contracting, the law creates an employer-employee
relationship for a limited purpose, i.e., to ensure that the employees
are paid their wages. The principal employer becomes jointly and
severally liable with the job contractor only for the payment of the
employees wages whenever the contractor fails to pay the same.
Other than that, the principal employer is not responsible for any
claim made by the employees.
FACTS:
New Golden City Builders and Development Corporation, a
corporation engaged in the construction business, entered into a
construction contract with Prince David Development Corporation for
the construction of a 17-storey office and residential condominium
building along Katipunan Road, Loyola Heights, Quezon City, Metro
Manila.
Petitioner engaged the services of Nilo Layno Builders to do the
specialized concrete works, form works and steel rebars works, in
consideration of the total contract price of P5 Million.
Pursuant to the contract, Nilo Layno Builders hired private
respondents to perform work at the project. After the completion of
the phase for which Nilo Layno Builders was contracted sometime in
1996, private respondents filed a complaint case against petitioner
and its president, Manuel Sy, with the Arbitration Branch of the
NLRC for unfair labor practice, non-payment of 13th month pay, non-
payment of 5 days service incentive leave, illegal dismissal and
severance pay in lieu of reinstatement.
Labor Arbiter: Nilo Layno Builders was a labor-only contractor, thus
private respondents were deemed employees of petitioners
NLRC: Affirmed LAs decision and held that private respondents
were illegally dismissed.
Since petitioners motion for a reconsideration of the decision was
denied, it instituted a special civil action for certiorari with the Court
of Appeals, alleging that the NLRC gravely abused its discretion in
totally discarding uncontroverted evidence and in relying merely on
conjectures and assumptions not supported by facts.
CA: Petition for certiorari denied
ISSUES:
1.) Whether Nilo Layno Builders was an independent contractor or a
labor-only contractor; and
2.) Whether there existed an employer-employee relationship
between petitioner and private respondents.
HELD/RULING:
1.) The test to determine the existence of independent contractorship
is whether one claiming to be an independent contractor has
contracted to do the work according to his own methods and without
being subject to the control of the employer, except only to the
results of the work.
This is exactly the situation obtaining in the case at bar. Nilo Layno
Builders hired its own employees, the private respondents, to do
specialized work in the Prince David Project of the petitioner. The
means and methods adopted by the private respondents were
directed by Nilo Layno Builders except that, from time to time, the
engineers of the petitioner visited the site to check whether the work
was in accord with the plans and specifications of the principal. As
admitted by Nilo G. Layno, he undertook the contract work on his
own account and responsibility, free from interference from any other
persons, except as to the results; that he was the one paying the
salaries of private respondents; and that as employer of the private
respondents, he had the power to terminate or dismiss them for just
and valid cause. Indubitably, the Court finds that Nilo Layno Builders
maintained effective supervision and control over the private
complainants.
88
Thus, it was plain conjecture on the part of the Labor Arbiter, the
NLRC and the Court of Appeals to conclude that Nilo Layno Builders
was a labor-only contractor merely because it does not have
investment in the form of tools or machineries. They failed to
appreciate the fact that Nilo Layno Builders had substantial
capitalization for it did not only provide labor to do the specified
project and pay their wages, but it furnished the materials to be used
in the construction.

2.) From the foregoing disquisition, the petitioner did not, as it could
not, illegally dismissed the private complainants. Hence, it could not
be held liable for backwages and separation pay. Nevertheless, it is
jointly and severally liable with Nilo Layno Builders for the private
complainants wages, in the same manner and extent that it is liable
to its direct employees.

DISPOSITIVE PORTION:
WHEREFORE, in view of the foregoing, the petition is PARTLY
GRANTED. The decision of the Court of Appeals in CA-G.R. SP No.
65577 is MODIFIED. Petitioner is ABSOLVED from liability for the
payment of backwages to private respondents. However, he is
ORDERED to pay, jointly and severally with Nilo Layno Builders,
private complainants Service Incentive Leave Pay and 13th Month
pay.

89
PCI Automation Center v. NLRC
GR # 115920 | January 29, 1996
Petition: Special civil action for certiorari under Rule 65 of the
Revised Rules of Court for the annulment of the Decision of the
National Labor Relations Commission (NLRC)
Petitioner: PCI Automation Center, Inc
Respondent: National Labor Relations Commission and Hector
Santelices
DOCTRINE
Under the law, any person who enters into an agreement with a job
contractor, either for the performance of a specified work or for the
supply of manpower, assumes responsibility over the employees of
the latter. However, for the purpose of determining the extent of the
principal employers liability, the law makes a distinction between
legitimate job contracting and labor-only contracting.
FACTS
- Philippine Commercial International Bank (PCIB) commenced its
4th GL Environment Conversion Project intended to link all
existing computer systems within PCIB and its branches. In
relation to this, a Computer Services Agreement with PCI
Automation Center, Inc. (PCI-AC) was entered.
- PCI-AC obligated itself to direct, supervise and run the
development of the software, computer software applications
and computer system of PCIB who in turn agreed to provide PCI-
AC with encoders and computer attendants.
- To comply with its obligation to procure manpower, PCIB
engaged the services of Prime Manpower Resources
Development, Inc. (Prime) through an External Job Contract.
- Hector Santelices was then hired by Prime and was assigned to
petitioner as a data encoder to work on Project but subsequently,
Prime decided to terminate his services after his services were
no longer needed.
- Santelices then filed before the NLRC a complaint for illegal
dismissal against Prime and PCI-AC and prayed for the payment
of his 14th month pay, 13th month pay, separation pay, unpaid
service incentive leave, unpaid vacation leave, termination pay,
as well as moral and exemplary damages and attorneys fees.
- LA: Dismissal was illegal and without legal basis so Santelices
should be immediately reinstated.
- Prime and PCI-AC then appealed to the NLRC and during the
pendency of the appeal, Prime paid Santelices separation pay in
lieu of reinstatement.
- Santelices, for his part, waived his right to be reinstated.
- Prime and Santelices executed and filed before the office of the
Labor Arbiter a document entitled Partial Satisfaction of
Judgment and Waiver of Right.
- NLRC: Affirmed the Decision of the Labor Arbiter, but deleted
the award of moral and exemplary damages and attorneys fees.
ISSUE/S
10. W/N NLRC acted with grave abuse of discretion amounting to
lack of jurisdiction when it disregarded the substantial evidence
in this case clearly showing that private respondent was not
illegally dismissed by petitioner
RULING & RATIO
- NO
o The External Job Contract between Prime and PCIB
must be read in conjunction with the Computer Services
Agreement between PCIB and PCI-AC.
o Although the parties in the External Job Contract are
only Prime and PCIB, the legal consequences of such
contract must also be made to apply to PCI-AC for under
the circumstances, PCIB merely acted as a conduit
between the other parties.
o The project was under the management and supervision
of the petitioner and it was the petitioner which exercised
control over the persons working on the project.
o Under the law, any person who enters into an agreement
with a job contractor, either for the performance of a
specified work or for the supply of manpower, assumes
responsibility over the employees of the latter. However,
for the purpose of determining the extent of the principal
employers liability, the law makes a distinction between
legitimate job contracting and labor-only contracting.
o In the event that the contractor or subcontractor fails to
pay the wages of his employees , the employer shall be
90
 jointly and severally liable to the extent of the work
performed under the contract.
o Considering the terms of the External Job Contract, it
cannot be doubted that Prime is a labor-only contractor
for it merely acted as a placement agency providing
manpower through PCIB not for the performance of a
specific job, but the supply of qualified personnel to work
as data encoders and computer attendants.
o Since Prime is a labor-only contractor, the workers it
supplied should be considered employees of PCI-AC.
The admissions made by Santelices in his affidavits and
position paper that he is a regular employee of Prime are
not conclusive as the existence of an employer-
employee relationship is a question of law which may not
be made the subject of stipulation.

DISPOSITION
IN VIEW WHEREOF, the petition is DISMISSED. The assailed
Decision and
Resolution are hereby AFFIRMED. No costs. SO ORDERED.

91
WILLIAM TIU v NLRC
254 SCRA 493 [1996]
Petition: for Certiorari
Petitioner: William Tiu
Respondent: NLRC and Hermes Dela Cruz
DOCTRINE
The "labor-only" contractor is a mere agent of the employer who is
responsible to the employees of the "labor-only" contractor as if such
employees had been employed by him directly. In such a case the
statute establishes an employer-employee relationship between the
employer and the employees of the "labor-only" contractor to prevent
any violation or circumvention of the provisions of the Labor Code,
by holding both the employer and the "labor-only" contractor
responsible to the employees.
FACTS
Tiu is engaged in the transportation of passengers from Cebu City to
the northern towns of Cebu. Hermes Dela Cruz worked in Tiu's bus
terminals as a "dispatcher," assisting and guiding passengers and
carrying their bags.
Tiu denies that Hermes was his employee. He alleges that he did not
have the power of selection and dismissal nor the power of control
over Hermes. Tiu alleges that Hermes together with other standbys
threatened to cause damage to his buses and scare passengers
away if Tiu and other bus operators did not let them assist
passengers with their baggages as dispatchers. Tiu alleges that he
had no choice but to hire them. He also claimed that as
dispatchers, Hermes worked in his own way, without supervision by
Tiu.
The Labor Arbiter and the NLRC found private respondent to be an
employee of petitioner, applying the Four-fold test, namely (a) who
has the power of selection and engagement of the employees; (b)
who pays the wages; (c) who has the power of dismissal, and (d)
and who has the power to control the employees' conduct.
ISSUE
WON an employee-employer relationship exist.
HELD
YES
Tiu has failed to refute the evidence presented by Hermes. He points
to his Chief Dispatcher, Regino de la Cruz, as the one who exercised
the powers of an employer over the "dispatchers." Tiu argues that
under an agreement with Regino, it is the latter who selects and
engages the "dispatchers," dictates their time, supervises the
performance of their work, and pays their wages. He further argues
that the "disciplinary memorandum" issued by him was not
addressed to Hermes but to Regino, as employer of Hermes, to
remind him regarding the discipline of the "dispatchers."
The "control test," under which the person for whom the services are
rendered reserves the right to direct not only the end to be achieved
but also the means for reaching such end, is generally relied on by
the courts.
Tiu admits that Regino was merely assigned to do dispatch work. He
also delegated the control to his employees to Regino. It cannot then
be said that Regino was the employer of the "dispatchers" or that he
was an independent contractor. He was himself only an employee of
Tiu.
Indeed the "control test" only requires the existence of the right to
control the manner of doing the work in a person, not necessarily the
actual exercise of the power by him, which he can
delegate. Consequently, in the case at bar, the power is exercised by
Regino but it is power which is only delegated to him so that in truth
the power inherently and primarily is possessed by Tiu. Regino is a
mere supervisor, while Tiu is the real employer.
DISPOSITION
WHEREFORE, the petition is DENIED for lack of merit.
92
San Miguel Corp. v. MAERC Integrated System (Short title)
405 SCRA 579 | July 10, 2003
Petitioner: San Miguel Corporation
Respondent: MAERC Integrated Services, Inc. and Emerberto
Roque, et al
DOCTRINE
In deciding the question of control, the language of the contract is not
determinative of the parties' relationship; rather, it is the totality of the
facts and surrounding circumstances of each case. On the other
hand, in labor-only contracting, the statute creates an employer-
employee relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an
agent of the principal employer and the latter is responsible to the
employees of the labor-only contractor as if such employees had
been directly employed by the principal employer. The principal
employer therefore becomes solidarily liable with the labor-only
contractor for all the rightful claims of the employees.
FACTS
- TWO HUNDRED NINETY-ONE (291) workers filed their
complaints (nine [9] complaints in all) against San Miguel
Corporation (petitioner
herein) and Maerc Integrated Services, Inc.
(respondent herein), for illegal dismissal,
underpayment of wages, non-payment of service incentive
leave pays and other labor standards benefits,
and for separation pays
from 25 June to 24 October 1991. The complainants alleged
that they were hired by
San Miguel Corporation (SMC) through itsagent or intermedi
ary Maerc Integrated
Services, Inc. (MAERC) to work in two (2) designated
workplaces in Mandaue City: one,
inside the SMC premises at the Mandaue
Container Services, and another, in the Philphos Warehouse
owned by MAERC.
- They
washed and segregated various kinds of empty bottles used
by SMC to sell and distribute its beer beverages to the
consuming public. They were paid on a per piece or pakiao
basis except for a few who worked as checkers and were
paid on daily wage basis. Complainants alleged that long
before SMC contracted the services of MAERC a majority of
them had already been working for SMC under the guise of
being employees of another contractor,
Jopard Services, until the services of the latter were
terminated on31 January 1988. SMC informed MAERC of
the termination of their service contract by the end of June
1991. SMC cited its plans to phase out its segregation
activities starting 1 June1991 due to the installation of labor
and cost
saving devices. When the service contractwas terminated, c
omplainants claimed thatSMC stopped them from performing
their jobs; that this was tantamount to their being illegally
dismissed by SMC who was their real
employer as their activities were directly related, necessary
and desirable to the main business of SMC; and, that
MAERC was merely made a tool or a shield by SMC to avoid
its liability under the Labor Code- MAERC for its part
admitted that it recruited
the complainants and placed them in thebottle segregation p
roject of SMC butmaintained that it was only conveniently
used by SMC as an intermediary in operating the project or
work directly related to the primary business concern of the
latter
- The Labor Arbiter rendered a decisionholding that MAERC w
as an independentcontractor. He dismissed the complaints
for illegal dismissal but ordered MAERC to pay
complainants' separation benefits in the total
amount of P2,334,150.00. MAERC and SMC were also
ordered to jointly and severally pay complainants their
wage differentials in the amount of P845,117.00 and to pay
attorney's fees in the amount of P317,926.70.-
The National Labor Relations Commission(NLRC)
ruled that MAERC was a labor-only
contractor and that complainants were employees of SMC.
93
 The NLRC also held that
whether MAERC was a job contractor or a labor-only
contractor, SMC was still
solidarilyliable with MAERC for the latter's unpaidobligations,
citing Art. 109 4 of the Labor Code. Thus, the NLRC
modified the judgment of the Labor Arbiter and held SMC
jointly and severally liable with MAERC for complainants'
separation benefits. In addition, both respondents were
ordered to pay jointly and severally an indemnity
fee of P2,000.00 to each complainant.

ISSUE/S
11. Whether complainants are employees of petitioner SMC or of
respondent MAERC.

RULING & RATIO

- Employees of SMC- In ascertaining an employer-employee
relationship, the following factors are considered: (a) the
selection and engagement of employee; (b) the payment of
wages; (c)the power of dismissal; and, (d) the power to
control an employee's conduct, the last being
the most important. Application of therefore
said criteria clearly indicates an employer-
employee relationship between petitioner and the
complainants.
- Evidence discloses that petitioner played a large and
indispensable part in the hiring of MAERC's workers.

DISPOSITION
Wherefore, the petition is denied. The assailed decision of CA and
the resolution are affirmed with modification. Respondent MAERC is
declared to be a labor only contractor. Accordingly, both petitioner
SMC and MAERC are ordered to jointly and severally pay
complainants separation benefits and wage differentials as may be
finally computed by the Labor Arbiter as herein directed.

94
Ramy Gallego v. Bayer Phils. INC
GR No. 179807 | 594 SCRA 736 | July 31, 2009
Petition: Petition for review on certiorari
Petitioner: Ramy Gallego
Respondent: Bayer Phil. INC and Edgardo Bergonia
DOCTRINE
The DOLE certificate having been issued by a public officer, it carries
with it the presumption that it was issued in the regular performance
of official duty.
FACTS
- Ramy Gallego was contracted in April 1992 by Bayer
Philippines, Inc. as crop protection technician to promote
and market BAYER products. Under the supervision of
BAYER sales representative for Panay Island.
- In 1996, Gallego seek employment with another company.
However, BAYER reemployed him in 1997 through Product
Image and Marketing Services INC. which performs the
same task as Crop Protection Technician promoting BAYER
products to farmers in Panay Island.
- Gallego claims that he was directed to submit a resignation
letter, but he refused. BAYER District Sales Manager for
Panay ordered to quit his employment which called for him
to return all pieces of service equipment issued to him, but
that again he refused
- Gallego also claim that Product Image and the District sales
manager spread rumors that he was no longer connected
with BAYER.
- Believing that his employment was terminated, he filled a
complaint for illegal dismissal with NLRC.
- Respondent denied the existence of an employee-employer
relationship between BAYER and Gallego.
Labor Arbiter:
- Ordered BAYER to reinstate Gallengo.
- Held that that there was an employer-employee
relationship between BAYER and petitioner since
BAYER furnished petitioner the needed facilities and
paraphernalia, and fixed the methodology to be used in
the performance of his work.
NLRC:
- Reversed the Decision of LA
- Held that an independent contractor, PRODUCT IMAGE
was the employer of petitioner but there was no
evidence that petitioner was dismissed by either
PRODUCT IMAGE or BAYER.
CA:
- Dismissed petitioners petition for failure to attach to it the
complaint and the parties respective position papers filed
with the Labor Arbiter.
Hence, this petition.
ISSUE/S
12. W/N Product Image is a legitimate job contractor.
RULING & RATIO
1. YES
Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to farm out with a
contractor the performance of a specific job, work, or service
within a period, regardless of whether such job, work or,
service is to be performed or completed within or outside the
premises of the principal.
The DOLE certificate having been issued by a public officer,
it carries with it the presumption that it was issued in the
regular performance of official duty.
Since the DOLE is the agency primarily responsible for
regulating the business of independent job contractors, the
Court can presume, in the absence of evidence to the
contrary, that it had thoroughly evaluated the requirements
submitted by PRODUCT IMAGE before issuing the
Certificate of Registration.
PRODUCT IMAGE cannot thus be considered a laboronly
contractor.
DISPOSITION
WHEREFORE, the petition is, in light of the foregoing, DENIED
95
Coca-cola vs Dela Cruz (Short title)
GR # 184977 | | December 7, 2009
Petition: PETITION for review on certiorari of a decision of the
Court of Appeals
Petitioner: Coca-cola Bottlers
Respondent: RICKY E. DELA CRUZ, ROLANDO M. GUASIS,
MANNY C. PUGAL, RONNIE L. HERMO, ROLANDO C. SOMERO,
JR., DIBSON D. DIOCARES, and IAN B. ICHAPARE
DOCTRINE
FACTS
- Dela Cruz, Gausis, Pugal, Hermo, Somero, Diocares and
Ichapare filed complaints before the LA for regularization
with money claims against Coca-cola. Peerless Integrated
services was subsequently impleaded.
- Dela Cruz et al alleged that they are route helpers assigned
to work in Coca-colas trucks. (They supply coca-cola from
warehouse to retailers)
o They were hired either directly by the Coca-cola or
by its contractors, but they do not enjoy the full
remuneration, benefits and privileges granted to the
regular sales force of Coca-cola.
- Coca-cola averred 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. Therefore, there was no EE relationship.
- Dela Cruz et al responded that Peerless and Excellent did
not have substantial capital and were therefore labor-only
contractors.
- Coca-cola rebutted that their jobs were not necessary and
desirable, in its main business, which is softdrinks
manufacturing.
- LA: Dismissed for lack of jurisdiction.
o No employer-employee relationship.
o Ordered Peerless to accord to the appropriate
complainants all employment benefits and privileges
befitting its regular employees
- Dela Cruz et al appealed to the NLRC.
- NLRC: Affirmed LA.
- CA: Reversed NLRC.
o Found no proof in the records showing the required
capitalization and tools; thus, the CA concluded that
Peerless and Excellent were engaged in labor-only
contracting.
Hence, this petition.
ISSUE/S
13. W/N Peerless and Excellent are labor only contractors
RULING & RATIO
- Yes.
o 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.
o Contracted personnel were under the companys
supervision and control since sales and distribution
were in fact not the purported contractors
independent, discrete and separable activities, but
were component parts of sales and distribution
operations that the company controlled in its
softdrinks business. (In short, distirbutionn of the
drinks are part of the business of Coke)
o Peerless and excellent had no sufficient
capitalization and equipment to undertake sales and
distribution of softdrinks as independent activities.
o They are therefore labor-only contractors.
Consequently, the contracted personnel, engaged in
component functions in the main business of the
company under the latters supervision and control,
cannot but be regular company employees. In these
96
 lights, the petition is totally without merit and hence
must be denied.

DISPOSITION
WHEREFORE, premises considered, we hereby DENY the petition
and accordingly AFFIRM the challenged decision and resolution of
the Court of Appeals in CA-G.R. SP No. 102988. Costs against the
petitioner.

97
Coca Cola Bottlers v. Agito
GR # 179546 | February 13, 2009
Petition: Petition for Review on Certiorari under Rule 45 of the
Rules of Court
Petitioner: COCA-COLA BOTTLERS PHILS., INC.
Respondent: ALAN M. AGITO, REGOLO S. OCA III, ERNESTO G.
ALARIAO, JR., ALFONSO PAA, JR., DEMPSTER P. ONG,
URRIQUIA T. ARVIN, GIL H. FRANCISCO, and EDWIN M. GOLEZ
DOCTRINE
The certification issued by the DOLE stating that Interserve is an
independent job contractor does not sway this Court to take it at face
value, since the primary purpose stated in the Articles of
Incorporation of Interserve is misleading. While the DOLE may have
found that the capital and/or investments in tools and equipment of
Interserve were sufficient for an independent contractor for janitorial
services, this does not mean that such capital and/or investments
were likewise sufficient to maintain an independent contracting
business for the delivery and distribution of Coca-Cola products.
FACTS
Respondents alleged they were salesmen assigned at the Lagro
Sales Office of Petitioner Coca-Cola, and that they had been
employed by the latter for years but were not regularized.
Respondents also alleged that their employment was terminated by
Coca-Cola without just cause and due process.
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 Coca-Cola
and Interserve. Coca-Cola alleged that the said Contract constituted
legitimate job contracting, given that the latter was a bona fide
independent contractor with substantial capital or investment in the
form of tools, equipment, and machinery necessary in the conduct of
its business.
To prove the status of Interserve as an independent contractor,
Coca-Cola presented among other documents, the following pieces
of evidence: (1) the Articles of Incorporation of Interserve; and (2) the
Certificate of Registration of Interserve as an independent job
contractor, issued by the DOLE. Hence, Coca-Cola 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. Coca-Cola 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 Coca-Cola, and reasoned that while
respondents performed activities that were necessary and desirable
in the usual business or trade of Coca-Cola, the Labor Arbiter
underscored that respondents functions were not indispensable to
the principal business of petitioner, which was manufacturing and
bottling soft drink beverages and similar products. 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.
Unsatisfied with the foregoing Decision of the Labor Arbiter,
respondents filed an appeal with the NLRC, and maintained that
contrary to the finding of the Labor Arbiter, their work was
indispensable to the principal business of Coca-Cola. Respondents
supported their claim with copies of the Delivery Agreement between
Coca-Cola 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, Coca-Cola
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 Coca-Cola.
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. Respondents further averred Coca-Cola
exercised control over workers supplied by various contractors.
98
The NLRC, affirmed the Labor Arbiters Decision pronounced that no
employer-employee relationship existed between petitioner and
respondents. It reiterated the findings of the Labor Arbiter that
Interserve was an independent contractor as evidenced by its
substantial assets and registration with the DOLE. Aggrieved once
more, respondents sought recourse with the Court of Appeals by
filing a Petition for Certiorari under Rule 65. The CA reversed the
NLRC Resolution, and 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. It
concluded that the respondents used the equipment, tools, and
facilities of Coca-Cola in the day-to-day sales operations.
Additionally, the CA determined that Coca-Cola 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 latters
undertaking did not involve a specific job, but rather the supply of
manpower. Coca-Cola filed a Motion for Reconsideration, but was
denied by the CA. Hence, the present Petition.
ISSUE/S
W/N INTERSERVE WAS ENGAGED IN LABOR ONLY
CONTRACTING?
RULING & RATIO
Yes, because the Contract of Services between Interserve and
petitioner did not identify the work needed to be performed and the
final result required to be accomplished. Instead, the Contract
specified the type of workers Interserve must provide petitioner and
their qualifications In other words, Interserve did not obligate itself to
perform an identifiable job, work, or service for petitioner, but merely
bound itself to provide the latter with specific types of employees.
These contractual provisions strongly indicated that Interserve was
merely a recruiting and manpower agency providing petitioner with
workers performing tasks directly related to the latters principal
business.
The certification issued by the DOLE stating that Interserve is an
independent job contractor does not sway this Court to take it at face
value, since the primary purpose stated in the Articles of
Incorporation of Interserve is misleading. According to its Articles of
Incorporation, the principal business of Interserve is to provide
janitorial and allied services. The delivery and distribution of Coca-
Cola products, the work for which respondents were employed and
assigned to petitioner, were in no way allied to janitorial services.
While the DOLE may have found that the capital and/or investments
in tools and equipment of Interserve were sufficient for an
independent contractor for janitorial services, this does not mean that
such capital and/or investments were likewise sufficient to maintain
an independent contracting business for the delivery and distribution
of Coca-Cola products.
With the finding that Interserve was engaged in prohibited labor-only
contracting, petitioner shall be deemed the true employer of
respondents. As regular employees of petitioner, respondents cannot
be dismissed except for just or authorized causes, none of which
were alleged or proven to exist in this case, the only defense of
petitioner against the charge of illegal dismissal being that
respondents were not its employees.
DISPOSITION
IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The
Court AFFIRMS WITH MODIFICATION the Decision dated 19
February 2007 of the Court of Appeals in CA-G.R. SP No. 85320.
The Court DECLARES that respondents were illegally dismissed
and, accordingly, ORDERS petitioner to reinstate them without loss
of seniority rights, and to pay them full back wages computed from
the time their compensation was withheld up to their actual
reinstatement. Costs against the petitioner. SO ORDERED.
99
Manila Public School Teachers Association v. Hon. Perfecto
Laguio, Jr. (Consolidated case)
GR # 95445 | 200 SCRA 323
Petition: Petitions to review the decision of the Regional Trial
Court of Manila, Br. 18, Laguio, Jr., J. and Secretary of
Education, Culture and Sports.
DOCTRINE: Government employees does not have the right to
strike as that would cause a cessation of Government functionality,
however, they are given the right to self-organise or unionise
pursuant to the Constitution. If they want to air out their grievances,
there is a proper forum for such.
FACTS
- The case started with a mass action undertaken by 800 public
school teachers who are also the petitioning associations in both
cases.
- On September 17, 1990, which was a regular school day, all 800
teachers who joined the mass action did not conduct class.
Instead they converged at the Liwasang Bonifacio in the morning
where they proceeded to the National Office of the Department of
Education and Sports (DECS) where the were in a dialogue with
the Secretary of Education, herein respondent.
- Due to their mass unauthorised leave, the were threatened with
dismissal if they do not return to work. Regardless, the mass
actions continued into the week.
- The numbers of teachers have increased to 4,000 while various
administrative suspension cases were filed.
- The petitioners filed a petition for status quo ante and to
restrain/enjoin further suspensions and the initiation of
administrative proceedings against the petitioners.
ISSUE
3. W/N the Public school teachers have the right to strike.
RULING & RATIO
- NO
Employees in the public (civil) service, unlike those in the
private sector, do not have the right to strike, although
guaranteed the right to selforganization, to petition Congress for
the betterment of employment terms and conditions and to
negotiate with appropriate government agencies for the
improvement of such working conditions as are not fixed by law.
These mass actions were to all intents and purposes a strike;
they constituted aconcerted and unauthorized stoppage of, or
absence from, work which it was the teachers duty to perform,
undertaken for essentially economic reasons;
It was lawful and within his statutory authority for the respondent
Secretary of Education to take the actions complained of, to wit:
issue a return-towork order, prefer administrative charges
against, and place under preventive suspension, those who
failed to comply with said order, and dismiss from the service
those who failed to answer or controvert the charges.
DISPOSITION
WHEREFORE, both petitioners are DISMISSED, without prejudice to
any appeals, if still timely, that the individual petitioners may take to
the Civil Service Commission on the matters complained of. The
motions to withdraw, supra, are merely NOTED, this disposition
rendering any express ruling thereon unnecessary. No
pronouncement as to costs.
100

Carino v Commission on Human Rights
G.R. No. 96681 204 SCRA 283 December 2, 1991
PETITION: For certiorari and prohibition of the Order issued by the
Commission on Human Rights.
PETITIONER: HON. ISIDRO CARIO, IN HIS CAPACITY AS
SECRETARY OF THE DEPARTMENT OF EDUCATION, CULTURE
& SPORTS, DR. ERLINDA LOLARGA, IN HER CAPACITY AS
SUPERINTENDENT OF CITY SCHOOLS OF MANILA
RESPONDENTS: THE COMMISSION ON HUMAN RIGHTS,
GRACIANO BUDOY, JULIETA BABARAN, ELSA IBABAO, HELEN
LUPO, AMPARO GONZALES, LUZ DEL CASTILLO, ELSA REYES
AND APOLINARIO ESBER
DOCTRINE:
FACTS:
On September 1990, some 800 public school teachers
undertook what they described as mass concerted actions.
The mass concerted actions were a result of a rally which
they have previously conducted within the DECS premises
to express their grievances but were not acted upon by the
authorities concerned.
Respondents were among the 800 public school teachers
who participated in the mass concerted actions
Through their representatives, the teachers participating in
the mass actions were served with an order of the Secretary
of Education (Petitioner) to return to work within 24 hours or
face dismissal, and a memorandum directing the DECS
officials concerned to initiate dismissal proceedings against
those who did not comply and to hire their replacements.
For their failure to follow the order, the respondents were
administratively charged, preventively suspended and
temporarily replaced.
Respondents moved for suspension of administrative
proceedings, but their motion was denied.
Respondents, thus, submitted sworn statements to the
Commission on Human Rights to complain that while they
were participating in peaceful mass actions, they suddenly
learned of their replacement as teachers, allegedly without
notice and consequently for reasons completely unknown to
them.
The Commission on Human Rights issued an Order
enjoining Petitioners to enlighten the Commission and to
bring with them any and all documents relevant to the
4
allegations of respondents.
Petitioners, through the Office of the Solicitor General, filed a
motion to dismiss the case alleging as grounds for the
dismissal "that the complaint states no cause of action and
that the CHR has no jurisdiction over the case."
The Commission issued an Order dismissing Petitioners'
motion to dismiss and required him and Superintendent
Lolarga to submit their counter-affidavits within ten (10) days
so that it could proceed to hearing and resolving the case.
ISSUE: W/N The Commission on Human Rights has the power to try,
hear, determine or decide a case?
COURT:
NO.
The proposition is made clear by the constitutional
provisions specifying the powers of the Commission
on Human Rights.
Its powers and functions are the following:
"(1)Investigate, on its own or on complaint by any party, all
forms of human rights violations involving civil and political
rights
(2)Adopt its operational guidelines and rules of procedure, and
cite for contempt for violations thereof in accordance with the
Rules of Court
(3) Provide appropriate legal measures for the protection of
human rights of all persons within the Philippines, as well as
Filipinos residing abroad, and provide for preventive measures
4 "denied due process and suspended without formal notice, and unjustly, since they
did not join the mass leave,"
101
and legal aid services to the underprivileged whose human
rights have been violated or need protection
(4) Exercise visitorial powers over jails,
prisons, or detention facilities
(5) Establish a continuing program of research, education, and
information to enhance respect for the primacy of human
rights
(6) Recommend to the Congress effective measures to
promote human rights and to provide for compensation to
victims of violations of human rights, or their families
(7) Monitor the Philippine Government's compliance with
international treaty obligations on human rights
(8) Grant immunity from prosecution to any person whose
testimony or whose possession of documents or other
evidence is necessary or convenient to determine the truth in
any investigation conducted by it or under its authority
(9) Request the assistance of any department, bureau, office,
or agency in the performance of its functions
(10) Appoint its officers and employees in accordance with
law and
(11) Perform such other duties and functions as may be
provided by law."
To investigate is not to adjudicate or adjudge.
"Investigate," commonly understood, means to
examine, explore, inquire or delve or probe into,
research on, study.
The legal meaning of "investigate" is essentially the
same: "(t)o follow up step by step by patient inquiry
or observation. To trace or track to search into to
examine and inquire into with care and accuracy to
find out by careful inquisition examination the
taking of evidence a legal inquiry"
The question of (a) whether or not the mass
concerted actions engaged in by the teachers
constitute a strike and are prohibited or otherwise
restricted by law (b) whether or not the act of
carrying on and taking part in those actions, and the
failure of the teachers to discontinue those actions
and return to their classes despite the order to this
effect by the Secretary of Education, constitute
infractions of relevant rules and regulations
warranting administrative disciplinary sanctions, or
are justified by the grievances complained of by
them and (c) what were the particular acts done by
each individual teacher and what sanctions, if any,
may properly be imposed for said acts or omissions.
These are matters undoubtedly and clearly within
the original jurisdiction of the Secretary of Education,
being within the scope of the disciplinary powers
granted to him under the Civil Service Law, and also,
within the appellate jurisdiction of the Civil Service
Commission.
DISPOSITION:
WHEREFORE, the petition is granted the Order of December 29,
1990 is ANNULLED and SET ASIDE, and the respondent
Commission on Human Rights and the Chairman and Members
thereof are prohibited "to hear and resolve the case (i.e., Striking
Teachers HRC Case No. 90-775) on the merits."
***NOTE
Notice that the case of the public school teachers was
not filed before the LA or the NLRC.
This case falls under the Excluded Employment
[Government Employees] of the syllabus.
That is why jurisdiction [over the case] is with the
Secretary of Education; the decision may be reviewed
by the Civil Service Commission.
102
Magsalin v. National Organization of Working Men

Facts:
1. The private respondents worked as sales route helpers for the
petitioner (Coca Cola) for 5 months and thereafter they were hired on
a daily basis. According to the petitioner, the respondents were
merely hired as substitutes for regular helpers when the latter were
unavailable or due to shortage of manpower/high volume of work.
These workers would then wait every morning outside the gates and
if hired, they would be paid their wages at the end of the day.

2. The respondents asked the petitioner to make them regular but

the latter refused. Hence, 23 of these temporary workers filed a case
for illegal dismissal.

Issue: W/N the respondents' work is deemed necessary and

desirable in the usual business or trade of the petitioner

RULING: Yes. The repeated hiring of the respondent workers and

continuing need of their daily services clearly attest to the necessity
or desirability of their services in the regular conduct of the
business/trade of petitioner.

In determining whether employment is regular or not, the applicable

test is the reasonable connection between a particular activity
performed in relation to the usual business or trade of the employer.
The nature of work must be viewed from the perspective of the
business in its entirety and not confined scope.

103

Abanilla vs. Commission on Audit
G.R. No. 142347/ 468 SCRA 87/ August 25, 2005
Petition: Petition for certiorari under Rule 64 in relation to Rule
65 of the 1997 Rules of Civil Procedure
Petitioner: DULCE M. ABANILLA, in her capacity as General
Manager of the Metropolitan Cebu Water District, Cebu City
Respondent: COMMISSION ON AUDIT, its CHAIRMAN CELSO D.
GANGAN, COMMISSIONERS RAUL C. FLORES and EMMANUEL
M. DALMAN, and REGIONAL DIRECTOR OF COA REGION VII
Petitioner-in-Intervention: METROPOLITAN CEBU WATER
DISTRICT EMPLOYEES UNION
DOCTRINE: The officers and employees of a water district are
covered by the Civil Service Law, petitioners invocation of the CBA,
in justifying the receipt by the MCWD personnel of benefits and
privileges, is utterly misplaced. Thus, we sustain the disallowance by
respondent COA.
FACTS:
- Pursuant to Presidential Decree 198 or the Provincial Water
Utilities Act of 1973, Metropolitan Cebu Water District
(MCWD), a local water district was organized as a
government-owned corporation with original charter.
- Subsequently, MCWD, through its Board of Directors, issued
the following Resolutions giving benefits and privileges to its
personnel, one of whom is Dulce M. Abanilla, MCWDs
General Manager, petitioner herein:(1)granting
hospitalization privileges;(2)allowing the monetization leave
credits;(3)granting Christmas bonus; and (4) Board granting
longevity allowance.
- On January 1, 1989, MCWD and Metropolitan Cebu Water
District Employees Union, petitioner-in-
intervention, executed a collective bargaining agreement
(CBA) providing for the continuous grant to all its regular
rank and file employees of existing benefits, such as cash
advances, thirteenth month pay, mid-year bonus, Christmas
bonus, vacation and sick leave credits, hospitalization,
medicare, uniform privileges, and water allowance.
- Thereafter, the Regional Director of COA Regional Office
No. VII, also a respondent, sent MCWD several notices
disallowing the amount of P12,221,120.86 representing
th
hospitalization benefits, mid-year bonus, 13 month pay,
Christmas bonus and longevity pay.
- Aggrieved, petitioner interposed an appeal to respondent
COA at Quezon City. She cited COA Memorandum Circular
No. 002-94 providing that all benefits provided under the
duly existing CBAs entered into prior to March 12, 1992, the
date of official entry of judgment of the Supreme Court ruling
in Davao City Water District vs. CSC and COA, shall
continue up to the respective expiry dates of the benefits or
CBA whichever comes earlier.
- COA rendered: denying petitioners appeal. Ruling that a
water district is a corporation created pursuant to a special
law P.D. No. 198, as amended, and as such, its officers
and employees are covered by the Civil Service Law.
Hence, this Petition for Certiorari
ISSUE: W/N the rights to benefits and privileges of employees of
MCWD are covered by collective bargaining agreements (CBAs)
RULING & RATIO: NO
. Subject to the minimum requirements of wage laws
and other labor and welfare legislation, the terms and
conditions of employment in the unionized private
sector are settled through the process of collective
bargaining. In government employment, however, it is
the legislature and, where properly given delegated
power, the administrative heads of government
which fix the terms and conditions of employment.
And this is effected through statutes or
administrative circulars, rules, and
regulations, not through collective bargaining
agreements.
. While we sustain the disallowance of the above
benefits by respondent COA, however, we find that
the MCWD affected personnel who received the
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above mentioned benefits and privileges acted in
good faith under the honest belief that the
CBA authorized such payment. Consequently, they
need not refund them.

DISPOSITION: WHEREFORE, the petition

is DENIED. The assailed Decision No. 98-465 dated
December 3, 1998 and Resolution No. 2000-062
dated February 15, 2000 of respondent COA
are AFFIRMED with MODIFICATION in the sense
that the amount of P12,221,120.86 representing
disallowed benefits and privileges should not be
refunded by the MCWD personnel.

105
Lumantavs NLRC agencies of the Government, including government-owned or
Facts: controlled corporations with original
- Petitioner Luz Lumanta, joined by fifty-four (54) other retrenched charter. complaint filed in March 20, 1987.
employees, filed a complaint for unpaid 'd - Instruction No. 1013, dated 19 April 1980, included Food Terminal,
retrenchment or separation pay and charges of underpayment of Inc. in the category of "government-
wages and non-payment of emergency cost of owned or controlled corporations."
living allowances (ECOLA) against private respondent Food - Since then, FTI served as the marketing arm of the National Grains
Terminal, Inc. ("FTI") with the Department of Authority (now known as the National
Labor and Employment. Food Authority). The pleadings show that FTI was previously a
- Respondent argues: Lack of jurisdiction - being a government- privately owned enterprise, created and
owned and controlled corporation, its employees organized under the general incorporation law, with the corporate
are governed by the Civil Service Law not by the Labor Code, and name "Greater Manila Food Terminal
that claims arising from employment fall Market, Inc."
within the jurisdiction of the Civil Service Commission and not the - Because respondent FTI is government-owned and controlled
Department of Labor and Employment. corporation without original charter, it is the
- Petitioner contention: although FTI is a corporation owned and Department of Labor and Employment, and not the Civil Service
controlled by the government, it has still the Commission, which has jurisdiction over
marks of a private corporation: it directly hires its employees without the dispute arising from employment of the petitioners with private
seeking approval from the Civil Service respondent FTI, and that consequently,
Commission and its personnel are covered by the Social Security the terms and conditions of such employment are governed by the
System and not the Government Service Labor Code and not by the Civil Service
Insurance System. Petitioners also argued that being a government- Rules and Regulations.
owned and controlled corporation without
original charter, private respondent FTl clearly falls outside the scope
of the civil service as marked out in
Section 2 (1), Article IX of the 1987 Constitution.
Issue: Whether or not a labor law claim against a government-owned
and controlled corporation, such as private
respondent FTI, falls within the jurisdiction of the Department of
Labor and Employment.
Held:
- Respondent relied on the case of NHA vsJuco wherein the Courts
said that employees of government-
owned or controlled corporations are governed by the civil service
law and civil service rules and
regulations.
- However, that case was under the 1973 Constitution. What applies
in this present case is the 1987
Constitution which states that The civil service embraces all
branches, subdivisions, instrumentalities, and
106