INTRODUCTION
Being an ordinary civil action, the same is beyond the jurisdiction of labor
CONSTITUTIONAL AND STATUTORY BASIS
Being an ordinary civil action, it is beyond the jurisdiction of labor tribunals.
G.R. No. 172013 October 2, 2009
PATRICIA HALAGUEÑA, MA. ANGELITA L. PULIDO, MA. TERESITA P.
SANTIAGO, MARIANNE V. KATINDIG, BERNADETTE A.
CABALQUINTO, LORNA B. TUGAS, MARY CHRISTINE A. VILLARETE,
CYNTHIA A. STEHMEIER, ROSE ANNA G. VICTA, NOEMI R.
CRESENCIO, and other flight attendants of PHILIPPINE AIRLINES,
Petitioners,
Vs. PHILIPPINE AIRLINES INCORPORATED, Respondent.
Facts: Petitioners were employed as flight attendants of respondent on different dates
prior to November 1996. They are members of FASAP union exclusive bargaining
organization of the flightattendants, flight stewards and pursers. On July 2001,
respondent and FASAP entered into a CBA incorporating the terms and conditions of
their agreement for the years 2000 to 2005 (compulsory retirement of 55 for female
and 60 for males).
In July 2003, petitioner and several female cabin crews, in a letter, manifested that the
provision in CBA on compulsory retirement is discriminatory. On July 2004,
petitioners filed a Special Civil Action for Declaratory Relief with issuanceof TRO
with the RTC Makati. The RTC issued a TRO. After the denial of the respondent on
itsmotion for reconsideration for the TRO, it filed a Petition with the CA. CA granted
respondent’s petition and ordered lower court to dismiss the case. Hence, this petition.
Issue: Whether or not the regular courts has jurisdiction over the case.
Ruling: Yes. The subject of litigation is incapable of pecuniary estimation, exclusively
cognizable by the RTC. Being an ordinary civil action, the same is beyond the
jurisdiction of labor tribunals.
Not every controversy or money claim by an employee against the employer or vice-
versa is within the exclusive jurisdiction of the labor arbiter. 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.
tribunals.The said issue cannot be resolved solely by applying the Labor Code. Rather,
it requires the application of the Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination Against Women, and
the power to apply and interpret the constitution and CEDAW is within the jurisdiction
of trial courts, a court of general jurisdiction. In GeorgGrotjahn 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 dispute 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.
GENERAL PRINCIPLES of LABOR LAW
4fold test of employer-employee relationship
Brotherhood Labor Unity Movement of the Phil. Et al v. Hon. Ronaldo Zamora
et al
Facts: The petitioners are workers who have been employed at the San Miguel Parola
Glass Factory as “pahinantes” or “kargadors” for almost seven years. They worked
exclusively at the SMC plant, never having been assigned to other companies or
departments of San Miguel Corp, even when the volume of work was at its minimum.
Their work was neither regular nor continuous, depending on the volume of bottles to
be loaded and unloaded, as well as the business activity of the company. However,
work exceeded the eight-hour day and sometimes, necessitated work on Sundays and
holidays. -for this, they were neither paid overtime nor compensation.
Sometime in 1969, the workers organized and affiliated themselves with Brotherhood
Labor Unity Movement (BLUM). They wanted to be paid to overtime and holiday pay.
They pressed the SMC management to hear their grievances. BLUM filed a notice of
strike with the Bureau of Labor Relations in connection with the dismissal of some of
its members. San Miguel refused to bargain with the union alleging that the workers
are not their employees but the employees of an independent labor contracting firm,
Guaranteed Labor Contractor.
The workers were then dismissed from their jobs and denied entrance to the glass
factory despite their regularly reporting for work. A complaint was filed for illegal
dismissal and unfair labor practices.
Issue: Whether or not there was employer-employee (ER-EE)relationship between the
workers and San Miguel Corp.
 Held: YES. In determining if there is an existence of the (ER-EE) relationship, the
four-fold test was used by the Supreme Court. These are:
The selection and engagement of the employee
Payment of wages
Power of dismissal
Control Test- the employer’s power to control the employee with respect to the means
and methods by which work is to be accomplished
In the case, the records fail to show that San Miguel entered into mere oral agreements
of employment with the workers. Considering the length of time that the petitioners
have worked with the company, there is justification to conclude that they were
engaged to perform activities necessary in the usual business or trade. Despite past
shutdowns of the glass plant, the workers promptly returned to their jobs. The term of
the petitioner’s employment appears indefinite and the continuity and habituality of
the petitioner’s work bolsters the claim of an employee status.
As for the payment of the workers’ wages, the contention that the independent
contractors were paid a lump sum representing only the salaries the workers where
entitled to have no merit. The amount paid by San Miguel to the contracting firm is no
business expense or capital outlay of the latter. What the contractor receives is a
percentage from the total earnings of all the workers plus an additional amount from
the earnings of each individual worker.
The power of dismissal by the employer was evident when the petitioners had already
been refused entry to the premises. It is apparent that the closure of the warehouse was
a ploy to get rid of the petitioners, who were then agitating the company for reforms
and benefits.
The inter-office memoranda submitted in evidence prove the company’s control over
the workers. That San Miguel has the power to recommend penalties or dismissal is
the strongest indication of the company’s right of control over the workers as direct
employer.
*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.
A labor dispute can nevertheless exist "regardless of whether the disputants stand
in the proximate relationship of employer and employee"
G.R. No. 87700 June 13, 1990
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL
S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL.,
petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE
OF BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION,
respondents.
FACTS: Sometime in 1983 and 1984, SanMig entered into contracts for
merchandising services with Lipercon and D'Rite (independent contractors duly
licensed by the DOLE). In said contracts, it was expressly understood and agreed that
the workers employed by the contractors were to be paid by the latter and that none of
them were to be deemed employees or agents of SanMig. There was to be no employer-
employee relation between the contractors and/or its workers, on the one hand, and
SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for
brevity) is the duly authorized representative of the monthly paid rank-and-file
employees of SanMig with whom the latter executed a Collective Bargaining
Agreement.
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig
that some Lipercon and D'Rite workers had signed up for union membership and
sought the regularization of their employment with SMC.
On 12 January 1989 on the ground that it had failed to receive any favorable response
from SanMig, the Union filed a notice of strike for unfair labor practice, CBA
violations, and union busting
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by
Lipercon and D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages
ISSUE: Whether, or not the case at bar involves, or is in connection with, or relates to
a labor dispute
HELD: A "labor dispute" as defined in Article 212 (1) of the Labor Code includes
"any controversy or matter concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing,
or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and employee."
A labor dispute can nevertheless exist "regardless of whether the disputants stand in
the proximate relationship of employer and employee"
That a labor dispute, as defined by the law, does exist herein is evident. At bottom,
what the Union seeks is to regularize the status of the employees contracted by
Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig.
This matter definitely dwells on the working relationship between said employees vis-
a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement
of those terms are thus involved bringing the matter within the purview of a labor
dispute. Further, the Union also seeks to represent those workers, who have signed up
for Union membership, for the purpose of collective bargaining. SanMig, for its part,
resists that Union demand on the ground that there is no employer-employee
relationship between it and those workers and because the demand violates the terms
of their CBA.
Employment not merely a contractual relationship
1) CAPITOL MEDICAL CENTER v. MERIS
FACTS: Capitol Medical Center hired Dr. Meris in 1974 as Chief of its Industrial
Service Unit (ISU).
In 1992, however, or after about 18 years of service, Dr. Meris was notified that the
ISU will be abolished and that his services will be terminated. He, however, doubted
the closure. The ISU was not, in fact, abolished. It continued to operate with Dr.
Clemente as head. Dr. Meris believed it was a mere ploy for his ouster due to his
refusal to retire. He sought reinstatement but was unheeded. Dr. Meris then filed a
complaint for illegal dismissal but the Labor Arbiter dismissed the same and was only
granted his hospital retirement plan.
On appeal, the NLRC set aside the retirement plan on the ground that Dr. Meris did
not, in fact, retire. It ordered payment of separation pay instead.
The CA, however, went on to hold that the ISU was not in fact abolished, its operation
and management having merely changed hands from Dr. Meris to Dr. Clemente; and
that there was a procedural lapse in terminating the services of Dr. Meris, no written
notice to the Department of Labor and Employment (DOLE) of the ISU abolition
having been made, thereby violating the requirement embodied in Article 283.20
The appellate court, concluding that Capitol failed to strictly comply with both
procedural and substantive due process, a condition sine qua non for the validity of a
case of termination, held that Dr. Meris was illegally dismissed.
ISSUE: WON CA erred in its decision
HELD:
Work is a necessity that has economic significance deserving legal protection. The
social justice and protection to labor provisions in the Constitution dictate so.
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 the closure must not be for the
purpose of circumventing the provisions on termination of employment embodied in
the Labor Code.
In the case at bar, Capitol failed to sufficiently prove its 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;" and
that such extinct demand was brought about by "the existing trend of industrial
companies allocating their health care requirements to Health Maintenance
Organizations (HMOs) or thru a tripartite arrangement with medical insurance carriers
and designated hospitals."
The records of the case, however, fail to impress that there was indeed extinct demand
for the medical services rendered by the ISU.
The foregoing disquisition notwithstanding, as reflected above, the existence of
business losses is not required to justify the closure or cessation of establishment or
undertaking as a ground to terminate employment of employees. Even if the ISU were
not incurring losses, its abolition or closure could be justified on other grounds like
that proffered by Capitol – extinct demand. Capitol failed, however, to present
sufficient and convincing evidence to support such claim of extinct demand.
The termination of the services of Dr. Meris not having been premised on a just or
authorized cause, he is entitled to either reinstatement or separation pay if
reinstatement is no longer viable, and to backwages.
Reinstatement, however, is not feasible in case of a strained employer-employee
relationship or when the work or position formerly held by the dismissed employee no
longer exists, as in the instant case.47 Dr. Meris is thus entitled to payment of
separation pay at the rate of one (1) month salary for every year of his employment,
with a fraction of at least six (6) months being considered as one(1) year,48 and full
backwages from the time of his dismissal from April 30, 1992 until the expiration of
his term as Chief of ISU or his mandatory retirement, whichever comes first
CA AFFIRMED.
Who has initial burden of proving existence of an er-ee relationship?
2) BITOY JAVIER (DANILO P. JAVIER) v. FLY ACE
CORPORATION/FLORDELYN CASTILLO
FACTS
On May 23, 2008, the petitioner Danilo (Bitoy) Javier filed a complaing against the
respondents (Fly Ace Corporation / Flordelyn Castillo) for underpayment of salaries
and other labor standard benefits. Javier worked for the respondent’s company since
September 2007 as an all around worker around the respondent’s warehouse and a
pahinante for the company’s deliveries. The petitioner claims that he worked for the
respondent from 7:00 AM to 5:00 PM, Monday to Saturday during his time of
employment but was never issued a company ID nor any payslips like the other
employees. On May 6, 2008, the petitioner was barred from entering the company’s
premises and despite repeated pleading to allow him to resume work he was not
allowed to, Petitioner further claims that when asked for a reason on why he was being
barred from working, his superior a certain Ruben Ong (Mr. Ong) replied by telling
him “Tanungin mo anak mo” Petitioner claims that Mr. Ong had been courting his
daughter and apparently after being spurned had terminated Javier without a chance to
refute the cause/s of his dismissal. To support his allegations, the petitioner presented
an affidavit of one Bengie Valenzuela who alleged that petitioner was a stevedore or
pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was
subscribed before the Labor Arbiter. Fly Ace on the other hand claims that the
petitioner was contracted by its employee Mr. Ong as a pahinante on a pakyaw (or per
work) basis at an agreed rate of 300 per trip (later increased to 325 on January 2008).
Mr. Ong had contracted the petitioner only roughly 5 to 6 times per month whenever
their contracted hauler (Milmar Hauling Services) was not available. Fly Ace
submitted their contract with Milmar, and copies of acknowledgement receipts
evidencing the payment for the petitioner’s services with the words “daily manpower
(pakyaw/piece rate pay) with the petitioner’s signature / initials to try and prove that
petitioner was not one of their employees.
LABOR ARBITER
LA dismissed the complaint for lack of merit, saying that the petitioner failed to
present proof of his regular employment with the company:
oComplainant has no employee ID showing his employment with the Respondent nor
any document showing that he received the benefits accorded to regular employees of
the Respondents. His contention that Respondent failed to give him said ID and
payslips implies that indeed he was not a regular employee of Fly Ace considering that
complainant was a helper and that Respondent company has contracted a regular
trucking for the delivery of its products.
oRespondent Fly Ace is not engaged in trucking business but in the importation and
sales of groceries. Since there is a regular hauler to deliver its products, we give
credence to Respondents’ claim that complainant was contracted on "pakiao" basis.
oAs to the claim for underpayment of salaries, the payroll presented by the
Respondents 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
On appeal at the NLRC, Javier was favored. It ruled that the LA skirted the argument
of Javier and immediately concluded that he was not a regular employee simply
because he failed to present proof. It was of the view that a pakyaw-basis arrangement
did not preclude the existence of employer-employee relationship.
CA
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a
former employee of Fly Ace and reinstated the dismissal of Javier’s complaint as
ordered by the LA.
In an illegal dismissal case the onus probandi rests on the employer to prove that its
dismissal was for a valid cause. However, before a case for illegal dismissal can
prosper, an employer-employee relationship must first be established. x x x it is
incumbent upon private respondent to prove the employee-employer relationship by
substantial evidence.
It is incumbent upon private respondent to prove, by substantial evidence, that he is an
employee of petitioners, but he failed to discharge his burden. The non-issuance of a
company-issued identification card to private respondent supports petitioners’
contention that private respondent was not its employee.
Case was elevated to the SC on appeal.
ISSUES + HELD
1.WON the CA erred in holding that the petitioner was not a regular employee of FLY
ACE (NO)
2.WON the CA erred in holding that the petitioner is not entitles to his monetary claims
(NO)
RATIO
The Court affirms the assailed CA decision.
It must be noted that the issue of Javier’s alleged illegal dismissal is anchored on the
existence of an employer-employee relationship between him and Fly Ace. This is
essentially a question of fact.
Generally, the Court does not review errors that raise factual questions. However,
when there is conflict among the factual findings of the antecedent deciding bodies
like the LA, the NLRC and the CA, "it is proper, in the exercise of Our equity
jurisdiction, to review and re-evaluate the factual issues and to look into the records of
the case and re-examine the questioned findings." In dealing with factual issues in
labor cases, "substantial evidence – that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion – is sufficient."
As the records bear out, the LA and the CA found Javier’s claim of employment with
Fly Ace as wanting and deficient. The Court is constrained to agree. Although Section
10, Rule VII of the New Rules of Procedure of the NLRC28 allows a relaxation of the
rules of procedure and evidence in labor cases, this rule of liberality does not mean a
complete dispensation of proof.
In sum, 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.
Javier failed to adduce substantial evidence as basis for the grant of relief.
While Javier remains firm in his position that as an employed stevedore of Fly Ace,
he was made to work in the company premises during weekdays arranging and
cleaning grocery items for delivery to clients, no other proof was submitted to fortify
his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in
strengthening Javier’s cause. The Court cannot ignore the inescapable conclusion that
his mere presence at the workplace falls short in proving employment therein. The
supporting affidavit could have, to an extent, bolstered Javier’s claim of being tasked
to clean grocery items when there were no scheduled delivery trips, but no information
was offered in this subject simply because the witness had no personal knowledge of
Javier’s employment
The Court is of the considerable view that on Javier lies the burden to pass the well-
settled tests to determine the existence of an employer-employee relationship, viz: (1)
the selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power to control the employee’s conduct. Of these elements,
the most important criterion is whether the employer controls or has reserved the right
to control the employee not only as to the result of the work but also as to the means
and methods by which the result is to be accomplished.35
In this case, Javier was not able to persuade the Court that the above elements exist in
his case.
Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as
a stevedore, albeit on a pakyaw basis. The Court cannot fail to note that Fly Ace
presented documentary proof that Javier was indeed paid on a pakyaw basis per the
acknowledgment receipts admitted as competent evidence by the LA. Unfortunately
for Javier, his mere denial of the signatures affixed therein cannot automatically sway
us to ignore the documents because "forgery cannot be presumed and must be proved
by clear, positive and convincing evidence and the burden of proof lies on the party
alleging forgery."
Considering the above findings, the Court does not see the necessity to resolve the
second issue presented.
The Court’s decision does not contradict the settled rule that "payment by the piece is
just a method of compensation and does not define the essence of the relation."
Payment on a piece-rate basis does not negate regular employment. "The term ‘wage’
is broadly defined in Article 97 of the Labor Code as remuneration or earnings, capable
of being expressed in terms of money whether fixed or ascertained on a time, task,
piece or commission basis. Payment by the piece is just a method of compensation and
does not define the essence of the relations. Nor does the fact that the petitioner is not
covered by the SSS affect the employer-employee relationship. However, in
determining whether the relationship is that of employer and employee or one of an
independent contractor, each case must be determined on its own facts and all the
features of the relationship are to be considered.
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 will be
automatically decided in favor of labor. Management also has its rights which are
entitled to respect and enforcement in the interest of simple fair play. Out of its concern
for the less privileged in life, the 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 the Court 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.
PETITION DENIED, CA RULING AFFIRMED.
3) BERNARD TENAZAS v. R. VILLEGAS TAXI TRANSPORT
FACTS:
Bernard Tenazas, Jaime Francisco, and Isidro Endraca filed a complaint for illegal
dismissal against R. Villegas Taxi Transport, and/or Romualdo Villegas and Andy
Villegas.
PETITIONER’S CLAIM
TENAZAS - Taxi unit was sideswiped by another vehicle (damage = P500); fired after
reporting the incident, even threatened w/ physical harm if he was seen on company
premises.
FRANCISCO - Dismissed because of the unfounded suspicion that he was organizing
a labor union
EDRACA – Dismissed after falling short of the required boundary for his taxi unit;
fell short because of P700 spent on an urgent repair
R. VILLEGAS TAXI’S CLAIM
TENAZAS - Company admits that Tenazas is an employee – regular driver. Tenazas
was never terminated; he failed to report back to work after being told to wait for the
release of his taxi (overhauled due to mechanical defects)
FRANCISCO - Company denies that Francisco is an employee
ENDRACA - Company admits that Endraca is an employee – spare driver . Endraca
could not have been terminated in March 2006 because he stopped reporting for work
in July 2003 (but willing to accommodate him again as he was never really dismissed)
Tenazas, Francisco, and Endraca also filed a Motion to Admit Additional Evidence:
(a) Joint Affidavit of the petitioners; (b) Affidavit of Good Faith of Aloney Rivera
(co-driver); (c) pictures of the petitioners wearing company shirts; (d) Tenazas’
Certification/Record of Social Security System (SSS) contributions.
• LA: No illegal dismissal because no proof of an overt act of dismissal committed by
R. Villegas Taxi; Francisco failed to prove he was an employee
• NLRC: Reversed LA; the additional evidence sufficiently established the existence
of employer-employee relationship and illegal dismissal (for all three)
• CA: Tenazas and Endraca were indeed employees and were illegally dismissed, but
Francisco failed to establish his relationship with the company
ISSUES: WON there was an employer-employee relationship (re: Francisco) – NO
HELD:
•The burden of proof rests upon the party who asserts the affirmative of an issue. As
Francisco was claiming to be an employee of R. Villegas Taxi, it is incumbent upon
him to proffer evidence to prove the existence of the relationship.
• There is no hard and fast rule to establish the elements of employer-employee
relationship. Any competent and relevant evidence may be admitted, e.g.,
identification cards, cash vouchers, social security registration, appointment letters or
employment contracts, payrolls, organization charts, personnel lists.
• Francisco failed to present substantial evidence to establish the relationship. No
documentary evidence submitted, like an attendance logbook, payroll, SSS record, or
any personnel file that depicts his status as an employee. He could also have at least
presented his social security records stating his contributions, name and address of
employer (which Tenazas presented). Another taxi operator, Emmanuel Villegas, also
claimed to be his employer – a fact not denied or questioned by Francisco in any of
his pleadings. Petition DENIED. SC agreed with CA’s order of reinstatement instead
of separation pay. (*Strained relations must be demonstrated as a fact. In this case, no
facts demonstrated that the relations were so strained as to make reinstatement no
longer a feasible option.)
Only substantial evidence is required in admin proceedings
4) ALILEM CREDIT COOPERATIVE, INC. v. SALVADOR M. BANDIOLA,
JR.
Facts: Respondent was employed by petitioner as bookkeeper. Petitioner's Board of
Directors (the Board) received a letter from a certain Napoleon Gao-ay (Napoleon)
reporting the alleged immoral conduct and unbecoming behavior of respondent by
having an illicit relationship with Napoleon’s sister, Thelma G. Palma (Thelma). This
prompted the Board to conduct a preliminary investigation. Respondent, on the other
hand, denied the accusation against him. He, instead, claimed that the accusation was
a result of the insecurity felt by some members of the cooperative and of the Board
because of his growing popularity owing to his exemplary record as an employee.11
Thelma executed an affidavit likewise denying the allegations of extra-marital affair.
During the preliminary investigation, the Board received the following evidence of
respondent’s alleged extramarital affair:
-Melanie Gao-ay’s (Melanie) sworn statement declaring that sometime in December
1996, respondent slept on the same bed with Thelma in a boarding house in San
Fernando, La Union where she (Melanie) and Thelma resided. She personally
witnessed the intimacy of respondent and Thelma when they engaged in lovemaking
as they slept in one room and openly displayed their affection for each other.
-Rosita Tegon’s (Rosita) sworn statement that on May 23, 1997, she saw Thelma talk
to respondent in petitioner’s office asking him to accompany her in San Fernando, La
Union.5
-Emma Gao-ay Lubrin’s (Emma, Thelma’s sister) interview wherein she admitted that
she and her family confronted Thelma about the alleged extramarital affair which
Thelma allegedly admitted.
-Napoleon’s interview with the Board wherein he claimed that their family tried to
convince Thelma to end her extramarital affair with respondent but instead of
complying, she in fact lived together with respondent.
The Board decided to form an Ad Hoc Committee to investigate the charges against
respondent yielding the following additional evidence:
-Agustina Boteras’ (Agustina) sworn statement that she witnessed a confrontation
between Thelma and her sister in the latter’s residence concerning the alleged
extramarital affair. At that time, respondent’s wife was allegedly present who in fact
pleaded Thelma to end her relationship with respondent but she supposedly said “No
way!”8]
-Milagros Villacorte’s sworn statement that while she was at the Bethany Hospital in
San Fernando, La Union where her husband was confined, respondent approached her
and asked her to look for Thelma who was then having her class. When he finally
found her, respondent and Thelma met and talked in the hospital premises.9]
-Julienne Marie L. Dalangey’s certification that on August 9 to 10, 1996, respondent
attended a seminar on Internal Control and Systems Design I at the Northern Luzon
Federation of Cooperatives and Development Center (NORLU) Pension House in
Baguio City, together with a lady companion whom he introduced as his wife.
Apparently, the lady was not his wife because at that time, his wife reported for work
in the Municipal Hall of Alilem.
The LA dismissed respondent’s complaint for lack of merit. As opposed to
respondent’s claim that the accusation is a mere fabrication of some of the directors or
cooperative members who were allegedly envious of his growing popularity, the LA
gave more credence to the testimonies of petitioner’s witnesses who were relatives of
Thelma and who had no motive to falsely testify because their family reputation was
likewise at a risk of being tarnished.
The NLRC found petitioner’s Personnel Policy to be of questionable existence and
validity because it was unnumbered.26 It held that even assuming that respondent had
an extra-marital affair with a married woman, the latter is not his fellow worker in
petitioner’s business establishment.27 It, thus, concluded that respondent’s dismissal
was not founded on any of the just causes for termination of employment under Article
282 of the Labor Code, as amended.
The CA found respondent’s dismissal being founded on the serious misconduct he
allegedly committed by carrying an illicit relationship with a married woman.31 While
considering said act a serious misconduct, it refused to consider it sufficient to justify
respondent’s dismissal, because it was not done in the performance of his duties as
would make him unfit to continue working for petitioner.
Issue:WON there was illegal dismissal.
Ruling: It is undisputed that respondent was dismissed from employment for engaging
in extramarital affairs, a ground for termination of employment stated in petitioner’s
Personnel Policy. This basis of termination was made known to respondent as early as
the first communication made by petitioner. In its June 20, 1997 letter, petitioner
directed respondent to explain in writing or personal confrontation why he should not
be terminated for violation of Section 4.1.4 of the Personnel Policy. Respondent
merely denied the accusation against him34 and did not question the basis of such
termination. When the LA was called upon to decide the illegal dismissal case, it ruled
in favor of petitioner and upheld the basis of such dismissal which is the cited
Personnel Policy.
The employer’s evidence consists of sworn statements of either relatives or friends of
Thelma and respondent. They either had direct personal knowledge of the illicit
relationship or revealed circumstances indicating the existence of such relationship.
As aptly observed by the LA:
x x x Moreover, the credibility of the persons who bore witness against him can hardly
be questioned because some of these persons are relatives or friends of either
[respondent] or his lover. In particular, it is hard to see how Napoleon Gao-ay, the
brother of his lover, Thelma, could have resorted to a lie just to destroy him when the
same scandal could also result in tarnishing the reputation of his own family. The
motive of Napoleon in bringing the matter to the attention of the Board of Directors,
after all, was based on ethical grounds – he wanted a stop to the affair because it was
a disgrace to the community.
There is also no reason to doubt the statement of Melanie Gao-ay, the wife of
Napoleon, who witnessed the embarrassing “encounter”, to borrow the term she used,
between [respondent] and Thelma in her own boarding house.
In this case, respondent was adequately afforded the opportunity to defend himself and
explain the accusation against him. Upon receipt of the complaint, petitioner
conducted a preliminary investigation and even created an Ad Hoc Committee to
investigate the matter. Respondent was directed to explain either in writing or by a
personal confrontation with the Board why he should not be terminated for engaging
in illicit affair.46 Not only did petitioner give him the opportunity but respondent in
fact informed petitioner that he opted to present his side orally47 and did so as
promised when he specifically denied such allegations before the AdHoc
Committee.48 Moreover, respondent was also allowed to peruse the investigation
report prepared by the Ad Hoc Committee and was advised that he was entitled to
assistance of counsel.49 Afterwhich, hearing was conducted. It was only after
thorough investigation and proper notice and hearing to respondent that petitioner
decided whether to dismiss the former or not. The decision to terminate respondent
from employment was embodied in Board Resolution No. 05, series of 1997 a copy of
which was furnished respondent.50 With this resolution, respondent was adequately
notified of petitioner’s decision to remove him from his position. Respondent cannot
now claim that his right to due process was infringed upon.
PETITION GRANTED.
In case of doubt or ambiguity, liberal interpretation of law in favor of worker
5) CHERRY J. PRICE, STEPHANIE G. DOMINGO AND LOLITA ARBILERA
v. INNODATA PHILS. INC.,/ INNODATA CORPORATION, LEO RABANG
AND JANE NAVARETTE
FACTS:
?The Respondent is a domestic corporation engaged in data encoding and data
conversion, therefore employing encoders, indexers, formatters, programmers,
quality/quantity staff, and others to perform its operations and assignments from
clients.
?The Petitioners and Respondent engaged in an employment contract for a fixed
duration of one year, beginning on February 16, 1999 until February 16, 2000. The
Petitioners were hired as Formatters.
?The aforesaid Employment Contract indicated the following terms for termination:
oIf Innodata shall cease operations, the contract shall also be terminated on the last
day of that month
oIf Innodata shall no longer need the services of the Petitioners and will thus pre-
terminate the contract (a) once the project has been completed, (b) during business
losses, (c) introduction of new production processes and techniques
oInnodata or the Petitioners may pre-terminate the contract with or without cause, with
due notice of 15 days
oInnodata or the Petitioners may pre-terminate the contract by reason of breach or
violation of the terms and conditions of the contract through 15 days written notice,
without need of judicial action or approval
?Respondent through its HRAD Manager sent notice to Petitioners re their last day of
work on February 16, 2000, the end data stipulated in the contract
?Petitioners filed a complaint for illegal dismissal and damages against respondents
on May 22, 2000 for the reason that they should be considered as regular employees
given that (1) their positions as formatters were necessary and desirable to the usual
business of Innodata and (2) they are not project employees as there was no specific
indication of the project upon which their contract duration was co-terminous with
?Respondents explained that (1) they were compelled to engage additional employees
for fixed durations to accommodate the wide range of services requested by their
clients (2) the contract was for a fixed term only, from September 6, 1999 to February
16, 2000 (3) the Petitioners knowingly, voluntarily, and wilfully entered into the
contract
?Respondents have ceased operations in June 2002.
On 17 October 2000, the 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. Thus, their
termination for no just or authorized cause was illegal.
The NLRC found that petitioners were not regular employees, but were fixed-term
employees as stipulated in their respective contracts of employment. The NLRC
observed that the petitioners freely and voluntarily entered into the fixed-term
employment contracts with INNODATA. Hence, INNODATA was not guilty of
illegal dismissal when it terminated petitioners’ employment upon the expiration of
their contracts on 16 February 2000.
The Court of Appeals ratiocinated that although this Court declared in Villanueva and
Servidad that the employees of INNODATA working as data encoders and abstractors
were regular, and not contractual, petitioners admitted entering into contracts of
employment with INNODATA for a term of only one year and for a project called
Earthweb. According to the Court of Appeals, there was no showing that petitioners
entered into the fixed-term contracts unknowingly and involuntarily, or because
INNODATA applied force, duress or improper pressure on them. The appellate court
also observed that INNODATA and petitioners dealt with each other on more or less
equal terms, with no moral dominance exercised by the former on latter. Petitioners
were therefore bound by the stipulations in their contracts terminating their
employment after the lapse of the fixed term.
ISSUE:
1.)Were the Petitioners regular employees of Innodata?
2.)Were the Petitioners illegally dismissed, therefore, subject to reinstatement and
payment of backwages?
HELD:
Yes.
?While the Court renders fixed-term contracts as valid, these should not be construed
as a means for employers to circumvent the law on security of tenure.
oThe employment status of a person is provided for by the law and not by what the
Parties declare it to be, and as such, they should not absolve themselves from the
coverage of the law. Applicable references are Art. 280 and Art. 270 of the Labor
Code.
oUndoubtedly, the Petitioners are regular employees by the nature of the work they
render, such that they are desirable and necessary in the usual operation of business of
Innodata.
oFixed-term employment is valid only for certain cases, such that these are essential
and natural undertakings, such as in (a) overseas employment (b) positions in
educational institutions where these are undertaken in rotation among faculty members
like deans and principals (c) elective positions in companies of which durations are
fixed
?The Employment Contract is highly suspicious as the document was clearly tampered
with: the beginning data, supposedly indicated to be on February 16, 1999, was crossed
out to indicate September 6, 2000. This was due to the completion of the project before
the end of the one year term, and as such, the Petitioners were re-hired in September.
This would mean that they engaged the Petitioners for a period of less than a year,
which is an attempt to circumvent security of tenure.
?Petitioners could not be considered as Project Employees, defined as (1) engaged for
a specific project or undertaking (2) completion or termination of the project has been
predetermined at the time of engagement of the employee. The contract did not
indicate a specific project upon which the Petitioners shall render services accordingly,
and in fact the Petitioners have rendered services for a number of clients of Innodata.
The Court notes that the attempt to change the beginning date of effectivity of
petitioners’ contracts was very crudely done. The alterations are very obvious, and
they have not been initialed by the petitioners to indicate their assent to the same. If
the contracts were truly fixed-term contracts, then a change in the term or period
agreed upon is material and would already constitute a novation of the original
contract.
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.
Obviously, respondents wanted to make it appear that petitioners worked for
INNODATA for a period of less than one year. The only reason the Court can discern
from such a move on respondents’ part is so that they can preclude petitioners from
acquiring regular status based on their employment for one year. Nonetheless, the
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.
Even assuming that petitioners’ length of employment is material, given respondents’
muddled assertions, this Court adheres to its pronouncement in Villanueva v. National
Labor Relations Commission,28 to the effect that where a contract of employment,
being a contract of adhesion, is ambiguous, any ambiguity therein should be construed
strictly against the party who prepared it. The Court is, thus, compelled to conclude
that petitioners’ contracts of employment became effective on 16 February 1999, and
that they were already working continuously for INNODATA for a year.
Further attempting to exonerate itself from any liability for illegal dismissal,
INNODATA contends that petitioners were project employees whose employment
ceased at the end of a specific project or undertaking. This contention is specious and
devoid of merit.In Magcalas v. National Labor Relations Commission,30 the Court
struck down a similar claim by the employer therein that the dismissed employees
were fixed-term and project employees. The Court here reiterates the rule that all
doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of
labor. It is a well-entrenched doctrine that in illegal dismissal cases, the employer has
the burden of proof. This burden was not discharged in the present case.
?The contract has barred the Petitioners from claiming illegal dismissal upon
termination of the contract as it has indicated that they can be pre-terminated with or
without cause provided they be given 15 days notice.
?Since reinstatement is no longer possible, the Respondents shall pay backwages from
the start of illegal termination until its closure plus attorney’s fees.
PETITION GRANTED.
6) BPI v. BPI EMPLOYEES UNION
Respondent Bank of the Philippine Islands Employees Union-Metro Manila (BPIEU-
MM), a legitimate labor organization and the sole and exclusive bargaining
representative of all the regular rank-and-file employees of petitioner BPI in Metro
Manila and petitioner BPI have an existing Collective Bargaining Agreement
(CBA)[3] which took effect on April 1, 2001. The CBA provides for loan benefits and
relatively low interest rates. The said provisions state:
Article VIII - Fringe Benefits
Section 14. Multi-Purpose Loan, Real Estate Secured Housing Loan and Car Loan.
(a) Multi-Purpose Loan not exceeding FORTY THOUSAND PESOS (P40,000.00),
payable within the period not exceeding three (3) years via semi-monthly salary
deductions, with interest at the rate of eight percent (8%) per annum computed on the
diminishing balance.\
(b) Real Estate-Secured Housing Loan not exceeding FOUR HUNDRED FIFTY
THOUSAND " PESOS (P450,000.00), payable over a period not exceeding fifteen
(15) years via semi-monthly salary deductions, with interest at the rate of nine percent
(9%) per annum computed on the diminishing balance.
The rate of interest on real estate secured loans, however, may be reduced to six
percent (6%) per annum, subject to conditions.
The BANK shall make strong representations with the BSP for a second upgrade
and/or availment under the Housing Loan Program.
(c) Car Loan. - The combined amount of both housing and car loans that may be
availed of shall not exceed P450,000.00.
The multi-purpose and housing loans stated in the next preceding paragraphs, as well
as the car loan which shall be incorporated in the housing loan program, shall be
subject further to the applicable provisions, guidelines and restrictions set forth in the
CB Circular No. 561, as amended by CB Circular No. 689, and to the rules, regulations
and policies of the BANK on such loans insofar as they do not violate the provisions,
guidelines and restrictions set forth in said CB Circular No. 561, as amended.
Section 15. Emergency Loans. - The BANK agrees to increase the amount from a
maximum P10,000 to a maximum amount of P15,000.00 to qualified employees
intended to cover emergencies only, i.e., expenses incurred but could not be foreseen
such as those arising from natural calamities, emergency medical treatment and/or
hospitalization of an employee and/or his immediate family and other genuine
emergency cases of serious hardship as the BANK may determine. Hospital expenses
for caesarian delivery of a female employee or an employee's wife not covered by the
Group Hospitalization Insurance Plan shall qualify for the emergency loan.
Thereafter, petitioner issued a "NO NEGATIVE DATA BANK POLICY" for the
implementation/availment of the manpower loans which the respondent objected to,
thus, resulting into labor-management dialogues. Unsatisfied with the result of those
dialogues, respondent brought the matter to the grievance machinery and afterwards,
the issue, not having been resolved, the parties raised it to the Voluntary Arbitrator.
In his decision, the Voluntary Arbitrator found merit in the respondent's cause.
Aggrieved, petitioner appealed the case to the CA via Rule 43, but the latter affirmed
the decision of the Voluntary Arbitrator with the modification that the award of
attorney's fees be deleted.
Petitioner filed a motion for reconsideration, but it was denied in a Resolution dated
November 29, 2006.
Hence, the present petition.
Petitioner raises the following arguments:
A. The "No NDB policy" is a valid and reasonable requirement that is consistent with
sound banking practice and is meant to inculcate among officers and employees of the
petitioner the need for fiscal responsibility and discipline, especially in an industry
where the element of trust is paramount.
B. The "No NDB policy" does not violate the parties' Collective Bargaining
Agreement.
C. The "No NDB policy" conforms to existing BSP regulations and circulars, and to
safe and sound banking practices.
ISSUE: WON the NDB policy violates the CBA
HELD: YES. A 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, including mandatory provisions
for grievances and arbitration machineries. As in all other contracts, there must be
clear indications that the parties reached a meeting of the minds. Therefore, the terms
and conditions of a CBA constitute the law between the parties.
The CBA in this case contains no provision on the "no negative data bank policy" as
a prerequisite in the entitlement of the benefits it set forth for the employees. In fact, a
close reading of the CBA would show that the terms and conditions contained therein
relative to the availment of the loans are plain and clear, thus, all they need is the
proper implementation in order to reach their objective. The CA was, therefore, correct
when it ruled that, although it can be said that petitioner is authorized to issue rules
and regulations pertinent to the availment and administration of the loans under the
CBA, the additional rules and regulations, however, must not impose new conditions
which are not contemplated in the CBA and should be within the realm of
reasonableness. The "no negative data bank policy" is a new condition which is never
contemplated in the CBA and at some points, unreasonable to the employees because
it provides that before an employee or his/her spouse can avail of the loan benefits
under the CBA, the said employee or his/her spouse must not be listed in the negative
data bank, or if previously listed therein, must obtain a clearance at least one year or
six months as the case may be, prior to a loan application.
It must be remembered that negotiations between an employer and a union transpire
before they agree on the terms and conditions contained in the CBA. If the petitioner,
indeed, intended to include a "no negative data bank policy" in the CBA, it should
have presented such proposal to the union during the negotiations. To include such
policy after the effectivity of the CBA is deceptive and goes beyond the original
agreement between the contracting parties.
This Court also notes petitioner's argument that the "no negative data bank policy" is
intended to exact a high standard of conduct from its employees. However, the terms
and conditions of the CBA must prevail. Petitioner can propose the inclusion of the
said policy upon the expiration of the CBA, during the negotiations for a new CBA,
but in the meantime, it has to honor the provisions of the existing CBA.
Article 1702 of the New Civil Code provides that, in case of doubt, all labor legislation
and all labor contracts shall be construed in favor of the safety and decent living of the
laborer. Thus, this Court has ruled that any doubt or ambiguity in the contract between
management and the union members should be resolved in favor of the
latter.Therefore, there is no doubt, in this case, that the welfare of the laborers stands
supreme.
7) PHIL JOURNALIST INC. v. JOURNAL EMPLOYEES UNION (JEU), FOR
ITS UNION MEMBER, MICHAEL ALFANTE
Facts: The second complainant Michael L. Alfante alleged that he started to work with
respondents as computer technician at Management Information System under
manager Neri Torrecampo on 16 May 2000; that on 15 July 2001, he was regularized
receiving a monthly salary of P9,070.00 plus other monetary benefits; that sometime
in 2001, Rico Pagkalinawan replaced Torrecampo, which was opposed by complainant
and three other co-employees; that Pagkalinawan took offense of their objection; that
on 22 October 2002, complainant Alfante received a memorandum from Pagkalinawan
regarding his excessive tardiness; that on 10 June 2003, complainant Alfante received
a memorandum from Executive Vice-President Arnold Banares, requiring him to
explain his side on the evaluation of his performance submitted by manager
Pagkalinawan; that one week after complainant submitted his explanation, he was
handed his notice of dismissal on the ground of “poor performance”; and that
complainant was dismissed effective 28 July 2003. Complainant Alfante submitted
that he was dismissed without just cause. With respect to the alleged non-adjustment
of longevity pay and burial aid, respondent PJI pointed out that it complies with the
provisions of the CBA and that both complainants have not claimed for the burial aid.
Issue: Whether or not petitioner’s denial of respondents’ claims for funeral and
bereavement aid granted under Section 4, Article XIII of their CBA constituted a
diminution of benefits in violation of Article 100 of the Labor Code.
Held: Yes. 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.
Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the law
between the parties, must be complied with by them. The literal meaning of the
stipulations of the CBA, as with every other contract, control if they are clear and leave
no doubt upon the intention of the contracting parties.
It is further worthy to note that petitioner granted claims for funeral and bereavement
aid as early as 1999, then issued a memorandum in 2000 to correct its erroneous
interpretation of legal dependent under Section 4, Article XIII of the CBA. This
notwithstanding, the 2001-2004 CBA35 still contained the same provision granting
funeral or bereavement aid in case of the death of a legal dependent of a regular
employee without differentiating the legal dependents according to the employee’s
civil status as married or single. The continuity in the grant of the funeral and
bereavement aid to regular employees for the death of their legal dependents has
undoubtedly ripened into a company policy. With that, the denial of Alfante’s qualified
claim for such benefit pursuant to Section 4, Article XIII of the CBA violated the law
prohibiting the diminution of benefits.
PETITION DENIED.
8) NATIONAL UNION OF WORKERS IN HOTEL RESTAURANT AND
ALLIED INDUSTRIES (NUWHRAIN-APL-IUF), PHILIPPINE PLAZA
CHAPTER v. PHILIPPINE PLAZA HOLDINGS, INC.
Topic: Service Charges, Negotiated Contracts, Special Rates
Ponente: Justice Arturo D. Brion
NATIONAL UNION OF WORKERS IN HOTEL RESTAURANT AND ALLIED
INDUSTRIES (NUWHRAIN-APL-IUF), PHILIPPINE PLAZA CHAPTER v.
PHILIPPINE PLAZA HOLDINGS, INC., G.R. No. 177524, July 23, 2014
Facts:The Union is the collective bargaining agent of the rank-and-file employees of
respondent Philippine Plaza Holdings, Inc. (PPHI). The PPHI and the Union executed
the “Third Rank-and-File Collective Bargaining Agreement as Amended”
(CBA). The CBA provided, among others, for the collection, by the PPHI, of a ten
percent (10%) service charge on the sale of food, beverage, transportation, laundry and
rooms. The CBA provisions merely reiterated similar provisions found in the PPHI-
Union’s earlier collective bargaining agreement executed.
The Union’s Service Charge Committee informed the Union President, through an
audit report (1st audit report), of uncollected service charges for the last quarter of
1998 amounting to P2,952,467.61. Specifically, the audit report referred to the service
charges from the following items: (1) “Journal Vouchers;” (2) “Banquet Other
Revenue;” and (3) “Staff and Promo.” The Union presented this audit report to the
PPHI’s management during the Labor Management Cooperation Meeting
(LMCM). The PPHI’s management responded that the Hotel Financial Controller
would need to verify the audit report.
Through a letter, the PPHI admitted liability for P80,063.88 out of the P2,952,467.61
that the Union claimed as uncollected service charges. The PPHI denied the rest of
the Union’s claims because: (1) they were exempted from the service charge being
revenues from “special promotions” (revenue from the Westin Gold Card sales) or
“negotiated contracts” (alleged revenue from the Maxi-Media contract); (2) the
revenues did not belong to the PPHI but to third-party suppliers; and (3) no revenue
was realized from these transactions as they were actually expenses incurred for the
benefit of executives or by way of good-will to clients and government officials.
During the LMCM, the Union maintained its position on uncollected service charges
so that a deadlock on the issue ensued. The parties agreed to refer the matter to a third
party for the solution. They considered two options – voluntary arbitration or court
action – and promised to get back to each other on their chosen option. In its formal
reply (to the PPHI’s letter) (2nd audit report), the Union modified its claims. It
claimed uncollected service charges from: (1) “Journal Vouchers - Westin Gold
Revenue and Maxi-Media” (F&B and Rooms Barter); (2) “Banquet and Other
Revenue;” and (3) “Staff and Promo.”
The Union’s Service Charge Committee made another service charge audit report for
the years 1997, 1998 and 1999 (3rd audit report). This 3rd audit report reflected total
uncollected service charges of P5,566,007.62 from the following entries: (1) “Journal
Vouchers;” (2) “Guaranteed No Show;” (3) “Promotions;” and (4) “F & B
Revenue.” The Union President presented the 3rd audit report to the PPHI.
When the parties failed to reach an agreement, the Union, filed before the LA
(Regional Arbitration Branch of the NLRC) a complaint for non-payment of specified
service charges and unfair labor practice. LA dismissed the Union’s complaint for lack
of merit. NLRC reversed the LA’s decision and considered the specified
entries/transactions as “service chargeable.” The PHHI went to the CA on a petition
for certiorari after the NLRC denied its motion for reconsideration. The CA granted
the PPHI’s petition. It affirmed the LA’s decision. The Union filed the present petition
after the CA denied its motion for reconsideration in the CA’s resolution.
Issue: Whether or not service charges should have been collected (and distributed to
the covered employees) for the specified entries/transactions.
Ruling: No.
No service charges were due from the specified entries/transactions; they either fall
within the CBA-excepted “Negotiated Contracts” and “Special Rates” or did not
involve “a sale of food, beverage, etc.”
The Union anchors its claim for services charges on Sections 68 and 69 of the CBA,
in relation with Article 96 of the Labor Code. Section 68 states that the sale of food,
beverage, transportation, laundry and rooms are subject to service charge at the rate of
ten percent (10%).Excepted from the coverage of the 10% service charge are the so-
called “negotiated contracts” and “special rates.”
Following the wordings of Section 68 of the CBA, three requisites must be present for
the provisions on service charges to operate: (1) the transaction from which service
charge is sought to be collected is a sale; (2) the sale transaction covers food, beverage,
transportation, laundry and rooms;and (3) the sale does not result from negotiated
contracts and/or at special rates.
In plain terms, all transactions involving a “sale of food, beverage, transportation,
laundry and rooms” are generally covered. Excepted from the coverage are, first, non-
sale transactions or transactions that do not involve any sale even though they involve
“food, beverage, etc.” Second, transactions that involve a sale but do not involve
“food, beverage, etc.” And third, transactions involving “negotiated contracts” and
“special rates” i.e., a “sale of food, beverage, etc.” resulting from “negotiated
contracts” or at “special rates;” non-sale transactions involving “food, beverage, etc.”
resulting from “negotiated contracts” and/or “special rates;” and sale transactions, but
not involving “food, beverage, etc.,” resulting from “negotiated contracts” and
“special rates.”
Notably, the CBA does not specifically define the terms “negotiated contracts” and
“special rates.” Nonetheless, the CBA likewise does not explicitly limit the use of
these terms to specified transactions. With particular reference to “negotiated
contracts,” the CBA does not confine its application to “airline contracts” as argued
by the Union. Thus, as correctly declared by the CA, the term “negotiated contracts”
should be read as applying to all types of negotiated contracts and not to “airlines
contracts” only. This is in line with the basic rule of construction that when the terms
are clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulations shall prevail. A constricted interpretation of this term, i.e.,
as applicable to “airlines contracts” only, must be positively shown either by the
wordings of the CBA or by sufficient evidence of the parties’ intention to limit its
application. The Union completely failed to provide support for its constricted reading
of the term “negotiated contracts,” either from the wordings of the CBA or from the
evidence.
In reversing the NLRC’s ruling and denying the Union’s claim, the CA found the
specified entries/transactions as either falling under the excepted negotiated contracts
and/or special rates or not involving a sale of food, beverage, etc. Specifically, it
considered the entries “Westin Gold Cards Revenue” and “Maxi Media Barter” to be
negotiated contracts or contracts under special rates, and the entries “Business
Promotions” and “Gift Certificates” as contracts that did not involve a sale of food,
beverage, etc. The CA also found no factual and evidentiary basis to support the
Union’s claim for service charges on the entries “Guaranteed No show” and “F & B
Revenue.”
9) MITSUBISHI MOTORS PHILIPPINES SALARIED EMPLOYEES UNION
(MMPSEU) v. MITSUBISHI MOTORS PHILIPPINES CORPORATION
FACTS:
The Collective Bargaining Agreement (CBA) of the parties in this case provides that
the company shoulder the hospitalization expenses of the dependents of covered
employees subject to certain limitations and restrictions. Accordingly, covered
employees pay part of the hospitalization insurance premium through monthly salary
deduction while the company, upon hospitalization of the covered employees'
dependents, shall pay the hospitalization expenses incurred for the same.
Each employee shall pay one hundred pesos (P100.00) per month through salary
deduction as his share in the payment of the insurance premium for the above coverage
with the balance of the premium to be paid by the COMPANY. If the COMPANY is
self-insured the one hundred pesos (P100.00) per employee monthly contribution shall
be given to the COMPANY which shall shoulder the expenses subject to the above
level of benefits and subject to the same limitations and restrictions provided for in
Annex "B" hereof.
The hospitalization expenses must be covered by actual hospital and doctor’s bills and
any amount in excess of the above mentioned level of benefits will be for the account
of the employee.
When the first CBA expired, the parties executed another CBA incorporating the same
provisions on dependents’ hospitalization insurance benefits but in the increased
amount of P50,000.00. The room and board expenses, as well as the doctor’s call fees,
were also increased to P375.00.
On separate occasions, three members of MMPSEU, namely, Ernesto Calida, Hermie
Juan Oabel and Jocelyn Martin, filed claims for reimbursement of hospitalization
expenses of their dependents.
MMPC paid only a portion of their hospitalization insurance claims, not the full
amount. In the case of Calida, his wife, Lanie, was confined at Sto. Tomas University
Hospital from September 4 to 9, 1998 due to Thyroidectomy. The medical expenses
incurred totalled P29,967.10. Of this amount, P9,000.00 representing professional fees
was paid by MEDICard Philippines, Inc. which provides health maintenance to Lanie.
MMPC only paid P12,148.63. It did not pay the P9,000.00 already paid by MEDICard
and the P6,278.47 not covered by official receipts. It refused to give to Calida the
difference between the amount of medical expenses of P27,427.10 which he claimed
to be entitled to under the CBA and the P12,148.63 which MMPC directly paid to the
hospital.
In the case of Martin, his father, Jose, was admitted at The Medical City from March
26 to 27, 2000 due to Acid Peptic Disease and incurred medical expenses amounting
to P9,101.30. MEDICard paid P8,496.00. Consequently, MMPC only paid P288.40,
after deducting from the total medical expenses the amount paid by MEDICard and
the P316.90 discount given by the hospital.
Claiming that under the CBA, they are entitled to hospital benefits amounting to
P27,427.10, P6,769.35 and P8,123.80, respectively, which should not be reduced by
the amounts paid by MEDICard and by Prosper, Calida, Oabel and Martin asked for
reimbursement from MMPC.
However, MMPC denied the claims contending that double insurance would result if
the said employees would receive from the company the full amount of hospitalization
expenses despite having already received payment of portions thereof from other
health insurance providers.
This prompted the MMPSEU President to write the MMPC President demanding full
payment of the hospitalization benefits.
MMPC clarified that the claims of the said MMPSEU members have already been paid
on the basis of official receipts submitted.
MMPSEU referred the dispute to the National Conciliation and Mediation Board and
requested for preventive mediation.
MMPSEU alleged that there is nothing in the CBA which prohibits an employee from
obtaining other insurance or declares that medical expenses can be reimbursed only
upon presentation of original official receipts. It stressed that the hospitalization
benefits should be computed based on the formula indicated in the CBA without
deducting the benefits derived from other insurance providers. Besides, if reduction is
permitted, MMPC would be unjustly benefited from the monthly premium contributed
by the employees through salary deduction. MMPSEU added that its members had
legitimate claims under the CBA and that any doubt as to any of its provisions should
be resolved in favor of its members. Moreover, any ambiguity should be resolved in
favor of labor.
On the other hand, MMPC argued that the reimbursement of the entire amounts being
claimed by the covered employees, including those already paid by other insurance
companies, would constitute double indemnity or double insurance, which is
circumscribed under the Insurance Code. Moreover, a contract of insurance is a
contract of indemnity and the employees cannot be allowed to profit from their
dependents’ loss.
The Voluntary Arbitrator rendered a Decision finding MMPC liable to pay or
reimburse the amount of hospitalization expenses already paid by other health
insurance companies. The Voluntary Arbitrator held that the employees may demand
simultaneous payment from both the CBA and their dependents’ separate health
insurance without resulting to double insurance, since separate premiums were paid
for each contract. He also noted that the CBA does not prohibit reimbursement in case
there are other health insurers.
MMPC filed a Petition for Review before the CA. It claimed that the Voluntary
Arbitrator committed grave abuse of discretion in not finding that recovery under both
insurance policies constitutes double insurance as both had the same subject matter,
interest insured and risk or peril insured against; in relying solely on the unauthorized
legal opinion of Atty. Funk; and in not finding that the employees will be benefited
twice for the same loss.
On March 31, 2006, the CA found merit in MMPC’s Petition. It ruled that despite the
lack of a provision which bars recovery in case of payment by other insurers, the
wordings of the subject provision of the CBA showed that the parties intended to make
MMPC liable only for expenses actually incurred by an employee’s qualified
dependent. In particular, the provision stipulates that payment should be made directly
to the hospital and that the claim should be supported by actual hospital and doctor’s
bills.
ISSUE: Are member-employees entitled to full payment of the hospital expenses
incurred by their dependents, including the amounts already paid by other health
insurance companies from MITSUBISHI under their CBA?
HELD: NO. The Voluntary Arbitrator based his ruling on the opinion of Atty. Funk
that the employees may recover benefits from different insurance providers without
regard to the amount of benefits paid by each. Atty. Funk erred in applying the
collateral source rule.
Under this rule, if an injured person receives compensation for his injuries from a
source wholly independent of the tortfeasor, the payment should not be deducted from
the damages which he would otherwise collect from the tortfeasor. In a recent Decision
by the Illinois Supreme Court, the rule has been described as "an established exception
to the general rule that damages in negligence actions must be compensatory." The
Court went on to explain that although the rule appears to allow a double recovery, the
collateral source will have a lien or subrogation right to prevent such a double
recovery.
The collateral source rule is ‘predicated on the theory that a tortfeasor has no interest
in, and therefore no right to benefit from monies received by the injured person from
sources unconnected with the defendant’. According to the collateral source rule, ‘a
tortfeasor has no right to any mitigation of damages because of payments or
compensation received by the injured person from an independent source.’
As seen, the collateral source rule applies in order to place the responsibility for losses
on the party causing them. Its application is justified so that "'the wrongdoer should
not benefit from the expenditures made by the injured party or take advantage of
contracts or other relations that may exist between the injured party and third persons."
Thus, it finds no application to cases involving no-fault insurances under which the
insured is indemnified for losses by insurance companies, regardless of who was at
fault in the incident generating the losses.
Here, it is clear that MMPC is a no-fault insurer. Hence, it cannot be obliged to pay
the hospitalization expenses of the dependents of its employees which had already
been paid by separate health insurance providers of said dependents.
The conditions set forth in the CBA provision indicate an intention to limit MMPC’s
liability only to actual expenses incurred by the employees’ dependents, that is,
excluding the amounts paid by dependents’ other health insurance providers.
The condition that payment should be direct to the hospital and doctor implies that
MMPC is only liable to pay medical expenses actually shouldered by the employees’
dependents. It follows that MMPC’s liability is limited, that is, it does not include the
amounts paid by other health insurance providers. This condition is obviously intended
to thwart not only fraudulent claims but also double claims for the same loss of the
dependents of covered employees.
It is well to note at this point that the CBA constitutes a contract between the parties
and as such, it should be strictly construed for the purpose of limiting the amount of
the employer’s liability.
To allow reimbursement of amounts paid under other insurance policies shall
constitute double recovery which is not sanctioned by law.
The CBA has provided for MMPC’s limited liability which extends only up to the
amount to be paid to the hospital and doctor by the employees’ dependents, excluding
those paid by other insurers. Consequently, the covered employees will not receive
more than what is due them; neither is MMPC under any obligation to give more than
what is due under the CBA.
Moreover, since the subject CBA provision is an insurance contract, the rights and
obligations of the parties must be determined in accordance with the general principles
of insurance law. Being in the nature of a non-life insurance contract and essentially a
contract of indemnity, the CBA provision obligates MMPC to indemnify the covered
employees’ medical expenses incurred by their dependents but only up to the extent
of the expenses actually incurred. This is consistent with the principle of indemnity
which proscribes the insured from recovering greater than the loss. Indeed, to profit
from a loss will lead to unjust enrichment and therefore should not be countenanced.
But management rights likewise protected
10) BEST WEAR GARMENTS v. ADELAIDA DE LEMOS and CECILLE
OCUBILLO
FACTS:
Petitioner Best Wear Garments (BWG) hired respondents Ocubillo and De Lemos as
sewers on piece-rate basis
De Lemos and Ocubillo filed a complaint for illegal dismissal, alleging that BWG’s
GM (Sitosta) arbitrarily transferred them to other areas of operation, which they said
amounted to constructive dismissal as it resulted in less earnings for them. They also
claimed that the reason for their transfer is their refusal to render OT work.
Petitioners denied having terminated the employment of respondents who supposedly
committed numerous AWOL. BWG further claimed that respondents intimated their
intention to resign and demanded separation pay. It was explained to the respondents
that the company had no existing policy on granting separation pay, and hence could
not act on their request. Subsequently, the respondents failed to report for work.
As to the allegation of respondents that the reason for their transfer was their refusal
to render OT work, petitioners asserted that respondents are piece-rate workers and
hence not paid according to the number of hours worked.
LA granted respondents’ claims. NLRC reversed (no basis for charge of constructive
dismissal, respondents were directed to report back to work without backwages). MR
denied. CA reversed NLRC, and reinstated LA’s decision with modification. Motion
for Partial Recon denied, hence this petition.
ISSUE: W/N respondents were constructively dismissed. No.
RATIO: The right of EEs to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them. Thus an ER may transfer or assign EEs from one
office to another, provided there is no demotion in rank or diminution of salary and
other privileges, and the action is not motivated by discrimination, made in BF or
effected as a form of punishment or demotion without sufficient cause.
Being piece rate workers assigned to individual sewing machines, respondents’
earnings depended on the quality and quantity of finished products. That their work
output might have been affected by the change in their specific work assignments does
not necessarily imply that any resulting reduction in pay is tantamount to constructive
dismissal. Workers under piece-rate employment have no fixed salaries and their
compensation is computed on the basis of accomplished tasks. As admitted by
respondent De Lemos, some garments or by-products took a longer time to finish so
they could not earn as much as before. Also, the type of sewing jobs available would
depend on the specifications made by the clients of petitioner company. Under these
circumstances, it cannot be said that the transfer was unreasonable, inconvenient, or
prejudicial to the respondents. Such deployment of sewers to work on different types
of garments as dictated by present business necessity is within the ambit of
management prerogative, which, in the absence of BF, ill motive or discrimination,
should not be interfered with by the courts.
The constitutional policy of providing full protection to labor is not intended to oppress
or destroy management.22While 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 will be automatically decided in favor of labor. Management also has its
rights which are entitled to respect and enforcement in the interest of simple fair
play.23 Thus, where management prerogative to transfer employees is validly
exercised, as in this case, courts will decline to interfere.
Petition granted, NLRC decision reinstated
Paradign shift towards mutual cooperation
11) TOYOTA MOTOR PHILS. CORP. WORKERS ASSOC. (TMPCWA) v.
NLRC, TOYOTA MOTOR PHIL CORP et al
FACTS: The Union filed a petition for certification election among the Toyota rank
and file employees with the National Conciliation and Mediation Board (NCMB). The
Med-Arbiter denied the petition, but, on appeal, the DOLE Secretary granted the
Union’s prayer, and, through an Order, directed the immediate holding of the
certification election.
After Toyota’s plea for reconsideration was denied, the certification election was
conducted. The Med-Arbiter’s Order certified the Union as the sole and exclusive
bargaining agent of all the Toyota rank and file employees. Toyota challenged said
Order via an appeal to the DOLE Secretary.
-STRIKE-
In the meantime, the Union submitted its CBA proposals to Toyota, but the latter
refused to negotiate in view of its pending appeal. Consequently, the Union filed a
notice of strike with the NCMB based on Toyota’s refusal to bargain. In connection
with Toyota’s appeal, Toyota and the Union were required to attend a hearing on
before the Bureau of Labor Relations (BLR). The February 21, 2001 hearing was
cancelled and reset to February 22.
STRIKE 1: On February 21, 135 Union officers and members failed to render the
required overtime work, and instead marched to and staged a picket in front of the
BLR office. The Union, in a letter of the same date, also requested that its members be
allowed to be absent on February 22 to attend the hearing and instead work on their
next scheduled rest day. This request however was denied by Toyota.
Despite denial of the Union’s request, more than 200 employees staged mass actions
on February 22 and 23 in front of the BLR and the DOLE offices, to protest the partisan
and anti-union stance of Toyota. Due to the deliberate absence of a considerable
number of employees on February 22 to 23, Toyota experienced acute lack of
manpower in its manufacturing and production lines, and was unable to meet its
production goals resulting in huge losses.
On February 27, Toyota sent individual letters to some 360 employees requiring them
to explain within 24 hours why they should not be dismissed for their obstinate
defiance of the company’s directive to render overtime work on February 21, for their
failure to report for work on February 22 and 23, and for their participation in the
concerted actions which severely disrupted and paralyzed the plant’s operations. These
letters specifically cited Section D, paragraph 6 of the Company’s Code of Conduct,
to wit:
Inciting or participating in riots, disorders, alleged strikes, or concerted actions
detrimental to [Toyota’s] interest.
1st offense – dismissal.11
On the next day, the Union filed with the NCMB another notice of strike for union
busting amounting to unfair labor practice.
On March 1, the Union nonetheless submitted an explanation in compliance with the
February 27 notices sent by Toyota to the erring employees. Consequently, on March
2 and 5, Toyota issued 2 memoranda to the concerned employees to clarify whether or
not they are adopting the March 1, 2001 Union’s explanation as their own. The
employees were also required to attend an investigative interview, but they refused to
do so.
On March 16, Toyota terminated the employment of 227 employees for participation
in concerted actions in violation of its Code of Conduct and for misconduct under
Article 282 of the Labor Code.
STRIKE 2: In reaction to the dismissal of its union members and officers, the Union
went on strike on March 17. Subsequently, from March 28 to April 12, the Union
intensified its strike by barricading the gates of Toyota’s Bicutan and Sta. Rosa plants.
The strikers prevented workers who reported for work from entering the plants.
On March 29, Toyota filed a petition for injunction with a prayer for the issuance of a
TRO with the NLRC. It sought free ingress to and egress from its Bicutan and Sta.
Rosa manufacturing plants. Acting on said petition, the NLRC issued a TRO against
the Union, ordering its leaders and members as well as its sympathizers to remove
their barricades and all forms of obstruction to ensure free ingress to and egress from
the company’s premises.
Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC
arbitration branch, , and prayed that the erring Union officers, directors, and members
be dismissed.
On April 10, the DOLE Secretary assumed jurisdiction over the labor dispute and
issued an Order certifying the labor dispute to the NLRC. In said Order, the DOLE
Secretary directed all striking workers to return to work at their regular shifts by April
16. On the other hand, it ordered Toyota to accept the returning employees under the
same terms and conditions obtaining prior to the strike or at its option, put them under
payroll reinstatement. The parties were also enjoined from committing acts that may
worsen the situation.
The Union ended the strike on April 12. The union members and officers tried to return
to work on April 16 but were told that Toyota opted for payroll-reinstatement
authorized by the Order of the DOLE Secretary.
STRIKE 3: Meanwhile, on May 23, despite the issuance of the DOLE Secretary’s
certification Order, several payroll-reinstated members of the Union staged a protest
rally in front of Toyota’s Bicutan Plant bearing placards and streamers in defiance of
the April 10 Order. Then, on May 28, around Union members staged another protest
action in front of the Bicutan Plant. At the same time, some payroll-reinstated
employees picketed in front of the Santa Rosa Plant’s main entrance, and were later
joined by other Union members.
On June 5, notwithstanding the certification Order, the Union filed another notice of
strike.
— Decision by reinstating severance compensation to the dismissed employees based on
In the meantime, the NLRC ordered both parties to submit their respective position
papers on June 8. The union, however, requested for abeyance of the proceedings
considering that there is a pending petition for certiorari with the CA assailing the
validity of the DOLE Secretary’s Assumption of Jurisdiction Order.
Thereafter, on June 19, the NLRC issued an Order, reiterating its previous order for
both parties to submit their respective position papers on or before June 2, 2001. Only
Toyota submitted its position paper. During the August 3, 2001 hearing, the Union,
despite several accommodations, still failed to submit its position paper. Later that day,
the Union claimed it filed its position paper by registered mail.
NLRC decision
Subsequently, the NLRC, in its August 9 Decision, declared the strikes staged by the
Union on February 21 to 23 (as the Union failed to comply with the procedural
requirements of a valid strike under Art. 263 of the Labor Code) and May 23 and 28
as illegal and Declared that the dismissal of the 227 who participated in the illegal
strike on February 21-23 is legal. Lastly, award of severance compensation was given
to the dismissed Union members
After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10,
the Union again staged strikes on May 23 and 28. The NLRC found the strikes illegal
as they violated Art. 264 of the Labor Code which proscribes any strike or lockout
after jurisdiction is assumed over the dispute by the President or the DOLE Secretary.
The NLRC held that both parties must have maintained the status quo after the DOLE
Secretary issued the assumption/certification Order, and ruled that the Union did not
respect the DOLE Secretary’s directive.
Accordingly, both Toyota and the Union filed MRs, which the NLRC denied.
Consequently, both parties questioned the Resolutions of the NLRC in separate
petitions for certiorari filed with the CA. The CA then consolidated the petitions.
[In its February 27, 2003 Decision, the CA ruled that the Union’s petition is defective
in form for its failure to append a proper verification and certificate of non-forum
shopping, given that, out of the 227 petitioners, only 159 signed the verification and
certificate of non-forum shopping. Despite the flaw, the CA proceeded to resolve the
petitions on the merits and affirmed the assailed NLRC Decision and Resolution with
a modification, however, of deleting the award of severance compensation to the
dismissed Union members.
However, in its June 20, 2003 Resolution, the CA modified its February 27, 2003
social justice.]
ISSUE:
(1) Whether the mass actions committed by the Union on different occasions are illegal
strikes; and
(2) Whether separation pay should be awarded to the Union members who participated
in the illegal strikes.
HELD: WHEREFORE, the petitions in G.R. Nos. 158786 and 158789 are DENIED
while those in G.R. Nos. 158798-99 are GRANTED.
The June 20, 2003 CA Resolution restoring the grant of severance compensation is
ANNULLED and SET ASIDE.
The February 27, 2003 CA Decision which affirmed the August 9, 2001 Decision of
the NLRC but deleted the grant of severance compensation, is REINSTATED and
AFFIRMED.
YES, THERE IS ILLEGAL STRIKE
A strike means any temporary stoppage of work by the concerted action of employees
as a result of an industrial or labor dispute. A labor dispute, in turn, includes any
controversy or matter concerning terms or conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining, changing, or arranging
the terms and conditions of employment, regardless of whether the disputants stand in
the proximate relation of the employer and the employee
Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike,
viz:
(1) [when it] is contrary to a specific prohibition of law, such as strike by employees
performing governmental functions; or
(2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor
Code on the requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the employer to
commit an unfair labor practice against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its objective, such as a
widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e)
of the Labor Code]; or
(5) [when it] is declared in violation of an existing injunction[, such as injunction,
prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of
the Labor Code]; or
(6) [when it] is contrary to an existing agreement, such as a no-strike clause or
conclusive arbitration clause
Petitioner Union contends that the protests or rallies conducted on February 21 and 23
are not within the ambit of strikes as defined in the Labor Code, since they were
legitimate exercises of their right to peaceably assemble and petition the government
for redress of grievances. The Union’s position fails to convince us.
Applying pertinent legal provisions and jurisprudence, we rule that the protest actions
undertaken by the Union officials and members on February 21 to 23 are not valid and
proper exercises of their right to assemble and ask government for redress of their
complaints, but are illegal strikes in breach of the Labor Code. The Union’s position
is weakened by the lack of permit from the City of Manila to hold “rallies.” Shrouded
as demonstrations, they were in reality temporary stoppages of work perpetrated
through the concerted action of the employees who deliberately failed to report for
work on the convenient excuse that they will hold a rally at the BLR and DOLE offices
on February 21 to 23. The purported reason for these protest actions was to safeguard
their rights against any abuse which the med-arbiter may commit against their cause.
However, the Union failed to advance convincing proof that the med-arbiter was
biased against them. The acts of the med-arbiter in the performance of his duties are
presumed regular. Sans ample evidence to the contrary, the Union was unable to justify
the February 2001 mass actions. What comes to the fore is that the decision not to
work for two days was designed and calculated to cripple the manufacturing arm of
Toyota. It becomes obvious that the real and ultimate goal of the Union is to coerce
Toyota to finally acknowledge the Union as the sole bargaining agent of the company.
This is not a legal and valid exercise of the right of assembly and to demand redress
of grievance.
It is obvious that the February 21 to 23 concerted actions were undertaken without
satisfying the prerequisites for a valid strike under Art. 263 of the Labor Code. The
Union failed to comply with the following requirements:
(1) a notice of strike filed with the DOLE 30 days before the intended date of strike,
or 15 days in case of unfair labor practice;
(2) strike vote approved by a majority of the total union membership in the bargaining
unit concerned obtained by secret ballot in a meeting called for that purpose; and
(3) notice given to the DOLE of the results of the voting at least seven days before the
intended strike. These requirements are mandatory and the failure of a union to comply
with them renders the strike illegal.
The evident intention of the law in requiring the strike notice and the strike-vote report
is to reasonably regulate the right to strike, which is essential to the attainment of
legitimate policy objectives embodied in the law. As they failed to conform to the law,
the strikes on February 21, 22, and 23 (STRIKE 1) were illegal.
With respect to the strikes committed from March 17 to April 12 (STRIKE 2), those
were initially legal as the legal requirements were met. However, on March 28 to April
12, the Union barricaded the gates of the Bicutan and Sta. Rosa plants and blocked the
free ingress to and egress from the company premises. Toyota employees, customers,
and other people having business with the company were intimidated and were refused
entry to the plants. As earlier explained, these strikes were illegal because unlawful
means were employed. The acts of the Union officers and members are in palpable
violation of Art. 264(e), which proscribes acts of violence, coercion, or intimidation,
or which obstruct the free ingress to and egress from the company premises.
Undeniably, the strikes from March 28 to April 12 (STRIKE 2) were illegal.
Petitioner Union also posits that strikes were not committed on May 23 and 28
(STRIKE 3). The Union asserts that the rallies held on May 23 and 28 could not be
considered strikes, as the participants were the dismissed employees who were on
payroll reinstatement. It concludes that there was no work stoppage.
This contention has no basis. It is clear that once the DOLE Secretary assumes
jurisdiction over the labor dispute and certifies the case for compulsory arbitration with
the NLRC, the parties have to revert to the status quo ante (the state of things as it was
before).
This was not heeded by the Union and the individual respondents who staged illegal
concerted actions on May 23 and 28, in contravention of the Order of the DOLE
Secretary that no acts should be undertaken by them to aggravate the “already
deteriorated situation.”
Anent the grant of severance compensation to legally dismissed union members:
The general rule is that when just causes for terminating the services of an employee
under Art. 282 of the Labor Code exist, the employee is not entitled to separation pay.
As in any rule, there are exceptions. One exception where separation pay is given even
though an employee is validly dismissed is when the court finds justification in
applying the principle of social justice well entrenched in the 1987 Constitution. In
one case, the Court laid down the rule that severance compensation shall be allowed
only when the cause of the dismissal is other than serious misconduct or that which
reflects adversely on the employee’s moral character.
Explicit in PLDT ase are two exceptions when the NLRC or the courts should not grant
separation pay based on social justice:
serious misconduct (which is the first ground for dismissal under Art. 282) or
acts that reflect on the moral character of the employee.
Considering that the dismissal of the employees was due to their participation in the
illegal strikes as well as violation of the Code of Conduct of the company, the same
constitutes serious misconduct. A serious misconduct is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment.
Based on existing jurisprudence, the award of separation pay to the Union officials and
members in the instant petitions cannot be sustained.
Principle of Social and Distributive Justice: Balancing of interests in case workers and
management's rights collide
12) MA. WENELITA S.TIRAZONA v. PHILIPPINE EDS TECHNO-SERVICE
INC. (PET, Inc.)
SUMMARY: Petitioner Tirazona was dismissed from service by Respondent PET,
Inc. for her willful breach of trust reposed upon her by her employer. The NLRC, CA,
and SC all found her dismissal as justified. In her 2nd Motion for Reconsideration, she
prayed for the invalidation of her dismissal and for the award of separation pay for just
causes on the basis of equity. The SC denied her petition for lack of merit.
DOCTRINE: Separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character.
FACTS:
Because of her improper handling of a situation involving a rank-and-file employee,
officers/directors of respondent PET, Inc. called the attention of petitioner Ma.
Wenelita Tirazona, the Administrative Manager of respondent company. Claiming she
was denied due process, she demanded Php 2M indemnity from PET and its
officers/directors. She also admitted to reading a confidential letter addressed to PET
officers/directors containing the legal opinion of the counsel of PET regarding her
case. Because of all this, she was validly terminated on the ground that she willfully
breached the trust and confidence reposed in her by her employed. The SC denied her
original petition.
Apr. 29, 2008: Petitioner moved for reconsideration praying that her dismissal be
declared illegal and that she be awarded separation pay and retirement benefits out of
humanitarian considerations. But the SC denied MR.
Aug. 21, 2008: Petitioner filed a Motion for Leave to File a Second Motion for
Reconsideration for the reconsideration of the SC resolution raising essentially the
same arguments and prayers.
RULING: Motion for leave to file a second Motion for Reconsideration is DENIED
for lack of merit.
W/N her dismissal was justified – YES
W/N she may be awarded separation pay out of humanitarian considerations – NO
First of all, a 2nd MR is prohibited, except for extraordinarily persuasive reasons [Sec.
2, Rule 52, ROC]. Here, no extraordinary persuasive reasons are present to allow the
2nd MR.
Next, as re petitioner’s dismissal, the general rule is that an employee who has been
dismissed for any of the just causes enumerated under Art. 282 of the Labor Code is
not entitled to separation pay. Only unjustly dismissed employees are entitled to
retirement benefits and other privileges including reinstatement and backwages.
An exception, however, is that separation pay or other financial assistance may be
allowed to an employee dismissed for just causes on the basis of equity. This shall be
allowed as a measure of social justice only in those instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his
moral character.
Given the above, petitioner is not entitled to the award of separation pay for violating
the trust and confidence reposed in her by her employer when she arrogantly demanded
from respondent the exorbitant amount of Php 2M in damages with a threat of a lawsuit
if the money was not paid within five days. She also continually refused to cooperate
with PET’s investigation of her case.
Lastly, petitioner tried to persuade the Court to consider in her favor the length of her
service to PET, but in the end, failed. She claimed that she was employed by PET for
26 years. However, it was later on found out that she had only been there for 2 years
and 9 months.
The cases she cited to support her case were misleading as the circumstances were
totally different from hers.

Not every controversy or money claim by an employee against the employer or
vice-versa is within the exclusive jurisdiction of the labor arbiter. 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.
Halagueña, et al. vs PAL
GR No. 172013 October 2, 2009
Facts:
Petitioners were employed as flight attendants of respondent on different dates prior
to November 1996. They are members of FASAP union exclusive bargaining
organization of the flightattendants, flight stewards and pursers. On July 2001,
respondent and FASAP entered into a CBA incorporating the terms and conditions of
their agreement for the years 2000 to 2005 (compulsory retirement of 55 for female
and 60 for males).
In July 2003, petitioner and several female cabin crews, in a letter, manifested that the
provision in CBA on compulsory retirement is discriminatory. On July 2004,
petitioners filed a Special Civil Action for Declaratory Relief with issuanceof TRO
with the RTC Makati. The RTC issued a TRO. After the denial of the respondent on
itsmotion for reconsideration for the TRO, it filed a Petition with the CA. CA granted
respondent’s petition and ordered lower court to dismiss the case. Hence, this petition.
Issue:
Whether or not the regular courts has jurisdiction over the case.
Ruling:
Yes. The subject of litigation is incapable of pecuniary estimation, exclusively
cognizable by the RTC. Being an ordinary civil action, the same is beyond the
jurisdiction of labor tribunals.
Not every controversy or money claim by an employee against the employer or vice-
versa is within the exclusive jurisdiction of the labor arbiter. 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.
Being an ordinary civil action, the same is beyond the jurisdiction of labor
tribunals.The said issue cannot be resolved solely by applying the Labor Code. Rather,
it requires the application of the Constitution, labor statutes, law on contracts and the
Convention on the Elimination of All Forms of Discrimination Against Women, and
the power to apply and interpret the constitution and CEDAW is within the jurisdiction
of trial courts, a court of general jurisdiction. In GeorgGrotjahn 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 dispute 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.
4fold test of employer-employee relationship
Brotherhood Labor Unity Movement of the Phil. Et al v. Hon. Ronaldo Zamora
et al
Facts:
The petitioners are workers who have been employed at the San Miguel Parola
Glass Factory as “pahinantes” or “kargadors” for almost seven years. They
worked exclusively at the SMC plant, never having been assigned to other
companies or departments of San Miguel Corp, even when the volume of work
was at its minimum. Their work was neither regular nor continuous, depending
on the volume of bottles to be loaded and unloaded, as well as the business activity
of the company. However, work exceeded the eight-hour day and sometimes,
necessitated work on Sundays and holidays. -for this, they were neither paid
overtime nor compensation.
Sometime in 1969, the workers organized and affiliated themselves with
Brotherhood Labor Unity Movement (BLUM). They wanted to be paid to
overtime and holiday pay. They pressed the SMC management to hear their
grievances. BLUM filed a notice of strike with the Bureau of Labor Relations in
connection with the dismissal of some of its members. San Miguel refused to
bargain with the union alleging that the workers are not their employees but the
employees of an independent labor contracting firm, Guaranteed Labor
Contractor.
The workers were then dismissed from their jobs and denied entrance to the glass
factory despite their regularly reporting for work. A complaint was filed for
illegal dismissal and unfair labor practices.
Issue:
Whether or not there was employer-employee (ER-EE)relationship between the
workers and San Miguel Corp.
Held:
YES. In determining if there is an existence of the (ER-EE) relationship, the four-
fold test was used by the Supreme Court. These are:
[if !supportLists]· [endif]The selection and engagement of the employee
[if !supportLists]· [endif]Payment of wages
[if !supportLists]· [endif]Power of dismissal
[if !supportLists]· [endif]Control Test- the employer’s power to control
the employee with respect to the means and methods by which work is to be
accomplished
In the case, the records fail to show that San Miguel entered into mere oral
agreements of employment with the workers. Considering the length of time that
the petitioners have worked with the company, there is justification to conclude
that they were engaged to perform activities necessary in the usual business or
trade. Despite past shutdowns of the glass plant, the workers promptly returned
to their jobs. The term of the petitioner’s employment appears indefinite and the
continuity and habituality of the petitioner’s work bolsters the claim of an
employee status.
As for the payment of the workers’ wages, the contention that the independent
contractors were paid a lump sum representing only the salaries the workers
where entitled to have no merit. The amount paid by San Miguel to the
contracting firm is no business expense or capital outlay of the latter. What the
contractor receives is a percentage from the total earnings of all the workers plus
an additional amount from the earnings of each individual worker.
The power of dismissal by the employer was evident when the petitioners had
already been refused entry to the premises. It is apparent that the closure of the
warehouse was a ploy to get rid of the petitioners, who were then agitating the
company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the company’s control
over the workers. That San Miguel has the power to recommend penalties or
dismissal is the strongest indication of the company’s right of control over the
workers as direct employer.
*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.
A labor dispute can nevertheless exist "regardless of whether the disputants stand
in the proximate relationship of employer and employee"
G.R. No. 87700 June 13, 1990
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, DANIEL
S.L. BORBON II, HERMINIA REYES, MARCELA PURIFICACION, ET AL.,
petitioners,
vs.
HON. JESUS G. BERSAMIRA, IN HIS CAPACITY AS PRESIDING JUDGE
OF BRANCH 166, RTC, PASIG, and SAN MIGUEL CORPORATION,
respondents.
J. Melencio-Herrera
FACTS:
Sometime in 1983 and 1984, SanMig entered into contracts for merchandising services
with Lipercon and D'Rite (independent contractors duly licensed by the DOLE). In
said contracts, it was expressly understood and agreed that the workers employed by
the contractors were to be paid by the latter and that none of them were to be deemed
employees or agents of SanMig. There was to be no employer-employee relation
between the contractors and/or its workers, on the one hand, and SanMig on the other.
Petitioner San Miguel Corporation Employees Union-PTWGO (the Union, for
brevity) is the duly authorized representative of the monthly paid rank-and-file
employees of SanMig with whom the latter executed a Collective Bargaining
Agreement.
In a letter, dated 20 November 1988 (Annex C, Petition), the Union advised SanMig
that some Lipercon and D'Rite workers had signed up for union membership and
sought the regularization of their employment with SMC.
On 12 January 1989 on the ground that it had failed to receive any favorable response
from SanMig, the Union filed a notice of strike for unfair labor practice, CBA
violations, and union busting
Beginning 14 February 1989 until 2 March 1989, series of pickets were staged by
Lipercon and D'Rite workers in various SMC plants and offices.
On 6 March 1989, SMC filed a verified Complaint for Injunction and Damages
ISSUE:
Whether, or not the case at bar involves, or is in connection with, or relates to a labor
dispute
HELD:
A "labor dispute" as defined in Article 212 (1) of the Labor Code includes "any
controversy or matter concerning terms and conditions of employment or the
association or representation of persons in negotiating, fixing, maintaining, changing,
or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and employee."
A labor dispute can nevertheless exist "regardless of whether the disputants stand in
the proximate relationship of employer and employee"
That a labor dispute, as defined by the law, does exist herein is evident. At bottom,
what the Union seeks is to regularize the status of the employees contracted by
Lipercon and D'Rite in effect, that they be absorbed into the working unit of SanMig.
This matter definitely dwells on the working relationship between said employees vis-
a-vis SanMig. Terms, tenure and conditions of their employment and the arrangement
of those terms are thus involved bringing the matter within the purview of a labor
dispute. Further, the Union also seeks to represent those workers, who have signed up
for Union membership, for the purpose of collective bargaining. SanMig, for its part,
resists that Union demand on the ground that there is no employer-employee
relationship between it and those workers and because the demand violates the terms
of their CBA.
Principle of social and distributive justice: balancing of interests in case workers
and management’s rights collide
REYNALDO HAYAN MOYA VS. FIRST SOLID RUBBER INDUSTRIES,
INC.
FACTS:
SOMETIME in May 1993, petitioner Reynaldo Hayan Moya was hired by respondent
First Solid Rubber Industries, Inc., which manufactured tires and rubber. The last
position he held was head of the Tire Curing Department.
On Oct. 15, 2004, he reported an incident about an undercuring of tires in his
department, which led to the damage of five tires. He stated that the damage was
caused by machine failure. Respondent, however, found out about his willful intention
to cancel the truth or cover up the mistake of a subordinate, Melandro Autor, a machine
operator, who failed to properly operate the machine.
In a case for illegal dismissal and money claims filed by Moya against respondent,
both the labor arbiter and the National Labor Relations Commission (NLRC) found
sufficient and valid grounds to dismiss him but still granted an award for separation
pay in lieu of reinstatement.
The Court of Appeals (CA) modified the decision of the NLRC by deleting the award
for separation pay. Did the CA err?
RULING: NO.
The petitioner is not entitled to separation pay. Payment of separation pay cannot be
justified by his length of service.
It must be stressed that Moya was not an ordinary rank-and-file employee. He was
holding a supervisory rank, being the officer-in-charge of the Tire Curing Department.
The position, naturally one of trust, required of him abiding honesty as compared to
ordinary rank-and-file employees. When he made a false report attributing the damage
of five tires to machine failure, he breached the trust and confidence reposed upon him
by the company.
xxx
As pronounced in the recent case of Unilever Philippines, Inc., v. Rivera, G.R. No.
201701, June 3, 2013, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code, including breach of trust, is not
entitled to separation pay (Tirazona v. Philippine EDS Techno-Service, Inc. (PET,
Inc.), G.R. No. 169712, Jan. 20, 2009, 576 SCRA 625, 628-629). This is further
bolstered by Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor
Code which provides that:
Section 7: Termination of employment by employer. The just causes for terminating
the services of an employee shall be those provided in Article 282 of the Code. The
separation from work of an employee for a just cause does not entitle him to the
termination pay provided in the Code, without prejudice, however, to whatever rights,
benefits and privileges he may have under the applicable individual or collective
agreement with the employer or voluntary employer policy or practice (Reynaldo
Hayan Moya vs. First Solid Rubber Industries, Inc., G.R. No. 184011, Sept. 18, 2013).
Test to determine the existence of employer-employee relationship
HACIENDA LEDDY/RICARDO GAMBOA, JR. VS. PAQUITA VILLEGAS
FACTS:
Paquito Villegas is an employee at the Hacienda Leddy. He was employed as early as
1960 when it was still named Hacienda Teresa. It was owned by Ricardo Gamboa Sr.,
and was succeeded by his son Ricardo Gamboa, Jr. During his employment up to the
time of his dismissal, Villegas performed sugar farming jobs 8 hours a day, 6 days a
week, continuously for not less than 302 days a year, and was paid P45 per day. He
also worked in the hacienda’s coconut lumber business where he was paid P34 a day
for 8 hours work.
On June 9, 1993, Gamboa went to Villegas' house and told him that his services were
no longer needed without prior notice or valid reason. Hence, Villegas filed a
complaint for illegal dismissal. Gamboa denied having dismissed Villegas but
admitted that Villegas worked with the farm owned by his father, doing casual and
odd jobs. Villegas was even given the benefit of occupying a small portion of the land
where his house was erected. However, he maintained that Villegas ceased working
at the farm as early as 1992, and not dismissed.
However, Gamboa retracted his statement and said that the only time Villegas rendered
service for the hacienda was only in the year 1993. Villegas rendered service
specifically on February 9, 1993 and February 11, 1993 when he was contracted by
the farm to cut coconut lumber. They informed Villegas that they need the property,
hence, they requested that he vacate it, but he refused. Gamboa surmised that Villegas
filed the complaint to gain leverage so he would not be evicted from the land he is
occupying.
LA found that there was illegal dismissal. NLRC reversed. MFR denied. CA set aside
the NLRC.
ISSUE:
Whether or not there exists an employer-employee relationship
RULING: YES
Gamboa’s position:Villegas was paid on a piece-rate basis without supervision. Since
his job was not necessary or desirable in the usual business or trade of the hacienda,
he cannot be considered as a regular employee. It was Villegas who stopped working,
and not dismissed.
The issue of Villegas' alleged illegal dismissal is anchored on the existence of an
employer-employee relationship between him and Gamboa.
Records show that Villegas has been employed in the Hacienda while it was still being
managed by Gamboa, Sr. It was even admitted by Gamboa, Jr. in his earlier
pleadings.While refuting that Villegas was a regular employee, Gamboa failed to
categorically deny that Villegas was employed in their hacienda albeit he insisted that
Villegas was merely a casual employee doing odd jobs.
Length of Service:Villegas worked for more than 20 years. Hislength of service is an
indication of the regularity of his employment. Even assuming that he was doing odd
jobs around the farm, such long period of doing said odd jobs is indicative that these
were either necessary or desirable to petitioner's trade or business. Owing to the length
of service alone, he became a regular employee, by operation of law, one year after he
was employed.While length of time may not be the controlling test to determine if
Villegas is indeed a regular employee, it is vital in establishing if he was hired to
perform tasks which are necessary and indispensable to the usual business or trade of
the employer. If it was true that Villegas worked in the hacienda only in the year 1993,
specifically February 9, 1993 and February 11, 1993, why would then he be given the
benefit to construct his house in the hacienda? Conclusion: Even assuming that
Villegas' employment was only for a specific duration, the fact that he was repeatedly
re-hired over a long period of time shows that his job is necessary and indispensable
to the usual business or trade of the employer.
Wage / Piece-rate basis: Payment on a piece-rate basis does not negate regular
employment.
Villegas did not suddenly stop working. Considering that Villegas was employed with
the Gamboas for more than 20 years and was even given a place to call his home, it
does not make sense why he would suddenly stop working for no apparent
reason. Gamboa failed to discharge the burden of proof of abandonment. Other than
the self-serving declarations in the affidavit of his employee, he did not adduce proof
of overt acts of Villegas showing his intention to abandon his work. The filing of the
illegal dismissal complaint negates any intention on Villegas’ part to sever their
employment relationship.
As a regular worker, Villegas is entitled to security of tenure under Article 279 of the
Labor Code and can only be removed for cause. The Court found no valid cause
attending to his dismissal and found also that his dismissal was without due
process.The failure of the Hacienda / Gamboa to comply with procedural guidelines
renders its dismissal of Villegas illegal.
Absent the jurisdictional requisite of an employer-employee relationship between
petitioner and private respondent, the inevitable conclusion is that
LA is without jurisdiction to hear and decide the case with respect to petitioner.
HAWAIIAN-PHILIPPINE COMPANY vs. REYNALDO J. GULMATICO
Labor Arbiter, Regional Arbitration Branch No. VI, AND NATIONAL
FEDERATION OF SUGAR WORKERS-FOOD AND GENERAL TRADES
representing all the sugar farm workers of the HAWAIIAN PHILIPPINE
MILLING DISTRICT, respondents.
G.R. No. 106231, November 16, 1994
.entry-header
FACTS:
The National Federation of Sugar Workers-Food and General Trades (NFSW-FGT)
claimed that the sugar farm workers within petitioner’s milling district have never
availed of the benefits due them under the law.
Petitioner contends that the complaint filed against it cannot be categorized under any
of the cases falling within the jurisdiction of the Labor Arbiter as enumerated in Article
217 of the Labor Code, as amended, considering that no employer-employee
relationship exists between petitioner milling company and the farm workers
represented by respondent union.
ISSUE:
Whether or not the Labor Arbiter has jurisdiction over a case wherein no employer-
employee relationship exists between the company and the farm workers.
HELD:
While the jurisdiction over controversies involving agricultural workers has been
transferred from the Court of Agrarian Relations to the Labor Arbiters under the Labor
Code as amended, the said transferred jurisdiction is however, not without limitations.
The dispute or controversy must still fall under one of the cases enumerated under
Article 217 of the Labor Code, which cases, arise out of or are in connection with an
employer-employee relationship.
In the case at bar, it is clear that there is no employer employee relationship between
petitioner milling company and respondent union and/or its members-workers, a fact
which, the Solicitor General notes, public respondent did not dispute or was silent
about. Absent the jurisdictional requisite of an employer-employee relationship
between petitioner and private respondent, the inevitable conclusion is that public
respondent is without jurisdiction to hear and decide the case with respect to petitioner.
Who has jurisdiction to determine ER-EE relationship: Secretary of Labor or the
National Labor Relations Commission?
PEOPLE'S BROADCASTING SERVICE (BOMBO RADYO PHILS., INC.) VS.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT,
FACTS:
The instant petition for certiorari under Rule 65 assails the decision and the resolution
of the Court of Appeals.
The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent)
against People’s Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for
illegal deduction, non-payment of service incentive leave, 13th month pay, premium
pay for holiday and rest day and illegal diminution of benefits, delayed payment of
wages and non-coverage of SSS, PAG-IBIG and Philhealth (non-diminution of
benefits in the amount allegedly 6K) before the Department of Labor and Employment
(DOLE) Regional Office No. VII, Cebu City.2 On the basis of the complaint, the
DOLE conducted a plant level inspection on 23 September 2003. Labor Inspector
wrote under the heading “Findings/Recommendations” “non-diminution of benefits”
and “Note: Respondent deny employer-employee relationship with the complainant-
see Notice of Inspection results.”
PETITIONER’S POSITION: Management representative informed that complainant
is a drama talent hired on a per drama ” participation basis” hence no employer-
employeeship [sic] existed between them. As proof of this, management presented
photocopies of cash vouchers, billing statement, employments of specific undertaking
(a contract between the talent director & the complainant), summary of billing of
drama production etc. They (mgt.) has [sic] not control of the talent if he ventures into
another contract w/ other broadcasting industries.
RULING OF DOLE REGIONAL DIRECTOR: respondent is an employee of
petitioner, and that the former is entitled to his money claims amounting
toP203,726.30. MR denied; Appeal with the DOLE Secretary, dismissed the appeal
on the ground that petitioner did not post a cash or surety bond and instead submitted
a Deed of Assignment of Bank Deposit.
APPEAL WITH THE CA: claiming that it was denied due process when the DOLE
Secretary disregarded the evidence it presented and failed to give it the opportunity to
refute the claims of respondent. Petitioner maintained that there is no employer-
employee relationship had ever existed between it and respondent because it was the
drama directors and producers who paid, supervised and disciplined respondent. It also
added that the case was beyond the jurisdiction of the DOLE and should have been
considered by the labor arbiter because respondent’s claim exceeded P5,000.00. CA
denied.
WITH THE SC: petitioner argues that the National Labor Relations Commission
(NLRC), and not the DOLE Secretary, has jurisdiction over respondent’s claim, in
view of Articles 217 and 128 of the Labor Code.
RESPONDENT’S POSITION: respondent posits that the Court of Appeals did not
abuse its discretion. He invokes Republic Act No. 7730, which “removes the
jurisdiction of the Secretary of Labor and Employment or his duly authorized
representatives, from the effects of the restrictive provisions of Article 129 and 217 of
the Labor Code, regarding the confinement of jurisdiction based on the amount of
claims.”; and wrong mode of appeal.
ISSUE:
Whether or not the Secretary of Labor have the power to determine the existence of an
employer-employee relationship.
RULING: 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. It reads:
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 xxx
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.” Of course, a person’s entitlement to labor standard benefits under the labor
laws presupposes the existence of employer-employee relationship in the first
place.The clause signifies that the employer-employee relationship must have existed
even before the emergence of the controversy. Necessarily, the DOLE’s 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.
The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the
Disposition of Labor Standards Cases15 issued by the DOLE Secretary. It reads:
Rule II MONEY CLAIMS ARISING FROM COMPLAINT/ROUTINE
INSPECTION
Sec. 3. Complaints where no employer-employee relationship actually exists. Where
employer-employee relationship no longer exists by reason of the fact that it has
already been severed, claims for payment of monetary benefits fall within the
exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face of
the complaint, it can be ascertained that employer-employee relationship no longer
exists, the case, whether accompanied by an allegation of illegal dismissal, shall
immediately be endorsed by the Regional Director to the appropriate branch of the
National Labor Relations Commission (NLRC).
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 determination of which should be
comprehensive and intensive and therefore best left to the specialized quasi-judicial
body that is the NLRC.
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 DOLE’s primary function of enforcing
labor standards provisions. The determination of the existence of employer-employee
relationship is still primarily lodged with the NLRC.
Thus, before the DOLE may exercise its powers under Article 128, two important
questions must be resolved: (1) Does the employer-employee relationship still exist,
or alternatively, was there ever an employer-employee relationship to speak of; and
(2) Are there violations of the Labor Code or of any labor law?
A mere assertion of absence of employer-employee relationship does not deprive the
DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a
prima facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power.
Without a doubt, petitioner, since the inception of this case had been consistent in
maintaining that respondent is not its employee. Certainly, a preliminary
determination, based on the evidence offered, and noted by the Labor Inspector during
the inspection as well as submitted during the proceedings before the Regional
Director puts in genuine doubt the existence of employer-employee relationship. From
that point on, the prudent recourse on the part of the DOLE should have been to refer
respondent to the NLRC for the proper dispensation of his claims. Furthermore, as
discussed earlier, even the evidence relied on by the Regional Director in his order are
mere self-serving declarations of respondent, and hence cannot be relied upon as proof
of employer-employee relationship.
Petition GRANTED.
VICTOR METEORO VS. CREATIVE CREATURES, INC.
FACTS:
Creative Creatures hired Victor Meteoro and the rest of the petitioners on various dates
as artists, carpenters, and welders, tasked to design, create, assemble, set-up, and
dismantle props, and provide sound effects to Creatives various TV programs and
movies. In 1999, Meteoro and the others filed a complaint against Creative for non-
payment of labor standards incentives with the DOLE-NCR. An inspection was
conducted. Creative claimed that the petitioners were only contractual workers, and as
such, no employer-employee relationship existed. Thus, the DOLE could not have
exercised jurisdiction over the case, for it had none. It added that the petitioners were
free- lance individuals, performing special services with skills and expertise inherently
exclusive to them like actors, actresses, directors, producers, and script writers, such
that they were treated as special types of workers. Petitioners, on the other hand, aver
that they were employees because the elements of an employer-employee relationship
existed. Subsequently, petitioners filed a complaint for illegal dismissal against
Creative, with prayer for payment of overtime pay, premium pay for holiday and rest
day, holiday pay, service incentive leave pay, 13Th month pay, and attorney‘s fees
before the NLRC. A few months after, DOLE Regional Director Maximo Baluyot Lim
issued an order directing Creative to pay petitioners. On appeal, DOLE Secretary
Patricia Sto. Tomas upheld the DOLE Regional Director‘s findings. She stated 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. On appeal, the CA dismissed the case against Creative for lack of
jurisdiction. Hence, this petition for review on certiorari.
ISSUE:
Whether or not the DOLE-NCR properly exercised its jurisdiction over the case.
RULING: NO.
The DOLE Secretary and her authorized representatives, such as the DOLE-NCR
Director, have jurisdiction to enforce compliance with labor standards laws under the
broad visitorial and enforcement powers conferred by Article 128 of the Labor Code,
and expanded by RA No. 7730. But this notwithstanding, the power of the Regional
Director to hear and decide money claims is not absolute. The last sentence of Article
128 (b) of the Labor Code, otherwise known as the- exception clause, it provides an
instance when the Regional Director or his representatives may be divested of
jurisdiction over a labor standards case. Under prevailing jurisprudence, the so-called
exception clause has the following elements, all of which must concur:
(a) That the employer contests the findings of the labor regulations officer and raises
issues thereon; (b) That in order to resolve such issues, there is a need to examine
evidentiary matters; and (c) That such matters are not verifiable in the normal course
of inspection.
In the instant case, Creative registered its objection to the findings of the labor
inspector at the earliest opportunity. It is clear that Creative contested and continues
to contest the findings and conclusions of the labor inspector. Also, the question of
whether or not petitioners were independent contractors/project employees/free-lance
workers is a question of fact that necessitates the examination of evidentiary matters
not verifiable in the course of inspection. Verily, the Regional Director and the
Secretary of Labor are divested of jurisdiction to decide the case, and the NLRC is the
agency clothed with authority to do so. Petition denied for lack of merit. CA decision
affirmed.
―To contest‖ means to raise questions as to the amounts complained of or the absence
of violation of labor standards laws; or, issues as to the complainants right to labor
standards benefits. Raising lack of jurisdiction alone is not the ―contest‘
contemplated by the exception clause. It is necessary that the employer contest the
findings of the labor regulations officer during the hearing or after receipt of the notice
of inspection results. More importantly, the key requirement for the Regional Director
and the DOLE Secretary to be divested of jurisdiction is that the evidentiary matters
be not verifiable in the course of inspection. Where the evidence presented was
verifiable in the normal course of inspection, even if presented belatedly by the
employer, the Regional Director, and later the DOLE Secretary, may still examine it;
and these officers are not divested of jurisdiction to decide the case.
Reasonable causal connection
INDOPHIL TEXTILE MILLS, INC. VS.ENGR. SALVADOR ADVIENTO
FACTS:
Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the
business of manufacturing thread for weaving. Petitioner hired respondent Engr.
Salvador Adviento as Civil Engineer to maintain its facilities in Lambakin, Marilao,
Bulacan. On August 7, 2002, respondent consulted a physician due to recurring
weakness and dizziness. Few days later, he was diagnosed with Chronic Poly Sinusitis,
and thereafter, with moderate, severe and persistent Allergic Rhinitis. Accordingly,
respondent was advised by his doctor to totally avoid house dust mite and textile dust
as it will transmute into health problems.
Distressed, respondent filed a complaint against petitioner with the National Labor
Relations Commission (NLRC), San Fernando, Pampanga, for alleged illegal
dismissal and for the payment of backwages, separation pay, actual damages and
attorney’s fees.
Subsequently, respondent filed another Complaint with the Regional Trial Court
(RTC) of Aparri, Cagayan, alleging that he contracted such occupational disease by
reason of the gross negligence of petitioner to provide him with a safe, healthy and
workable environment.
In his Complaint, respondent alleged that as part of his job description, he conducts
regular maintenance check on petitioner’s facilities including its dye house area, which
is very hot and emits foul chemical odor with no adequate safety measures introduced
by petitioner. According to respondent, the air washer dampers and all roof exhaust
vests are blown into open air, carrying dust thereto. Concerned, respondent
recommended to management to place roof insulation to minimize, if not, eradicate
the health hazards attendant in the work place. However, said recommendation was
turned down by management due to high cost.
In reply, petitioner filed a Motion to Dismiss on the ground that the RTC has no
jurisdiction over the subject matter of the complaint because the same falls under the
original and exclusive jurisdiction of the Labor Arbiter (LA) under Article 217(a)(4)
of the Labor Code.
ISSUE:
Whether or not the RTC has jurisdiction over the subject matter of respondent’s
complaint praying for moral damages, exemplary damages, compensatory damages,
anchored on petitioner’s alleged gross negligence in failing to provide a safe and
healthy working environment for respondent.
RULING: YES.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor
cases. More, the acts complained of appear to constitute matters involving employee-
employer relations since respondent used to be the Civil Engineer of petitioner.
However, it should be stressed that respondent’s claim for damages is specifically
grounded on petitioner’s gross negligence to provide a safe, healthy and workable
environment for its employees −a case of quasi-delict. This is easily ascertained from
a plain and cursory reading of the Complaint, which enumerates the acts and/or
omissions of petitioner relative to the conditions in the workplace.
It is a basic tenet that jurisdiction over the subject matter is determined upon the
allegations made in the complaint, irrespective of whether or not the plaintiff is entitled
to recover upon the claim asserted therein, which is a matter resolved only after and as
a result of a trial. In this case, a perusal of the complaint would reveal that the
subject matter is one of claim for damages arising from quasi-delict, which is
within the ambit of the regular court's jurisdiction.
In the case at bar, respondent alleges that due to the continued and prolonged exposure
to textile dust seriously inimical to his health, he suffered work-contracted disease
which is now irreversible and incurable, and deprived him of job opportunities.
Clearly, injury and damages were allegedly suffered by respondent, an element of
quasi-delict. Secondly, the previous contract of employment between petitioner and
respondent cannot be used to counter the element of "no pre-existing contractual
relation" since petitioner’s alleged gross negligence in maintaining a hazardous work
environment cannot be considered a mere breach of such contract of employment, but
falls squarely within the elements of quasi-delict under Article 2176 of the Civil Code
since the negligence is direct, substantive and independent. Hence, we ruled in Yusen
Air and Sea Services Phils., Inc. v. Villamor that:
When, as here, the cause of action is based on a quasi-delict or tort, which has no
reasonable causal connection with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts.
Therefore, the RTC has jurisdiction over the subject matter of respondent's complaint
praying for moral damages, exemplary damages, compensatory damages, anchored on
petitioner's alleged gross negligence in failing to provide a safe and healthy working
environment for respondent.
Is a car benefit a labor or a civil dispute?
SMART COMMUNICATIONS, INC. VS.REGINA M. ASTORGA
FACTS:
Astorga was employed by Smart as District Sales Manager of the Corporate Sales
Marketing Group/ Fixed Services Division. SMART launched an organizational
realignment to achieve more efficient operations. Part of the reorganization was the
outsourcing of the marketing and sales force. Thus, SMART formed SMART-NTT
Multimedia, Incorporated (SNMI). Since SNMI was formed to do the sales and
marketing work, SMART abolished the CSMG/FSD, Astorga’s division.
SNMI agreed to absorb the CSMG personnel who would be recommended by
SMART. Astorga landed last in the performance evaluation, thus, she was not
recommended by SMART. SMART, nonetheless, offered her a supervisory position
in the Customer Care Department, but she refused the offer because the position
carried lower salary rank and rate.
Astorga continued reporting for work. SMART issued a memorandum advising
Astorga of the termination of her employment on ground of redundancy,
Astorga filed a Complaint for illegal dismissal, non-payment of salaries and other
benefits with prayer for moral and exemplary damages against SMART.
In the meantime, SMART sent a letter to Astorga demanding that she pay the current
market value of the Honda Civic Sedan which was given to her under the company’s
car plan program, or to surrender the same to the company for proper disposition.
Astorga, however, failed and refused to do either, thus prompting SMART to file a
suit for replevin before the RTC which was subsequently denied.
Astorga elevated the denial of her motion via certiorari to the CA, which, in its
February 28, 2000 Decision,19 reversed the RTC ruling. Granting the petition and,
consequently, dismissing the replevin case, the CA held that the case is intertwined
with Astorga’s complaint for illegal dismissal; thus, it is the labor tribunal that has
rightful jurisdiction over the complaint. SMART’s motion for reconsideration having
been denied.
On the other hand, the labor arbiter held that Astorga’s dismissal from employment
illegal. While recognizing SMART’s right to abolish any of its departments, the Labor
Arbiter held that such right should be exercised in good faith and for causes beyond
its control. The Arbiter found the abolition of CSMG done neither in good faith nor
for causes beyond the control of SMART, but a ploy to terminate Astorga’s
employment. The Arbiter also ruled that contracting out the functions performed by
Astorga to an in-house agency like SNMI was illegal.
SMART also appealed the unfavorable ruling of the Labor Arbiter in the illegal
dismissal case to the NLRC which declared the abolition of CSMG and the creation of
SNMI to do the sales and marketing services for SMART a valid organizational action.
ISSUE: Whether or not Astorga’s dismissal was valid.
RULING: Astorga was terminated due to redundancy, which is one of the authorized
causes for the dismissal of an employee. The nature of redundancy as an authorized
cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v.
National Labor Relations Commission, viz:
x x x redundancy in an employer’s personnel force necessarily or even ordinarily refers
to duplication of work. That no other person was holding the same position that private
respondent held prior to termination of his services does not show that his position had
not become redundant. Indeed, in any well organized business enterprise, it would be
surprising to find duplication of work and two (2) or more people doing the work of
one person.
We believe that redundancy, for purposes of the Labor Code, exists where the services
of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number
of factors, such as overhiring of workers, decreased volume of business, or dropping
of a particular product line or service activity previously manufactured or undertaken
by the enterprise.
However, as aptly found by the CA, SMART failed to comply with the mandated one
month notice prior to termination.
Article 283 of the Labor Code clearly provides:
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 x x x.
SMART’s assertion that Astorga cannot complain of lack of notice because the
organizational realignment was made known to all the employees as early as February
1998 fails to persuade.
Astorga’s actual knowledge of the reorganization cannot replace the formal and
written notice required by the law. In the written notice, the employees are informed
of the specific date of the termination, at least a month prior to the effectivity of such
termination, to give them sufficient time to find other suitable employment or to make
whatever arrangements are needed to cushion the impact of termination.
Smart gave her a formal notice of termination barely two (2) weeks before the effective
date of termination, a period very much shorter than that required by law.
This procedural infirmity, however, would not render the termination of Astorga’s
employment illegal. The validity of termination can exist independently of the
procedural infirmity of the dismissal.
In DAP Corporation v. CA, the dismissal of the employees therein valid and for
authorized cause even if the employer failed to comply with the notice requirement
under Article 283 of the Labor Code.
The Court found the need to modify, by increasing, the indemnity awarded by the CA
to Astorga, as a sanction on SMART for non-compliance with the one-month
mandatory notice requirement, in light of our ruling in Jaka Food Processing
Corporation v. Pacot, viz.:
[I]f the dismissal is based on a just cause under Article 282 but the employer failed to
comply with the notice requirement, the sanction to be imposed upon him should be
tempered because the dismissal process was, in effect, initiated by an act imputable to
the employee, and (2) if the dismissal is based on an authorized cause under Article
283 but the employer failed to comply with the notice requirement, the sanction should
be stiffer because the dismissal process was initiated by the employer’s exercise of his
management prerogative.
The award of backwages to Astorga by the CA should be deleted for lack of basis.
Backwages is a relief given to an illegally dismissed employee. Thus, before
backwages may be granted, there must be a finding of unjust or illegal dismissal from
work.The Labor Arbiter ruled that Astorga was illegally dismissed. But on appeal, the
NLRC reversed the Labor Arbiter’s ruling and categorically declared Astorga’s
dismissal valid. This ruling was affirmed by the CA in its assailed Decision. Since
Astorga’s dismissal is for an authorized cause, she is not entitled to backwages.
GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC. VS.EDNA
MARGALLO
FACTS:
Grandteq is a domestic corporation engaged in the business of selling welding
electrodes. Margallo was employed as a sales engineer. Margallo, awarded as
salesman of the year, she was rewarded a car loan program in which she availed the
same. Unfortunately, She was allegedly had committed a company violation in which
she was asked to resign with a promise that her car loan payments will be reimbursed.
No reimbursement had transpired. Margallo filed a complaint before the Labor Arbiter
for the recovery of car loan payments. However, Grandteq contended that based in
their car loan agreement, that in the event that Margallomre resigned or was terminated
her car loan would be forfeited.
ISSUE:
Whether the contention of Grantdteq is valid?
RULING:
No. The Court uphold a car loan agreement that threatens an employee with the
forfeiture of all the car loan payments, should the employee wish to resign, said
agreement can then be used by the employer to either hold said employee hostage to
the job or punish him from resigning.
Counterclaim involving transfer of ownership of company car fall within the
ambit of the Labor Arbiter’s jurisdiction
ROBERTO T. DOMONDON VS.NATIONAL LABOR RELATIONS
COMMISSION
FACTS:
Petitioner Domondon was hired as Materials Manager by the Van Melle Phils. All
things went well until a precious general manager was replaced by a Dutch National-
Have. Have requested that Domondon file his resignation letter. He refused and his
life at work became difficult until he was removed from the company. He later filed
for a complaint. In their counter complaint, the respondent denied Domondon‘s
allegations and even allowed him to resign. Respondent further averred the parties
agreed that in order for him to own the car, he had an agreement with company that
petitioner must pay for it in order to transfer ownership thereof. Subsequent demands
were made but to no avail. When raised to the Labor Arbiter, the complaint by
Domondon was denied.
ISSUE:
Whether or not the Labor Arbiter has jurisdiction to hear the counterclaim of the
employer and the return of the car for failure of Domondon to pay.
RULING: YES.
The Labor Arbiter has jurisdiction.
The Court holds that by the designating clause ― arising from employer= employee
relationship‖ Article 217 should apply with equal force to the claim of an employer
for actual damages against its employee where the basis of the claim arises from or
necessarily connected with the fact of termination, and should be entered as a
counterclaim in the illegal dismissal case.
Private respondent herein made a counterclaim involving the transfer of ownership of
the company car to petitioner. Such transfer is connected with Domondon‘s
resignation and thus is covered in jurisdiction by the Labor Arbiter.
Corporate officer or employee?
PRUDENTIAL BANK AND TRUST COMPANY VS.CLARITA T. REYES
FACTS:
Clarita Tan Reyes was appointed Accounting Clerk by Prudential Bank and Trust
Company (bank) and rose to become supervisor. She was appointed Assistant Vice-
President in the foreign department of the Bank, tasked with the duties, among
others, to collect checks drawn against overseas banks payable in foreign currency and
to ensure the collection of foreign bills or checks purchased, including the signing of
transmittal letters covering the same, until her illegal dismissal. Her length of service
with the bank was equivalent to 28 years. The auditors of the Bank discovered that
two checks, received by the Bank were not sent out for collection to Hong Kong
Shanghai Banking Corporation (HSBC) on her order until the said checks became
stale. After thorough investigation, the Board has resolved not to re-elect her position
here services were terminated. She filed a complaint for illegal suspension and illegal
dismissal and alleged that alleged that the real reason for her dismissal was her filing
of the criminal cases against the bank president, the vice president and the auditors of
the Bank, such filing not being a valid ground for her dismissal. LA ruled in favor of
Reyes however NLRC reversed the said decision and ruled that dismissal was valid.
CA reinstated LA‘s decision hence this petition. The bank argued that the dispute is
an intra- corporate controversy as it does the non-election of private respondent to the
position of Assistant Vice-President of the Bank which falls under the exclusive and
original jurisdiction of the Securities and Exchange Commission (now the Regional
Trial Court) under Section 5 of Presidential Decree No. 902-A.
ISSUE:
Whether the dispute is an intra-corporate controversy?
RULING:
The bank‘s contention that she merely holds an elective position and that in effect
she is not a regular employee is belied by the nature of her work and her length
of service with the Bank. It has been stated that ―the primary standard of
determining regular employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or business of the
employer. Additionally, ―an employee is regular because of the nature of work and
the length of service, not because of the mode or even the reason for hiring them.‖ As
Assistant Vice-President of the Foreign Department of the Bank she performs tasks
integral to the operations of the bank and her length of service with the bank
totaling 28 years speaks volumes of her status as a regular employee of the bank.
In fine, as a regular employee, she is entitled to security of tenure; that is, her services
may be terminated only for a just or authorized cause.
Petitioner Bank can no longer raise the issue of jurisdiction under the principle of
estoppel. The Bank participated in the proceedings from start to finish. It was only
when the Court of Appeals ruled in favor of private respondent did it raise the issue of
jurisdiction. The Bank actively participated in the proceedings before the Labor
Arbiter, the NLRC and the Court of Appeals. . Hence, a party may be estopped or
barred from raising the question of jurisdiction for the first time in a petition before
the Supreme Court when it failed to do so in the early stages of the proceedings.
ARSENIO Z. LOCSIN VS. NISSAN LEASE PHILS. INC. AND LUIS BANSON
FACTS:
Locsin was elected Executive Vice President and Treasurer (EVP/Treasurer) of
NCLPI. A little over 7 months after his election as Chairman of the Board, the NCLPI
Board held a special meeting and one of the items of the agenda was the election of a
new set of officers. Unfortunately, Locsin was neither re-elected Chairman nor
reinstated to his previous position as EVP/Treasurer. Aggrieved, Locsin filed a
complaint for illegal dismissal with prayer for reinstatement, payment of backwages,
damages and attorney‘s fees before the Labor Arbiter against NCLPI and Banson, who
was then President of NCLPI.
NCLPI and Banson filed a Motion to Dismiss,on the ground that the Labor Arbiter did
not have jurisdiction over the case since the issue of Locsin‘s removal as
EVP/Treasurer involves an intra-corporate dispute.
LA issued an Order denying the Motion to Dismiss, holding that her office acquired
―jurisdiction to arbitrate and/or decide the instant complaint finding extant in the case
an employer-employee relationship. This was reversed by the CA ruling that Locsin
was a corporate officer; the issue of his removal as EVP/Treasurer is an intra-corporate
dispute under the RTC‘s jurisdiction
ISSUE:
Whether the removal of Locsin is an intra-corporate dispute and thus , does not fall
under jurisdiction of LA Ruling
RULING:
CA correctly ruled that no employer-employee relationship exists between Locsin and
Nissan.
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
corporation‘s 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
Nissan‘s By-Laws. In this case, Locsin was elected by the NCLPI Board, in
accordance with the Amended By-Laws of the corporation
Given Locsin‘s status as a corporate officer, the RTC, not the Labor Arbiter or the
NLRC, has jurisdiction to hear the legality of the termination of his relationship with
Nissan. As held in Okol, a corporate officer‘s dismissal from service is an intra-
corporate dispute: In a number of cases it was held that a corporate officer‘s dismissal
is always a corporate act, or an intra-corporate controversy which arises between a
stockholder and a corporation.
RENATO REAL VS.SANGU PHILIPPINES, INC. AND/ OR KIICHI ABE
FACTS:
Renato Real was the Manager of respondent corporation Sangu Philippines, Inc.
which is engaged in the business of providing manpower for general services. He
filed a complaint for illegal dismissal against the respondents stating that he was
neither notified of the Board meeting during which his removal was discussed nor
was he formally charged with any infraction.
Respondents, on the other hand, said that Real committed gross acts of misconduct
detrimental to the company since 2000. The LA declared petitioner as having been
illegally dismissed. Sangu appealed to NLRC and established petitioner‘s status as a
stockholder and as a corporate officer and hence, his action against respondent
corporation is an intra-corporate controversy over which the Labor Arbiter has no
jurisdiction. NLRC modified the LA‘s decision. On appeal, the CA affirmed the
decision of NLRC.
ISSUE:
Whether Real‘s complaint for illegal dismissal constitutes an intra-corporate
controversy.
RULING:
No. The case does not involve an intra-corporate controversy. Not all conflicts
between the stockholders and the corporation are classified as intra-corporate. There
are other factors to consider in determining whether the dispute involves corporate
matters as to consider them as intra-corporate controversies.
To determine whether a case involves an intra-corporate controversy, and is to be heard
and decided by the branches of the RTC specifically designated by the Court to try and
decide such cases, two elements must concur: (a) the status or relationship of the
parties, and (2) the nature of the question that is the subject of their controversy.
The first element requires that the controversy must arise out of intra-corporate or
partnership relations between any or all of the parties and the corporation. The second
element requires that the dispute among the parties be intrinsically connected with the
regulation of the corporation. If the nature of the controversy involves matters that are
purely civil in character, necessarily, the case does not involve an intra-corporate
controversy.
RAUL C. COSARE VS.BROADCOM ASIA, INC. AND DANTE AREVALO
FACTS:
Cosare was employed as a salesman by Arevalo, who was then in the business of
selling broadcast equipment needed by television networks and production houses. In
December 2000, Arevalo set up the company Broadcom, still to continue the business
of trading communication and broadcast equipment. Cosare was named an
incorporator of Broadcom, having been assigned 100 shares of stock with par value of
P1.00 per share. In October 2001, Cosare was promoted to the position of Assistant
Vice President for Sales (AVP for Sales) and Head of the Technical Coordination.
Sometime in 2003, Alex F. Abiog (Abiog) was appointed as Broadcom’s Vice
President for Sales and thus, became Cosare’s immediate superior. On March 23,
2009, Cosare sent a confidential memo to Arevalo to inform him of the anomalies
which were allegedly being committed by Abiog against the company.
Arevalo failed to act on Cosare’s accusations and instead called Cosare for a meeting
and was asked to tender his resignation in exchange for "financial assistance" in the
amount of P300,000.00. Cosare refused to comply with the directive.
On March 30, 2009, Cosare received a memo charging him of serious misconduct and
willful breach of trust.
Thus, Cosare was precluded from reporting for work on March 31, 2009, and was
instead instructed to wait at the office’s receiving section. On April 1, 2009, Cosare
was totally barred from entering the company premises, and was told to merely wait
outside the office building for further instructions.
On April 3, 2009, Cosare filed the subject labor complaint, claiming that he was
constructively dismissed from employment by the respondents. He further argued
that he was illegally suspended, as he placed no serious and imminent threat to the life
or property of his employer and co-employees.
In refuting Cosare’s complaint, the respondents argued that Cosare was neither
illegally suspended nor dismissed from employment.
The Labor Arbiter rendered his Decision dismissing the complaint on the ground of
Cosare’s failure to establish that he was dismissed, constructively or otherwise, from
his employment. Unyielding, Cosare appealed the LA decision to the NLRC. The
NLRC rendered its Decision reversing the Decision of the Labor Arbiter, and found
that the Respondents are found guilty of Illegal Constructive Dismissal. Thereafter,
the CA rendered the assailed Decision granting the respondents’ petition. It agreed
with the respondents’ contention that the case involved an intra-corporate controversy
which, pursuant to Presidential Decree No. 902-A, as amended, was within the
exclusive jurisdiction of the RTC.
ISSUE:
Whether or not the instant suit is an intra-corporate controversy, where as such is
within the jurisdiction of the RTC.
RULING:
It is not an intra-corporate controversy.
An intra-corporate controversy, which falls within the jurisdiction of regular courts,
has been regarded in its broad sense to pertain to disputes that involve any of the
following relationships: (1) between the corporation, partnership or association and
the public; (2) between the corporation, partnership or association and the state in so
far as its franchise, permit or license to operate is concerned; (3) between the
corporation, partnership or association and its stockholders, partners, members or
officers; and (4) among the stockholders, partners or associates, themselves. Settled
jurisprudence, however, qualifies that when the dispute involves a charge of illegal
dismissal, the action may fall under the jurisdiction of the LAs upon whose
jurisdiction, as a rule, falls termination disputes and claims for damages arising from
employer-employee relations as provided in Article 217 of the Labor Code. Consistent
with this jurisprudence, the mere fact that Cosare was a stockholder and an officer of
Broadcom at the time the subject controversy developed failed to necessarily make the
case an intra-corporate dispute.
The LA has the original jurisdiction over the complaint for illegal dismissal because
Cosare, although an officer of Broadcom for being its AVP for Sales, was not a
"corporate officer" as the term is defined by law. We held in Real v. Sangu Philippines,
Inc., citing Garcia v. Eastern Telecommunications Philippines, Inc.:
" ‘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 corporation’s by-laws. There are three specific
officers whom a corporation must have under Section 25 of the Corporation
Code. These are the president, secretary and the treasurer. The number
of officers is not limited to these three. A corporation may have such other
officers as may be provided for by its by-laws like, but not limited to, the
vice-president, cashier, auditor or general manager. The number of corporate
officers is thus limited by law and by the corporation’s by-laws." (Emphasis
ours)
As may be deduced from the foregoing, there are two circumstances which must
concur in order for an individual to be considered a corporate officer, as against an
ordinary employee or officer, namely: (1) the creation of the position is under the
corporation’s charter or by-laws; and (2) the election of the officer is by the directors
or stockholders. It is only when the officer claiming to have been illegally dismissed
is classified as such corporate officer that the issue is deemed an intra-corporate
dispute which falls within the jurisdiction of the trial courts.
As may be gleaned from Broadcom’s by-laws, the only officers who are specifically
listed, and thus with offices that are created under Broadcom’s by-laws are the
following: the President, Vice-President, Treasurer and Secretary. Although a blanket
authority provides for the Board’s appointment of such other officers as it may deem
necessary and proper, the respondents failed to sufficiently establish that the position
of AVP for Sales was created by virtue of an act of Broadcom’s board, and that Cosare
was specifically elected or appointed to such position by the directors. No board
resolutions to establish such facts form part of the case records. Further, it was held in
Marc II Marketing, Inc. v. Joson that an enabling clause in a corporation’s by-laws
empowering its board of directors to create additional officers, even with the
subsequent passage of a board resolution to that effect, cannot make such position a
corporate office. The board of directors has no power to create other corporate offices
without first amending the corporate by-laws so as to include therein the newly created
corporate office. "To allow the creation of a corporate officer position by a simple
inclusion in the corporate by-laws of an enabling clause empowering the board of
directors to do so can result in the circumvention of that constitutionally well-
protected right [of every employee to security of tenure]."
Finally, the mere fact that Cosare was a stockholder of Broadcom at the time of
the case’s filing did not necessarily make the action an intra- corporate
controversy. "Not all conflicts between the stockholders and the corporation are
classified as intra-corporate. There are other facts to consider in determining whether
the dispute involves corporate matters as to consider them as intra-corporate
controversies." Time and again, the Court has ruled that in determining the existence
of an intra-corporate dispute, the status or relationship of the parties and the nature of
the question that is the subject of the controversy must be taken into account.
Considering that the pending dispute particularly relates to Cosare’s rights and
obligations as a regular officer of Broadcom, instead of as a stockholder of the
corporation, the controversy cannot be deemed intra-corporate. This is consistent with
the "controversy test" explained by the Court in Reyes v. Hon. RTC, Br. 142, to
wit:”Under the nature of the controversy test, 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. If the relationship and its incidents
are merely incidental to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy exists.”
3.6 Effect when no employer-employee relationship exists, or when the main issue
does not involve er-ee rel
Jurisdiction devolves with the regular courts
PURIFICACION Y. MANLIGUEZ VS. CA
Facts: On May 25, 1988, petitioners filed with the RTC of Cebu City, 7th Judicial
Branch, a Complaint 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; the lease
agreement was terminated by petitioners in November, 1980 due to non-payment of
rentals by Inductocast Cebu; thereafter, 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. Danilo Pilapil, claiming to be the John Doe named in the Complaint, filed a
motion to dismiss on the ground that the trial court had no jurisdiction over the case,
but was denied.
CA: 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.
Issue: W/N the trial court has jurisdiction over the case filed by petitioners.
Held: Yes. 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 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.
GEORG GROTJAHN GMBH VS. ISNANI
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.
In July 1992, Employee filed an illegal suspension case with the NLRC (NLRC
Case). Employer, on the other hand, filed a case for collection of Sum of Money at
the RTC (Collection Case). Employee moved to dismiss the collection case on the
ground that the case was in the nature of a claim for employee compensation (Art
217 No.4 & 6) and was under the exclusive jurisdiction of the NLRC. The RTC under
respondent judge dismissed the case.
Issue: Whether or not the RTC has jurisdiction over the Collection Case.
Held: YES. 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.
The SC writes:
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. …
xxx
Civil Case No. 92-2486 is a simple collection of a sum of money brought by
petitioner, as creditor, against private respondent 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.
xxx
Whether or not the subject loan was incurred by private respondent as an incident to
her profession, occupation or business is a question of fact. In the absence of
relevant evidence, the issue cannot be resolved in a motion to dismiss.
Thus the relevant 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.
The order of the RTC was reversed and the collection case was reinstated.
EDUARDO G. EVIOTA VS. CA
Facts: Sometime on January 26, 1998, the respondent Standard Chartered Bank and
petitioner Eduardo G. Eviota executed a contract of employment under which the
petitioner was employed by the respondent bank as Compensation and Benefits
Manager, VP (M21). Petitioner came up with many proposals which the bank
approved and made preparations of. He was also given privileges like car, renovation
of the office, and even a trip to Singapore at the company’s expense. However, the
petitioner abruptly resigned from the respondent bank barely a month after his
employment and rejoined his former employer. On June 19, 1998, the respondent
bank filed a complaint against the petitioner with the RTC of Makati City for damages
brought about his abrupt resignation.
Though petitioner reimbursed part of the amount demanded by Standard, he was not
able to pay it full.
Standard alleged that assuming arguendo that Eviota had the right to terminate his
employment with the Bank for no reason, the manner in and circumstances under
which he exercised the same are clearly abusive and contrary to the rules governing
human relations, governed by the Civil Code.
Further, Standard alleged that petitioner also violated the Labor Code when he
terminated his employment without one (1) notice in advance. This stipulation was
also provided in the employment contract of Eviota with Standard, which would also
constitute breach of contract.
The petitioner filed a motion to dismiss the complaint on the ground that the action for
damages of the respondent bank was within the exclusive jurisdiction of the Labor
Arbiter under paragraph 4, Article 217 of the Labor Code of the Philippines, as
amended. The petitioner averred that the respondent bank’s claim for damages arose
out of or were in connection with his employer-employee relationship with the
respondent bank or some aspect or incident of such relationship. The respondent bank
opposed the motion, claiming that its action for damages was within the exclusive
jurisdiction of the trial court. Although its claims for damages incidentally involved
an employer-employee relationship, the said claims are actually predicated on the
petitioner’s acts and omissions which are separately, specifically and distinctly
governed by the New Civil Code.
Issue: Whether or not the RTC had jurisdiction over the case.
Held: The SC held that the RTC has jurisdiction. Case law has it that the nature of an
action and the subject matter thereof, as well as which court has jurisdiction over the
same, are determined by the material allegations of the complaint and the reliefs prayed
for in relation to the law involved. 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. The 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 of the Philippines, other labor laws or their collective
bargaining agreements.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of
Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal
connection with any of the claims provided for in that article. Only if there is such a
connection with the other claims can the claim for damages be considered as arising
from employer-employee relations.
In this case, the private respondent’s first cause of action for damages is anchored on
the petitioner’s employment of deceit and of making the private respondent believe
that he would fulfill his obligation under the employment contract with assiduousness
and earnestness. The petitioner volte face when, without the requisite thirty-day notice
under the contract and the Labor Code of the Philippines, as amended, he abandoned
his office and rejoined his former employer; thus, forcing the private respondent to
hire a replacement. The private respondent was left in a lurch, and its corporate plans
and program in jeopardy and disarray. Moreover, the petitioner took off with the
private respondent’s 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 sans any written notice, to the prejudice of the private respondent, its
banking operations and the conduct of its business. Anent 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.
The primary relief sought is for liquidated damages for breach of a contractual
obligation. The other items demanded are not labor benefits demanded by workers
generally taken cognizance of in labor disputes, such as payment of wages, overtime
compensation or separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute.
It is evident that the causes of action of the private respondent against the petitioner
do not involve the provisions of the Labor Code of the Philippines 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 respondent’s
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.
Petition is denied.
4. When er-ee rel does not exist re: Valid Job Contracting Arrangements
4.1 Management Prerogative to contract out of services
ASIAN ALCOHOL CORP VS. NLRC
Facts: The Parsons family who owned controlling stocks in Asian Alcohol Corporation
suffered major business losses prompting it to sell the corporation to Prior Holding
which took over its management and operation.
Prior Holding implemented re-organizational plan and other cost-saving measures for
the company. As a result 117 employees were separated. Of 72 of them occupied
redundant positions, 21 were held by union members and 51 by non-union members.
6 private respondents were members of the union whose positions were abolished due
to redundancy. Private respondents Carias, Martines, and Sendon were water pump
tenders, Amacio was a machine shop mechanic, Verayo was plant operator while
Tormo was a plant helper under him.
They received individual notices of termination; were paid the equivalent of one
month salary for every year of service as separation pay. The money value of their
unused sick vacation, emergency, and seniority leave credits, 13th month pay,
medicine allowance, tax refunds and good will cash bonuses for those with at least 10
years of service. All of them executed sworn releases, waivers and quitclaims.
Private respondents filed with the NLRC complaints for illegal dismissal with a prayer
for reinstatement and backwages. Moral damages and attorney’s fees. They alleged
that Asian Alcohol used the retrenchment to dismiss them because they were members
of the union. They also alleged that Asian Alcohol was not bankrupt as it has engaged
in aggressive scheme in contractual hiring.
Labor Arbiter: Dismissed the complaint. The dismissal of the respondents on the
ground of redundancy/retrenchment is valid or legal. The fact that the Asian Alcohol
incurred losses in its business operations was not seriously challenged by the
complainants. The facts of business losses incurred in its business operations prior to
the implementation of the retrenchment program was sufficiently supported by
documents indicating a deficit of 26, 117,889.
NLRC: Revered. Illegal dismissal. The positions of the respondents were not
redundant because casuals replaced them. The company was not in the state of reverses
at the time of retrenchment
Issue: Whether or not there is a valid retrenchment thus making the dismissal of private
respondents illegal.
Held: There was a valid dismissal. 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.
Under the said provision, retrenchment and redundancy are just cause for the
employer to terminate the services 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.
The law gives the new management every right to undertake measures to save the
company from bankruptcy. In this case, when Prior Land bought the corporation and
took over the management of it there were no signs that the loses would end, hence
Prior land undertook re-organizational plan which retrenched number of employees
because ultimately they will absorb all the loses that the prior corporation incurred.
4.2 Independent Contractor/ Job -contracting vs. Labor only contracting
FONTERRA BRANDS PHILS. INC. VS. LEONARDO LARGARDO
Facts: Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of
Zytron Marketing and Promotions Corp. (Zytron) for the marketing and promotion of
its milk and dairy products. Pursuant to the contract, Zytron provided Fonterra with
trade merchandising representatives (TMRs), including respondents Leonardo
Largado (Largado) and TeotimoEstrellado (Estrellado).
Fonterra sent Zytron a letter terminating its promotions contract. Fonterra then entered
into an agreement for manpower supply with A.C. Sicat Marketing and Promotional
Services (A.C. Sicat). Desirous of continuing their work as TMRs, respondents
submitted their job applications with A.C. Sicat, which hired them for a term of five
(5) months. When respondents 5-month contracts with A.C. Sicat were about to expire,
they allegedly sought renewal thereof, but were allegedly refused. This prompted
respondents to file complaints for illegal dismissal against petitioner, Zytron, and A.C.
Sicat.
The Labor Arbiter dismissed the complaint and ruled that respondents were not
illegally dismissed. The NLRC affirmed the Labor Arbiter, finding that respondents
separation from Zytron was brought about by the execution of the contract between
Fonterra and A.C. Sicat where the parties agreed to absorb Zytrons personnel,
including respondents.
The NLRC decision was assailed in a petition under Rule 65 before the CA.CA held
that respondents were illegally dismissed since Fonterra itself failed to prove that their
dismissal is lawful. However, the illegal dismissal should be reckoned from the
termination of their supposed employment with Zytron on June 6, 2006. Furthermore,
respondents transfer to A.C. Sicat is tantamount to a completely new engagement by
another employer. Lastly, the termination of their contract with A.C. Sicat arose from
the expiration of their respective contracts with the latter. The CA, thus, ruled that
Fonterra is liable to respondents and ordered the reinstatement of respondents without
loss of seniority rights, with full backwages, and other benefits from the time of their
illegal dismissal up to the time of their actual reinstatement. Zytron and Fonterra
moved for reconsideration, but to no avail. Hence, this petition.
Issue: whether or not respondents were illegally dismissed. (By zytron and A.C. Sicat)
Held: No.We do not agree with the CA that respondents employment with Zytron was
illegally terminated. As correctly held by the Labor Arbiter and the NLRC, the
termination of respondents employment with Zytron was brought about by the
cessation of their contracts with the latter. We give credence to the Labor Arbiters
conclusion that respondents were the ones who refused to renew their contracts with
Zytron, and the NLRCs finding that they themselves acquiesced to their transfer to
A.C. Sicat. By refusing to renew their contracts with Zytron, respondents effectively
resigned from the latter.
Here, it is obvious that respondents were no longer interested in continuing their
employment with Zytron. Their voluntary refusal to renew their contracts was brought
about by their desire to continue their assignment in Fonterra which could not happen
in view of the conclusion of Zytrons contract with Fonterra. Hence, to be able to
continue with their assignment, they applied for work with A.C. Sicat with the hope
that they will be able to continue rendering services as TMRs at Fonterra since A.C.
Sicat is Fonterras new manpower supplier.
We agree with the findings of the CA that the termination of respondents employment
with the latter was simply brought about by the expiration of their employment
contracts.Foremost, respondents were fixed-term employees. As previously held by
this Court, fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects with
predetermined dates of completion; they also include those to which the parties by free
choice have assigned a specific date of termination. The determining factor of such
contracts is not the duty of the employee but the day certain agreed upon by the parties
for the commencement and termination of the employment relationship.
AVELINO ALILIN VS. PETRON CORPORATION
Facts: Alilin, et al. are laborers hired by Romualdo D. Gindang Contractor and RDG
to work in the premises of Petron's bulk plant. Their dates of hiring range from 1968
to 1993. In 2000, Petron and RDG entered into a Contract of Services for the period
June 1, 2000 to May 31, 2002 whereby RDG undertook to provide Petron with
janitorial, maintenance, tanker receiving, packaging and other utility services in its
Mandaue Bulk Plant. This contract was extended on July 31, 2002 and further
extended until September 30, 2002. Upon expiration, no further extension was made.
Thus, on October 16, 2002, Alilin, et al. were barred from continuing their services
with Petron.
Hence, the filing of a complaint for illegal dismissal, etc. against Petron, claiming to
be the latter's regular employees. Petron, on the other hand, alleges that they are
employees of RDG, an independent contractor. It presented the following pieces of
evidence: (1) RDG's Certificate of Registration of Business Name issued by DTI; (2)
RDG's Certificate of Registration issued by DOLE; (3) Contractor's Pre-Qualification
Statement; (4) Conflict of Interest Statement signed by Romeo Gindang as manager of
RDG; (5) RDG's Audited Financial Statements for the years 1998, 1999 and 2000; (6)
RDG's Mayor's Permit for the years 2000 and 2001; (7) RDG's Certificate of
Accreditation issued by DTI; (8) performance bond and insurance policy; (9) SSS
Online Inquiry System Employee Contributions and Employee Static Information; and
(10) Romeo's affidavit stating that he had paid the salaries of his employees assigned
to Petron.
LA found against Petron and ruled that Alilin, et al. are its regular employees because
their jobs were directly related to Petron's business operations; they worked under the
supervision of Petron's foreman; they were using Petron's tools and equipment in the
performance of their works. NLRC affirmed the ruling. However, CA reversed the
ruling and found RDG to be a legitimate contractor.

Issue: Whether or not RDG is a legitimate contractor
Held: Petron failed to discharge the burden of proving that RDG is a legitimate
contractor. Hence, the presumption that RDG is a labor-only contractor stands.
The audited financial statements and other financial documents of RDG for the years
1999 to 2001 establish that it does have sufficient working capital to meet the
requirements of its service contract. In fact, the financial evaluation conducted by
Petron of RDG's financial statements for years 1998-2000 showed RDG to have a
maximum financial capability of Php4.807 Million as of December 1998, and
PHp1.611 Million as of December 2000. Petron was able to establish RDG's sufficient
capitalization when it entered into the service contract in 2000. The Court stresses
though that this determination of RDG's status as an independent contractor is only
with respect to its financial capability for the period covered by the financial and other
documents presented. In other words, the evidence adduced merely proves that RDG
was financially qualified as a legitimate contractor but only with respect to its last
service contract with Petron in the year 2000.
As may be recalled, petitioners have rendered work for Petron for a long period of time
even before the service contract was executed in 2000. The respective dates on which
petitioners claim to have started working for Petron, as well as the fact that they have
rendered continuous service to it until October 16, 2002, when they were prevented
from entering the premises of Petron's Mandaue Bulk Plant, were not at all disputed
by Petron. In fact, Petron even recognized that some of the petitioners were initially
fielded by Romualdo Gindang, the father of Romeo, through RDG's precursor,
Romualdo D. Gindang Contractor, while the others were provided by Romeo himself
when he took over the business of his father in 1989. Hence, while Petron was able to
establish that RDG was financially capable as a legitimate contractor at the time of the
execution of the service contract in 2000, it nevertheless failed to establish the
financial capability of RDG at the time when petitioners actually started to work for
Petron in 1968, 1979, 1981, 1987, 1990, 1992 and 1993.
Petron's power of control over petitioners exists in this case
The facts that petitioners were hired by Romeo or his father and that their salaries were
paid by them do not detract from the conclusion that there exists an employer-
employee relationship between the parties due to Petron's power of control over
petitioners. One manifestation of the power of control is the power to transfer
employees from one work assignment to another. Here, Petron could order petitioners
to work outside of their regular "maintenance/utility" job. Also, petitioners were
required to report for work every day at the bulk plant, observe an 8:00 a.m. to 5:00
p.m. daily work schedule, and wear proper uniform and safety helmets as prescribed
by the safety and security measures being implemented within the bulk plant. All these
imply control. In an industry where safety is of paramount concern, control and
supervision over sensitive operations, such as those performed by the petitioners, are
inevitable if not at all necessary. Indeed, Petron deals with commodities that are highly
volatile and flammable which, if mishandled or not properly attended to, may cause
serious injuries and damage to property and the environment. Naturally, supervision
by Petron is essential in every aspect of its product handling in order not to
compromise the integrity, quality and safety of the products that it distributes to the
consuming public.
Petitioners already attained regular status as employees of Petron
Petitioners were given various work assignments such as tanker receiving, barge
loading, sounding, gauging, warehousing, mixing, painting, carpentry, driving, gasul
filling and other utility works. Petron refers to these work assignments as menial works
which could be performed by any able-bodied individual. The Court finds, however,
that while the jobs performed by petitioners may be menial and mechanical, they are
nevertheless necessary and related to Petron's business operations. If not for these
tasks, Petron's products will not reach the consumers in their proper state. Indeed,
petitioners' roles were vital inasmuch as they involve the preparation of the products
that Petron will distribute to its consumers.
Furthermore, while it may be true that any able-bodied individual can perform the
tasks assigned to petitioners, the Court notes the undisputed fact that for many years,
it was the same able-bodied individuals (petitioners) who performed the tasks for
Petron. The engagement of petitioners for the same works for a long period of time is
a strong indication that such works were indeed necessary to Petron's business. In view
of these, and considering further that petitioners' length of service entitles them to
become regular employees under the Labor Code, petitioners are deemed by law to
have already attained the status as Petitioner's regular employees. As such, Petron
could not terminate their services on the pretext that the service contract it entered with
RDG has already lapsed.
However, preliminary presumption is that contractor is that contractor is labor-
only contracting
GARDEN OF MEMORIES PARK
vs. NATIONAL LABOR RELATIONS COMMISSION
Facts: Petitioner is engaged in business of operating a memorial park in Pateros, MM,
and selling memorial plan and services, Respondent, likewise, is a worker in Garden
of Memories Park from 1991 up to Feb. 1998. On March 13, 1998 Respondent filed a
complaint of illegal dismissal, underpayment of wages, non- inclusion of SSS and so
on against the petitioner before the DOLE. Petitioner denied the employment of
respondent, but likewise, impleaded Paulina T. Requino as it was the service contractor
and employer of Cruz. It was due to misunderstanding with a co-worker why he was
dismissed without due process and valid cause. Both petitioner denied the fact that
Cruz was their employee either, and argued that respondent has abandoned his work.
Upon judgement of the LA, it was declared that both petitioners are held jointly and
severally liable for the monetary claims of Cruz and order payment. Petitioners both
appealed at NLRC but was denied even on the MR due to lack of merit. They then
elevated the appeal at the CA but was also affirmed the decision made by NLRC, hence
this petition for certiorari due to GAOD and Acted in Excess of Jurisdiction for the
following issues, to wit:
Issues:
1. WON Petitioner Requino was engaged in Labor-only contracting;
2. WON there exists an employee-employer relationship between Gardens and
respondent Cruz; and
3. WON respondent Cruz has abandon his work at the Gardens.
Held: First Issue: Sec. 5 of Rule VIII-A of the Omnibus Rule implementing the Labor
Codes, provides that labor contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a principal and the elements of determinating this are present,
1) capitalization requirements and 2) the power of control over to his employee which
Requino are wanting. The Courts find this absent in Requino’s favor, hence, he’s only
doing as a mere agent of the Garden of Memories and not as an employer of respondent
Cruz, which was supported by Service Contract Agreement between both the
petitioners.
Second Issue: Consequently, due to the findings made by the court upon declaring that
Requino was only doing as agent of the Gardens. As such, Gardens is the principal
employer of the respondent Cruz, he was hired as a Utility Worker tasked to clean,
sweep and water the lawn of the memorial park. She performed activities which were
necessary or desirable to its principal trade or business. Thus, she was a regular
employee of Gardens of Memories and cannot be dismissed except for just and
authorized causes when respondent Cruz did not abandon her work but was illegally
dismissed as described on the Third Issue. Therefore, the petition is denied and the
assailed decision/resolutions of the CA were affirmed by the Supreme Court.
The principal has the burden of proof to show that the person concerned is an
independent contractor rather than a regular employee
Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji")
as a news correspondent/producer[4] "tasked to report Philippine news to Fuji through
its Manila Bureau field office."[5] Arlene's employment... contract initially provided
for a term of one (1) year but was successively renewed on a yearly basis with salary
adjustment upon every renewal.[6]
Arlene was diagnosed with lung cancer.[7] She informed Fuji about her condition. In
turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene "that the
company will have a problem renewing her contract"[8] since it would be difficult for
her to perform her job.[9] She "insisted that she was still fit to work as certified by her
attending physician.
Arlene and Fuji signed a non-renewal contract... the day after Arlene signed the non-
renewal contract, she filed a complaint for illegal dismissal
She alleged that she was forced to sign the... non-renewal contract when Fuji came to
know of her illness and that Fuji withheld her salaries and other benefits
Labor Arbiter Corazon C. Borbolla dismissed Arlene's complaint... rlene appealed
before the National Labor Relations Commission. The National Labor Relations
Commission reversed the Labor Arbiter's decision.[21] It held that Arlene was a
regular employee with respect to the activities... for which she was employed since she
continuously rendered services that were deemed necessary and desirable to Fuji's
business.
The assailed decision, the Court of Appeals affirmed the National Labor Relations
Commission with the modification that Fuji immediately reinstate Arlene to her
position as News Producer without loss of seniority rights,
Issues: Whether the Court of Appeals correctly determined that no grave abuse of
discretion was committed by the National Labor Relations Commission when it ruled
that Arlene was a regular employee, not an independent contractor, and that she was
illegally dismissed; and Whether the Court of Appeals properly modified the National
Labor Relations Commission's decision by awarding reinstatement, damages, and
attorney's fees
Held: Whether the Court of Appeals correctly affirmed the National Labor Relations
Commission's finding that Arlene was a regular employee
Fuji alleges that Arlene was an independent contractor, citing Sonza v. ABS-CBN and
relying on the following facts: (1) she was hired because of her skills; (2) her salary
was US$1,900.00, which is higher than the normal rate; (3) she had the power to
bargain with her... employer; and (4) her contract was for a fixed term.
Arlene argues that she was a regular employee because Fuji had control and
supervision over her work. The news events that she covered were all based on the
instructions of Fuji.[142] She maintains that the successive renewal of her employment
contracts for... four (4) years indicates that her work was necessary and desirable.
On her illness, Arlene points out that it was not a ground for her dismissal because her
attending physician certified that she was fit to work.[147]
Fuji's argument that Arlene was an independent contractor under a fixed-term contract
is contradictory. Employees under fixed-term contracts cannot be independent
contractors because in fixed-term contracts, an employer-employee relationship exists.
The test in this kind of... contract is not the necessity and desirability of the employee's
activities, "but the day certain agreed upon by the parties for the commencement and
termination of the employment relationship."[179] For regular employees, the
necessity and desirability of... their work in the usual course of the employer's business
are the determining fac... tors. On the other hand, independent contractors do not have
employer-employee relationships with their principals.
Arlene was hired by Fuji as a news producer, but there was no showing that she... was
hired because of unique skills that would distinguish her from ordinary employees.
Neither was there any showing that she had a celebrity status. Her monthly salary
amounting to US$1,900.00 appears to be a substantial sum, especially if compared to
her salary when she was... still connected with GMA.[199] Indeed, wages may indicate
whether one is an independent contractor. Wages may also indicate that an employee
is able to bargain with the employer for better pay. However, wages should not be the
conclusive factor in... determining whether one is an employee or an independent
contractor.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional
employment contract.[200] Her contract also indicated that Fuji had control over her
work because she was required to work for eight (8) hours from Monday to Friday,...
although on flexible time.[201] Sonza was not required to work for eight (8) hours,
while Dumpit-Murillo had to be in ABC to do both on-air and off-air tasks.
The expiration of Arlene's contract does not negate the finding of illegal dismissal by
Fuji. The manner by which Fuji informed Arlene that her contract would no longer be
renewed is tantamount to constructive dismissal. To make matters worse, Arlene was
asked to sign a letter... of resignation prepared by Fuji.[235] The existence of a fixed-
term contract should not mean that there can be no illegal dismissal. Due process must
still be observed in the pre-termination of fixed-term contracts of employment.
There is no evidence showing that Arlene was accorded due process. After informing
her employer of her lung cancer, she was not given the chance to present medical
certificates. Fuji immediately concluded that Arlene could no longer perform her
duties because of chemotherapy. It... did not ask her how her condition would affect
her work. Neither did it suggest for her to take a leave, even though she was entitled
to sick leaves. Worse, it did not present any certificate from a competent public health
authority. What Fuji did was to inform her that her... contract would no longer be
renewed, and when she did not agree, her salary was withheld.
All-entrenched is the rule that an illegally dismissed employee is entitled to
reinstatement as a matter of right. . . . To protect labor's security of tenure, we
emphasize that the doctrine of "strained relations" should be strictly applied so as not
to deprive an illegally dismissed employee of his right to reinstatement. Every labor
dispute almost always results in "strained relations" and the... phrase cannot be given
an overarching interpretation, otherwise, an unjustly dismissed employee can never be
reinstated.[245] (Citations omitted)
The Court of Appeals reasoned that strained relations are a question of fact that must
be supported by evidence.[246] No evidence was presented by Fuji to prove that
reinstatement was no longer feasible. Fuji did not allege that it ceased operations or
that
Arlene's position was no longer available. Nothing in the records shows that Arlene's
reinstatement would cause an atmosphere of antagonism in the workplace. Arlene filed
her complaint in 2009. Five (5) years are not yet a substantial period[247] to bar...
reinstatement.
Principles:
It is the burden of the employer to prove that a person whose services it pays for is an
independent contractor rather than a regular employee with or without a fixed term.
That a person has a disease does not per se entitle the employer to terminate his or...
her services. Termination is the last resort. At the very least, a competent public health
authority must certify that the disease cannot be cured within six (6) months, even with
appropriate treatment.
A voluntary arbitrator, by agreement of parties, assume jurisdiction over any
labor disputes under art 223 of LC or those which could fall under the
jurisdiction of LC.
Preliminary presumption is that is labor-only contracting.
7k CORPORATION VS. NLRC, RENE CORONA AND ALEX
CATINGAN
FACTS:When he was dismissed on April 5, 1993, Albarico was a regular employee
of 7k Corp, a company selling water purifiers. He started working for the company in
1990 as a salesman. Because of his good performance, his employment was
regularized. He was promoted to senior sales representative and then to acting team
field supervisor. In 1992, he was awarded the President’s Trophy for being one of the
company’s top water purifier specialist distributors.
April 1993, the chief operating officer of 7k corp terminated Albarico’s
employment allegedly for his poor sales performance. Albarico had to stop reporting
for work, and he subsequently submitted his money claims against 7k corporation for
arbitration before the National Conciliation and Mediation Board (NCMB). The issue
for voluntary arbitration before the NCMB according to parties’ Submission
Agreement was whether Albarico was entitled to the payment of separation pay and
the sales commission reserved for him by the corporation.
As for its defense, 7k corp claimed Albarico had voluntarily stopped
reporting for work after receiving a verbal reprimand for his sales performance; hence
it was he who was guilty of abandonment of employment. While his case was pending
before the NCMB, Albarico filed a complaint for illegal dismissal before LA. LA
favored Albarico. However, NLRC on appeal vacated the decision of LA on the
ground of forum-shopping without prejudice to the pending NCMB arbitration case.
The decision of NLRC became final.
The arbitrator explained that the promotions, increases in salary , and awards
received by respondent belied the claim that the latte was performing poorly. It was
found that Albarico could not have abandoned his job as the abandonment should have
been clearly shown. VA also found that Albarico was dismissed from his work without
due process. However, it was found that reinstatement was no longer possible because
of the strained relationship of the parties. Thus, in lieu of the reinstatement, VA
ordered 7k corp to pay separation pay for 2 years. VA ordered 7k corp to pay
backwages plus attys fees since Albarico had been compelled to file an action for
illegal dismissal.

7k corp appealed to CA imputing grave abuse of discretion on the part of VA
for ruling on the issue of illegal dismissal and for awarding payment of backwages and
attys fees. 7k corp contended that the issue of the legality of dismissal was not
explicitly included in the submission agreement.
ISSUE: WON VA properly assume jurisdiction to decide th eissue of the lgality of the
dismmissal of Albarico as well as the latter’s entitlement to backwages
HELD: Yes. The claim of Albarico’s pay was premised on his allegation of illegal
dismissal. VA properly assumed jurisdiction over the issue of the legality of his
dismissal.
It should be noted that even the NLRC was of the understanding that NCMB
arbitration case sought to resolve the issue of the legality of the dismissal of Albarico.
In fact, the identity of the issue of the legality of his dismissal, which was previously
submitted to NCMB, and later submitted to NLRC, was the basis of the latter’s finding
of forum shopping and consequent illegal dismissal of the case before it. In fact, 7k
corp also implicitly acknowledged this when it filed before NLRC its MD Albarico’s
complaint on the ground of forum shopping. Thus, it is now estopped from claiming
that the issue before NCMB does not include the issue of the legality of the dismissal
of respondent. Besides, there has to be a reason for deciding the issue of respondent’s
entitlement to separation pay. LA would have no basis whatsoever for saying that
Albarico was entitled to separation pay or not if the issue of the legality of Albarico’s
dismissal was not resolved first.
As a rule in labor only contracting, the principal is solidarily liable with teh
contractor to pay the employee all his claims. But in Independent Job Contracting, the
employee is only entitled to his unpaid wages and monetary claims. In absence of
agreements, it is to be presumed that the relationship is labor-contracting
4.3 Examples
Masiador and Sentenciador in a cockpit; not employees
MARTICIO SEMBLANTE VS. COURT OF APPEALS
FACTS: Petitioners Marticio Semblante (Semblante) and Dubrick
Pilar (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 masiador and sentenciador, respectively,
of the cockpit sometime in 1993.
As themasiador, 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 thearriba,
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. Hence,
petitioners came to this Court, arguing in the main that the CA
committed a reversible error in entertaining an appeal, which was
not perfected in the first place.
ISSUE: Did the CA err in entertaining an appeal which was not
perfected?
HELD: Indeed, the posting of a bond is indispensable to the
perfection of an appeal in cases involving monetary awards from the
Decision of the Labor Arbiter. Article 223 of the Labor Code
provides:
Article 223. Appeal. Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission
by any or both partieswithin ten (10) calendar days from receipt of
such decisions, awards, or orders.Such appeal may be entertained
only on any of the following grounds:
In case of a judgment involving a monetary award,an appeal by the
employer may be perfected only upon the posting of a cash or surety
bondissued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the
judgment appealed from.
Time and again, however, this Court, considering the
substantial merits of the case, has relaxed this rule on, and excused
the late posting of, the appeal bond when there are strong and
compelling reasons for the liberality, such as the prevention of
miscarriage of justice extant in the caseor the special circumstances
in the case combined with its legal merits or the amount and the issue
involved.After all, technical rules cannot prevent courts from
exercising their duties to determine and settle, equitably and
completely, the rights and obligations of the parties. This is one case
where the exception to the general rule lies.
While 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 We
have repeatedly mentioned in countless decisions:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employees conduct, which is the most
important element.
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 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.
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.
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. DENIED.
Manufacturing Company vs Forwarding Agent
TEMIC AUTOMOTIVE PHILS. VS. TEMIC AUTOMOTIVE
UNION
Facts: The petitioner is composed of several departments, one of
which is the warehouse department consisting of two warehouses -
the electronic braking system and the comfort body electronics.
These warehouses are further divided into four sections - receiving
section, raw materials warehouse section, indirect warehouse
section and finished goods section. The union members are regular
rank-and-file employees working in these sections as clerks,
material handlers, system encoders and general clerks. By practice
established since 1998, the petitioner contracts out some of the work
in the warehouse department, specifically those in the receiving and
finished goods sections, to three independent service providers or
forwarders. The regular employees of the petitioner and those of the
forwarders share the same work area and use the same equipment,
tools and computers 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, specifically to the
question of “whether or not the functions of the forwarders’
employees are functions being performed by the regular rank-and-
file employees covered by the bargaining unit.”
The petitioner, on the other hand, said that the contracting
arrangement with the forwarders is a valid exercise of its
management prerogative.
Issue: W/N the outsourcing arrangement is valid
Held: YES. The forwarding arrangement complies with the
requirements of Article 106 of the Labor Code and its implementing
rules. To reiterate, no evidence or argument questions the
company’s basic objective of achieving “greater economy and
efficiency of operations.” This, to our mind, goes a long way to
negate the presence of bad faith. 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.
No evidence likewise stands before us showing that the
outsourcing has resulted in a reduction of work hours or the splitting
of the bargaining unit effects that under the implementing rules of
Article 106 of the Labor Code can make a contracting arrangement
illegal.
The job of forwarding, as we earlier described, 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. It is in the appreciation of these forwarder
services as one whole package of inter-related services that we
discern a basic misunderstanding that results in the error of equating
the functions of the forwarders’ employees with those of regular
rank -and-file employees of the company.
The regular company employees, to be sure, work for
the company under its supervision and control, but forwarder
employees work for the forwarder in the forwarder’s own
operation that is itself a contracted work from the company. The
company controls its employees in the means, method and
results of their work, in the same manner that the forwarder
controls its own employees in the means, manner and results of
their work. Complications and confusion result because the
company at the same time controls the forwarder in the results
of the latter’s work, without controlling however the means and
manner of the forwarder employees’ work. Thus, 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.
Television Company vs Talent
JOSE SONZA VS ABSCBN
Facts: In May 1994, ABS-CBN signed an agreement with the Mel
and Jay Management and Development Corporation (MJMDC).
ABS-CBN was represented by its corporate officers while MJMDC
was represented by Sonza, as President and general manager, and
Tiangco as its EVP and treasurer. Referred to in the agreement as
agent, MJMDC agreed to provide Sonza’s services exclusively to
ABS-CBN as talent for radio and television. ABS-CBN agreed to
pay Sonza a monthly talent fee of P310, 000 for the first year and
P317, 000 for the second and third year.
On April 1996, Sonza wrote a letter to ABS-CBN where he
irrevocably resigned in view of the recent events concerning his
program and career. After the said letter, Sonza filed with the
Department of Labor and Employment a complaint alleging that
ABS-CBN did not pay his salaries, separation pay, service incentive
pay,13th month pay, signing bonus, travel allowance and amounts
under the Employees Stock Option Plan (ESOP). ABS-CBN
contended that no employee-employer relationship existed between
the parties. However, ABS-CBN continued to remit Sonza’s
monthly talent fees but opened another account for the same
purpose.
The Labor Arbiter dismissed the complaint and found that
there is no employee-employer relationship. NLRC affirmed the
decision of the Labor Arbiter. CA also affirmed the decision of
NLRC.
Issue: Whether or not there was employer-employee relationship
between the parties.
Ruling: Case law has consistently held that the elements of an
employee-employer relationship are selection and engagement of
the employee, the payment of wages, the power of dismissal and the
employer’s 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.
Sonza’s services to co-host its television and radio
programs are because of his peculiar talents, skills and celebrity
status. Independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary
employees. The specific selection and hiring of SONZA, because of
his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative, but not
conclusive, of an independent contractual relationship. All the talent
fees and benefits paid to SONZA were the result of negotiations that
led to the Agreement. For violation of any provision of the
Agreement, either party may terminate their relationship. Applying
the control test to the present case, we find that SONZA is not an
employee but an independent contractor.
The control test is the most important test our courts apply
in distinguishing an employee from an independent contractor. This
test is based on the extent of control the hirer exercises over a
worker. The greater the supervision and control the hirer exercises,
the more likely the worker is deemed an employee. The converse
holds true as well – the less control the hirer exercises, the more
likely the worker is considered an independent contractor. To
perform his work, SONZA only needed his skills and talent. How
SONZA delivered his lines, appeared on television, and sounded on
radio were outside ABS-CBN’s control. 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-CBN’s 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 Sonza’s work. A radio broadcast
specialist who works under minimal supervision is an independent
contractor. Sonza’s work as television and radio program host
required special skills and talent, which SONZA admittedly
possesses.
ABS-CBN claims that there exists a prevailing practice in
the broadcast and entertainment industries to treat talents like Sonza
as independent contractors. The right of labor to security of tenure
as guaranteed in the Constitution arises only if there is an employer-
employee relationship under labor laws. Individuals with special
skills, expertise or talent enjoy the freedom to offer their services as
independent contractors. The right to life and livelihood guarantees
this freedom to contract as independent contractors. The right of
labor to security of tenure cannot operate to deprive an individual,
possessed with special skills, expertise and talent, of his right to
contract as an independent contractor.
ABS-CBN MARLYN NAZARENO
Facts: Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN)
is engaged in the broadcasting business and owns a network of
television and radio stations, whose operations revolve around the
broadcast, transmission, and relay of telecommunication signals. It
sells and deals in or otherwise utilizes the airtime it generates from
its radio and television operations. It has a franchise as a
broadcasting company, and was likewise issued a license and
authority to operate by the National Telecommunications
Commission.
Petitioner employed respondents Nazareno, Gerzon,
Deiparine, and Lerasan 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. On December 19,
1996, petitioner 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 petitioner refused to recognize PAs as part of the
bargaining unit, respondents were not included to the CBA.
On October 12, 2000, respondents 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
petitioner before the NLRC. The Labor Arbiter rendered judgment
in favor of the respondents, and declared that they were regular
employees of petitioner as such, they were awarded monetary
benefits. NLRC affirmed the decision of the Labor Arbiter.
Petitioner filed a motion for reconsideration but CA dismissed it.

Issue: Whether or not the respondents were considered regular
employees of ABS-CBN.
Held: The respondents are regular employees of ABS-CBN. It was
held that where a person has rendered at least one year of service,
regardless of the nature of the activity performed, or where the work
is continuous or intermittent, the employment is considered regular
as long as the activity exists, the reason being that a customary
appointment is not indispensable before one may be formally
declared as having attained regular status.
In Universal Robina Corporation v. Catapang, the Court
states that the primary standard, therefore, of determining regular
employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or
business of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer.
The connection can be determined by considering the nature of work
performed and its relation to the scheme of the particular business
or trade in its entirety. Also, if the employee has been performing
the job for at least a year, even if the performance is not continuous
and merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such
activity and while such activity exists.
Additionally, respondents cannot be considered as project
or program employees because no evidence was presented to show
that the duration and scope of the project were determined or
specified at the time of their engagement. In the case at bar,
however, the employer-employee relationship between petitioner
and respondents has been proven. 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
petitioner’s personnel department just like any ordinary employee.
Respondents did not have the power to bargain for huge talent fees,
a circumstance negating independent contractual relationship.
Respondents are highly dependent on the petitioner for continued
work. 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. As regular employees,
respondents are entitled to the benefits granted to all other regular
employees of petitioner under the CBA . Besides, only talent-artists
were excluded from the CBA and not production assistants who are
regular employees of the respondents. Moreover, under Article 1702
of the New Civil Code: “In case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and decent
living of the laborer.”
2.7 Terms and conditions hiring; ban on spouses in same company
Compare with: Stipulations against marriage
FARLEY FULACHE, MANOLO JABONERO, DAVID CASTILLO,
JEFFREY LAGUNZAD, MAGDALENA MALIG-ON BIGNO, FRANCISCO
CABAS, JR., HARVEY PONCE and ALAN C. ALMENDRAS, vs. ABS-CBN
BROADCASTING CORPORATION
G.R. NO. 183810; JANUARY 21, 2010
FACTS:
The petitioners in this case are questioning the CBA executed between ABS-CBN
and the ABS-CBN Rank-and-File Employees Union (Union) because under such
agreement, they are only considered as temporary and not regular
employees. The petitioners claimed that they should be recognized as regular
employees of ABS-CBN because they had already rendered more than a year of
service in the company and, therefore, entitled to the benefits of a regular
employee.
Instead of salaries, ABS-CBN pointed out that talents are paid a pre-arranged
consideration called “talent fee” taken from the budget of a particular program
and subject to a ten percent (10%) withholding tax. Talents do not undergo
probation. Their services are engaged for a specific program or production, or a
segment thereof. Their contracts are terminated once the program, production
or segment is completed.
ABS-CBN alleged that the petitioners’ services were contracted on various dates
by its Cebu station as independent contractors/off camera talents, and they were
not entitled to regularization in these capacities.
Labor Arbiter Rendoque rendered his decision holding that the petitioners were
regular employees of ABS-CBN, not independent contractors, and are entitled to
the benefits and privileges of regular employees
ABS-CBN appealed the ruling to the National Labor Relations Commission
(NLRC) Fourth Division, mainly contending that the petitioners were
independent contractors, not regular employees.
While the appeal of the regularization case 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.
The Labor Arbiter Rendoque 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 arbiter’s 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. Under both cases, the petitioners were awarded CBA benefits
and privileges from the time they became regular employees up to the time of
their dismissal.
The NLRC resolved the motions for reconsideration on by both parties, thus, on
the regularization issue, the NLRC stood by the ruling that the petitioners were
regular employees entitled to the benefits and privileges of regular employees. On
the illegal dismissal case, the petitioners, while recognized as regular employees,
were declared dismissed due to redundancy. The NLRC denied the petitioners’
second motion for reconsideration in its order of May 31, 2006 for being a
prohibited pleading.
ISSUE:
WON the petitioners are correct that they should be considered already as
regular employees
WON Fulache and the other petitioners were dismissed illegally
HELD:
1. As regular employees, the petitioners fall within the coverage of the bargaining
unit and are therefore entitled to CBA benefits as a matter of law and contract.
Section 1. APPROPRIATE BARGAINING UNIT. – The parties agree that the
appropriate bargaining unit shall be regular rank-and-file employees of ABS-
CBN BROADCASTING CORPORATION but shall not include:
a) Personnel classified as Supervisor and Confidential employees;
b) Personnel who are on “casual” or “probationary” status as defined in Section
2 hereof;
c) Personnel who are on “contract” status or who are paid for specified units of
work such as writer-producers, talent-artists, and singers.
The inclusion or exclusion of new job classifications into the bargaining unit shall
be subject of discussion between the COMPANY and the UNION.
Under these terms, the petitioners are members of the appropriate bargaining
unit because they are regular rank-and-file employees and do not belong to any
of the excluded categories. Specifically, nothing in the records shows that they are
supervisory or confidential employees; neither are they casual nor probationary
employees. Most importantly, the labor arbiter’s decision of January 17, 2002 –
affirmed all the way up to the CA level – ruled against ABS-CBN’s submission
that they are independent contractors. Thus, as regular rank-and-file employees,
they fall within CBA coverage under the CBA’s express terms and are entitled to
its benefits.
2. Their dismissal was not only unjust and in bad faith as the above discussions
abundantly show. The bad faith in ABS-CBN’s move toward its illegitimate goal
was not even hidden; it dismissed the petitioners – already recognized as regular
employees – for refusing to sign up with its service contractor. Thus, from every
perspective, the petitioners were illegally dismissed.
By law, illegally dismissed employees are entitled to reinstatement without loss of
seniority rights and other privileges and to full backwages, inclusive of
allowances, and to other benefits or their monetary equivalent from the time their
compensation was withheld from them.
NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN
AND MA. CRISTINA SUMAYAO, Petitioners, vs. ABS-CBN CORPORATION
(FORMERLY, ABS-CBN BROADCASTING CORPORATION) AND
AMALIA VILLAFUERTE, Respondents.
G.R. No. 199166, 20 April 2015.
FACTS:
Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of
Petitioners as cameramen, editors or reporters for TV Broadcasting. Petitioners
signed regularly renewed Talent Contracts (3 months - 1 year) and Project
Assignment Forms which detailed the duration, budget and daily technical
requirements of a particular project. Petitioners were tasked with coverage of
news items for subsequent daily airings in Respondents’ TV Patrol Bicol
Program.
The Talent Contract has an exclusivity clause and provides that nothing therein
shall be deemed or construed to establish an employer-employee relationship
between the parties.
Petitioners filed against Respondents a complaint for regularization before the
NLRC's Arbitration branch.
In support of their complaint, Petitioners claimed that they worked under the
direct control of Respondent Villafuerte - they were mandated to wear company
IDs, they were provided the necessary equipment, they were informed about the
news to be covered the following day, and they were bound by the company’s
policy on attendance and punctuality.
Respondents countered that, pursuant to their Talent Contracts and Project
Assignment Forms, Petitioners were hired as talents to act as reporters, editors
and/or cameramen. Respondents further claimed they never imposed control as
to how Petitioners discharged their duties. At most, they were briefed regarding
the general requirements of the project to be executed.
While the case was pending, Petitioners contracts were terminated, prompting
the latter to file a second complaint for illegal dismissal.
The Arbitration Branch ruled that Petitioners were regular employees, and
ordered Respondents to reinstate the Petitioners.
The NLRC affirmed the ruling, but the CA overturned the decision.
ISSUE:
Whether or not the CA seriously and reversibly erred in brushing aside the
determination made by both the Labor Arbiter and the NLRC of the existence of
an employer-employee relationship between the parties, despite established
jurisprudence supporting the same.
HELD:
The Court finds the petition impressed with merit.
Although the existence of an employer-employee relationship is, on the other
hand, a question of fact which is ordinarily not the proper subject of a Rule 45
petition for review on certiorari like the one at bar, the conflicting findings
between the labor tribunals and the CA justify a further consideration of the
matter. To determine the existence of said relation, case law has consistently
applied the four-fold test, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee on the means and methods by which
the work is accomplished. Of these criteria, the so-called “control test” is
generally regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship. Under this test, an
employer-employee relationship is said to exist where the person for whom the
services are performed reserves the right to control not only the end result but
also the manner and means utilized to achieve the same.
Insofar as the nature of one’s employment is concerned, Article 280 of the Labor
Code of the Philippines also provides as follows:
ART. 280. Regular and Casual Employment. — The provisions of written
agreement to the contrary notwithstanding and regardless of the oral agreement
of the parties, an employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has
been fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such actually exists.
The Court finds that, notwithstanding the nomenclature of their Talent
Contracts and/or Project Assignment Forms and the terms and condition
embodied therein, petitioners are regular employees of ABS-CBN. Time and
again, it has been ruled that the test to determine whether employment is regular
or not is the reasonable connection between the activity performed by the
employee in relation to the business or trade of the employer. As
cameramen/editors and reporters, petitioners were undoubtedly performing
functions necessary and essential to ABS-CBN’s business of broadcasting
television and radio content. It matters little that petitioners’ services were
engaged for specified periods for TV Patrol Bicol and that they were paid
according to the budget allocated therefor. Aside from the fact that said program
is a regular weekday fare of the ABS-CBN’s Regional Network Group in Naga
City, the record shows that, from their initial engagement in the aforesaid
capacities, petitioners were continuously re-hired by respondents over the years.
To the mind of the Court, respondents’ repeated hiring of petitioners for its long-
running news program positively indicates that the latter were ABS-CBN’s
regular employees.
Rather than the project and/or independent contractors respondents claim them
to be, it is evident from the foregoing disquisition that petitioners are regular
employees of ABS-CBN. This conclusion is borne out by the ineluctable showing
that petitioners perform functions necessary and essential to the business of ABS-
CBN which repeatedly employed them for a long-running news program of its
Regional Network Group in Naga City. In the course of said employment,
petitioners were provided the equipment they needed, were required to comply
with the Company's policies which entailed prior approval and evaluation of
their performance. Viewed from the prism of these considerations, we find and
so hold that the CA reversibly erred when it overturned the NLRC's affirmance
of the Labor Arbiter's finding that an employer-employee relationship existed
between the parties. Given the fact, however, that Sub-RAB-V-05-03-00039-08
had not been consolidated with this case and appears, for all intents and purposes,
to be pending still, the Court finds that the reinstatement of petitioners ordered
by said labor officer and tribunal should, as a relief provided in case of illegal
dismissal, be left for determination in said case.
INSURANCE COMPANY vs. COMMISSION AGENTS
INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and MELECIO BASIAO, respondents.
G.R. No. 84484 November 15, 1989
FACTS:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the
Company) and Melecio T. Basiao entered into a contract 1 by which:
1. Basiao was "authorized to solicit within the Philippines applications for
insurance policies and annuities in accordance with the existing rules and
regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as provided in
the Schedule of Commissions" of the contract to "constitute a part of the
consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as
all its circulars ... and those which may from time to time be promulgated by it,
..." were made part of said contract.
The contract also contained, among others, provisions governing the relations of
the parties, the duties of the Agent, the acts prohibited to him, and the modes of
termination of the agreement.
Some four years later, in April 1972, the parties entered into another contract —
an Agency Manager's Contract — and to implement his end of it Basiao
organized an agency or office to which he gave the name M. Basiao and
Associates, while concurrently fulfilling his commitments under the first contract
with the Company.
In May, 1979, the Company terminated the Agency Manager's Contract. After
vainly seeking a reconsideration, Basiao sued the Company in a civil action and
this, he was later to claim, prompted the latter to terminate also his engagement
under the first contract and to stop payment of his commissions starting April 1,
1980.
Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the
Company and its president. Without contesting the termination of the first
contract, the complaint sought to recover commissions allegedly unpaid
thereunder, plus attorney's fees. The respondents disputed the Ministry's
jurisdiction over Basiao's claim, asserting that he was not the Company's
employee, but an independent contractor and that the Company had no
obligation to him for unpaid commissions under the terms and conditions of his
contract.
ISSUE:
Whether, as Basiao asserts, he had become the Company's employee by virtue of
the contract invoked by him, thereby placing his claim for unpaid commissions
within the original and exclusive jurisdiction of the Labor Arbiter under the
provisions of Section 217 of the Labor Code, or, contrarily, as the Company
would have it, that under said contract Basiao's status was that of an independent
contractor whose claim was thus cognizable, not by the Labor Arbiter in a labor
case, but by the regular courts in an ordinary civil action.
HELD:
... In determining the existence of employer-employee relationship, the following
elements are generally considered, 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 the employees' conduct — although the latter is the most
important element (35 Am. Jur. 445). ...
Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the
means or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The
first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used
to achieve it. The distinction acquires particular relevance in the case of an
enterprise affected with public interest, as is the business of insurance, and is on
that account subject to regulation by the State with respect, not only to the
relations between insurer and insured but also to the internal affairs of the
insurance company. 12 Rules and regulations governing the conduct of the
business are provided for in the Insurance Code and enforced by the Insurance
Commissioner. It is, therefore, usual and expected for an insurance company to
promulgate a set of rules to guide its commission agents in selling its policies that
they may not run afoul of the law and what it requires or prohibits. Of such a
character are the rules which prescribe the qualifications of persons who may be
insured, subject insurance applications to processing and approval by the
Company, and also reserve to the Company the determination of the premiums
to be paid and the schedules of payment. None of these really invades the agent's
contractual prerogative to adopt his own selling methods or to sell insurance at
his own time and convenience, hence cannot justifiably be said to establish an
employer-employee relationship between him and the company.
In Investment Planning Corporation of the Philippines us. Social Security System
14
a case almost on all fours with the present one, this Court held that there was
no employer-employee relationship between a commission agent and an
investment company, but that the former was an independent contractor where
said agent and others similarly placed were: (a) paid compensation in the form of
commissions based on percentages of their sales, any balance of commissions
earned being payable to their legal representatives in the event of death or
registration; (b) required to put up performance bonds; (c) subject to a set of
rules and regulations governing the performance of their duties under the
agreement with the company and termination of their services for certain causes;
(d) not required to report for work at any time, nor to devote their time
exclusively to working for the company nor to submit a record of their activities,
and who, finally, shouldered their own selling and transportation expenses.
The respondents limit themselves to pointing out that Basiao's contract with the
Company bound him to observe and conform to such rules and regulations as the
latter might from time to time prescribe. No showing has been made that any
such rules or regulations were in fact promulgated, much less that any rules
existed or were issued which effectively controlled or restricted his choice of
methods — or the methods themselves — of selling insurance. Absent such
showing, the Court will not speculate that any exceptions or qualifications were
imposed on the express provision of the contract leaving Basiao "... free to
exercise his own judgment as to the time, place and means of soliciting
insurance."
The Court, therefore, rules that under the contract invoked by him, Basiao was
not an employee of the petitioner, but a commission agent, an independent
contractor whose claim for unpaid commissions should have been litigated in an
ordinary civil action. The Labor Arbiter erred in taking cognizance of, and
adjudicating, said claim, being without jurisdiction to do so, as did the respondent
NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary
and premature to consider Basiao's claim for commissions on its merits.
GREGORIO V. TONGKO, Petitioner, vs.
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and
RENATO A. VERGEL DE DIOS, Respondents.
G.R. No. 167622 June 29, 2010
FACTS:
The contractual relationship between Tongko and Manulife had two basic
phases. The first or initial phase began on July 1, 1977, under a Career Agent’s
Agreement that 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.
a) The Agent shall canvass for applications for Life Insurance, Annuities, Group
policies and other products offered by the Company, and collect, in exchange for
provisional receipts issued by the Agent, money due to or become due to the
Company in respect of applications or policies obtained by or through the Agent
or from policyholders allotted by the Company to the Agent for servicing, subject
to subsequent confirmation of receipt of payment by the Company as evidenced
by an Official Receipt issued by the Company directly to the policyholder.
The Company may terminate this Agreement for any breach or violation of any
of the provisions hereof by the Agent by giving written notice to the Agent within
fifteen (15) days from the time of the discovery of the breach. No waiver,
extinguishment, abandonment, withdrawal or cancellation of the right to
terminate this Agreement by the Company shall be construed for any previous
failure to exercise its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time
without cause, by giving to the other party fifteen (15) days notice in writing.
Tongko additionally agreed (1) to comply with all regulations and requirements
of Manulife, and (2) to maintain a standard of knowledge and competency in the
sale of Manulife’s products, satisfactory to Manulife and sufficient to meet the
volume of the new business, required by his Production Club membership.
The second phase started in 1983 when Tongko was named Unit Manager in
Manulife’s Sales Agency Organization. In 1990, he became a Branch Manager.
Six years later, Tongko became a Regional Sales Manager.
Tongko’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. Thus, under oath, he declared
his gross business income and deducted his business expenses to arrive at his
taxable business income. Manulife withheld the corresponding 10% tax on
Tongko’s earnings.
De Dios addressed a letter to Tongko stating that the former found the latter’s
views and comments unaligned with the directions the company was taking. The
allegations stated that some Managers were unhappy with their earnings.
However, no Managers confirmed the said allegations. De Dios worried about
Tongko’s inability to push for the company’s development and growth.
Subsequently, de Dios wrote Tongko another letter terminating Tongko’s
services. Tongko responded by filing an illegal dismissal complaint with the
NLRC Arbitration Branch. He essentially alleged – despite the clear terms of the
letter terminating his Agency Agreement – that he was Manulife’s employee
before he was illegally dismissed.
Tongko asserted that as Unit Manager, he was paid an annual over-rider not
exceeding ₱50,000.00, regardless of production levels attained and exclusive of
commissions and bonuses. He also claimed that as Regional Sales Manager, he
was given a travel and entertainment allowance of ₱36,000.00 per year in addition
to his overriding commissions; he was tasked with numerous administrative
functions and supervisory authority over Manulife’s employees, aside from
merely selling policies and recruiting agents for Manulife; and he recommended
and recruited insurance agents subject to vetting and approval by Manulife. He
further alleges that he was assigned a definite place in the Manulife offices when
he was not in the field for which he never paid any rental. Manulife provided the
office equipment he used, and paid for the electricity, water and telephone bills.
As Regional Sales Manager, Tongko additionally asserts that he was required to
follow at least three codes of conduct.
Manulife argues that Tongko had no fixed wage or salary. Under the Agreement,
Tongko was paid commissions of varying amounts, computed based on the
premium paid in full and actually received by Manulife on policies obtained
through an agent. As sales manager, Tongko was paid overriding sales
commission derived from sales made by agents under his
unit/structure/branch/region. Manulife also points out that it deducted and
withheld a 10% tax from all commissions Tongko received; Tongko even declared
himself to be self-employed and consistently paid taxes as such—i.e., he availed
of tax deductions such as ordinary and necessary trade, business and professional
expenses to which a business is entitled.
Manulife asserts that the labor tribunals have no jurisdiction over Tongko’s
claim as he was not its employee as characterized in the four-fold test.
The labor arbiter decreed that no employer-employee relationship existed
between the parties. However, the NLRC reversed the labor arbiter’s decision on
appeal; it found the existence of an employer-employee relationship and
concluded that Tongko had been illegally dismissed. In the petition for certiorari
with the CA, the appellate court found that the NLRC gravely abused its
discretion in its ruling and reverted to the labor arbiter’s decision that no
employer-employee relationship existed between Tongko and Manulife.
In the Supreme Court’s Decision of November 7, 2008, the Court reversed the
CA ruling and found that an employment relationship existed between Tongko
and Manulife for the following reasons:
1. Our ruling in the first Insular case did not foreclose the possibility of an
insurance agent becoming an employee of an insurance company; if evidence
exists showing that the company promulgated rules or regulations that effectively
controlled or restricted an insurance agent’s choice of methods or the methods
themselves in selling insurance, an employer-employee relationship would be
present. The determination of the existence of an employer-employee relationship
is thus on a case-to-case basis depending on the evidence on record.
2. Manulife had the power of control over Tongko, sufficient to characterize him
as an employee, as shown by the following indicators:
2.1 Tongko undertook to comply with Manulife’s rules, regulations and other
requirements, i.e., the different codes of conduct such as the Agent Code of
Conduct, the Manulife Financial Code of Conduct, and the Financial Code of
Conduct Agreement;
2.2 The various affidavits of Manulife’s insurance agents and managers, who
occupied similar positions as Tongko, showed that they performed administrative
duties that established employment with Manulife;12 and
2.3 Tongko was tasked to recruit some agents in addition to his other
administrative functions. De Dios’ letter harped on the direction Manulife
intended to take, viz., greater agency recruitment as the primary means to sell
more policies; Tongko’s alleged failure to follow this directive led to the
termination of his employment with Manulife.
Manulife disagreed filed the present motion for reconsideration for the following
grounds:
1. The November 7[, 2008] Decision violates Manulife’s right to due process by:
(a) confining the review only to the issue of "control" and utterly disregarding all
the other issues that had been joined in this case; (b) mischaracterizing the
divergence of conclusions between the CA and the NLRC decisions as confined
only to that on "control"; (c) grossly failing to consider the findings and
conclusions of the CA on the majority of the material evidence, especially
[Tongko’s] declaration in his income tax returns that he was a "business person"
or "self-employed"; and (d) allowing [Tongko] to repudiate his sworn statement
in a public document.
2. The November 7[, 2008] Decision contravenes settled rules in contract law and
agency, distorts not only the legal relationships of agencies to sell but also
distributorship and franchising, and ignores the constitutional and policy context
of contract law vis-à-vis labor law.
3. The November 7[, 2008] Decision ignores the findings of the CA on the three
elements of the four-fold test other than the "control" test, reverses well-settled
doctrines of law on employer-employee relationships, and grossly misapplies the
"control test," by selecting, without basis, a few items of evidence to the exclusion
of more material evidence to support its conclusion that there is "control."
4. The November 7[, 2008] Decision is judicial legislation, beyond the scope
authorized by Articles 8 and 9 of the Civil Code, beyond the powers granted to
this Court under Article VIII, Section 1 of the Constitution and contravenes
through judicial legislation, the constitutional prohibition against impairment of
contracts under Article III, Section 10 of the Constitution.
5. For all the above reasons, the November 7[, 2008] Decision made unsustainable
and reversible errors, which should be corrected, in concluding that Respondent
Manulife and Petitioner had an employer-employee relationship, that
Respondent Manulife illegally dismissed Petitioner, and for consequently
ordering Respondent Manulife to pay Petitioner backwages, separation pay,
nominal damages and attorney’s fees.
ISSUE:
Whether or not there is an existing employer-employee relationship.
HELD:
The primary evidence in the present case is the July 1, 1977 Agreement that
governed and defined the parties’ relations until the Agreement’s termination in
2001. This Agreement stood for more than two decades and, based on the records
of the case, was never modified or novated. It assumes primacy because it directly
dealt with the nature of the parties’ relationship up to the very end; moreover,
both parties never disputed its authenticity or the accuracy of its terms.
By the Agreement’s express terms, Tongko served as an "insurance agent" for
Manulife, not as an employee. To be sure, the Agreement’s legal characterization
of the nature of the relationship cannot be conclusive and binding on the courts;
the characterization of the juridical relationship the Agreement embodied is a
matter of law that is for the courts to determine. At the same time, though, the
characterization the parties gave to their relationship in the Agreement cannot
simply be brushed aside because it embodies their intent at the time they entered
the Agreement, and they were governed by this understanding throughout their
relationship. At the very least, the provision on the absence of employer-employee
relationship between the parties can be an aid in considering the Agreement and
its implementation, and in appreciating the other evidence on record.
Evidence shows that Tongko’s role as an insurance agent never changed during
his relationship with Manulife. If changes occurred at all, the changes did not
appear to be in the nature of their core relationship. Tongko essentially remained
an agent, but moved up in this role through Manulife’s recognition that he could
use other agents approved by Manulife, but operating under his guidance and in
whose commissions he had a share. For want of a better term, Tongko perhaps
could be labeled as a "lead agent" who guided under his wing other Manulife
agents similarly tasked with the selling of Manulife insurance.
Evidence suggests that these other agents operated under their own agency
agreements. Thus, if Tongko’s compensation scheme changed at all during his
relationship with Manulife, the change was solely for purposes of crediting him
with his share in the commissions the agents under his wing generated. As an
agent who was recruiting and guiding other insurance agents, Tongko likewise
moved up in terms of the reimbursement of expenses he incurred in the course of
his lead agency, a prerogative he enjoyed pursuant to Article 1912 of the Civil
Code. Thus, Tongko received greater reimbursements for his expenses and was
even allowed to use Manulife facilities in his interactions with the agents, all of
whom were, in the strict sense, Manulife agents approved and certified as such
by Manulife with the Insurance Commission.
There case is the lack of evidence on record showing that Manulife ever exercised
means-and-manner control, even to a limited extent, over Tongko during his
ascent in Manulife’s sales ladder. In 1983, Tongko was appointed unit manager.
Inexplicably, Tongko never bothered to present any evidence at all on what this
designation meant. This also holds true for Tongko’s appointment as branch
manager in 1990, and as Regional Sales Manager in 1996. The best evidence of
control – the agreement or directive relating to Tongko’s duties and
responsibilities – was never introduced as part of the records of the case. The
reality is, prior to de Dios’ letter, Manulife had practically left Tongko alone not
only in doing the business of selling insurance, but also in guiding the agents
under his wing.
The mere presentation of codes or of rules and regulations, however, is not per se
indicative of labor law control as the law and jurisprudence teach us.
Insurance Code imposes obligations on both the insurance company and its
agents in the performance of their respective obligations under the Code,
particularly on licenses and their renewals, on the representations to be made to
potential customers, the collection of premiums, on the delivery of insurance
policies, on the matter of compensation, and on measures to ensure ethical
business practice in the industry.
The general law on agency, on the other hand, expressly allows the principal an
element of control over the agent in a manner consistent with an agency
relationship. In this sense, these control measures cannot be read as indicative of
labor law control. Foremost among these are the directives that the principal may
impose on the agent to achieve the assigned tasks, to the extent that they do not
involve the means and manner of undertaking these tasks. The law likewise
obligates the agent to render an account; in this sense, the principal may impose
on the agent specific instructions on how an account shall be made, particularly
on the matter of expenses and reimbursements. To these extents, control can be
imposed through rules and regulations without intruding into the labor law
concept of control for purposes of employment.
According to the Insular Life case, 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
agent’s conduct necessarily indicate "control" as this term is defined in
jurisprudence. Guidelines indicative of labor law "control," as the first Insular
Life case tells us, should not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the nature of dictating
the means or methods to be employed in attaining the result, or of fixing the
methodology and of binding or restricting the party hired to the use of these
means. In fact, results-wise, the principal can impose production quotas and can
determine how many agents, with specific territories, ought to be employed to
achieve the company’s objectives. These are management policy decisions that
the labor law element of control cannot reach.
Aside from these affidavits however, no other evidence exists regarding the effects
of Tongko’s additional roles in Manulife’s sales operations on the contractual
relationship between them.
A "coordinative" standard for a manager cannot be indicative of control; the
standard only essentially describes what a Branch Manager is – the person in the
lead who orchestrates activities within the group. To "coordinate," and thereby
to lead and to orchestrate, is not so much a matter of control by Manulife; it is
simply a statement of a branch manager’s role in relation with his agents from
the point of view of Manulife whose business Tongko’s sales group carries.
The following portions of the affidavit of Regional Sales Manager John Chua,
with counterparts in the other affidavits, were not brought out in the Decision of
November 7, 2008, while the other portions suggesting labor law control were
highlighted. Specifically, the following portions of the affidavits were not brought
out:
1.a. I have no fixed wages or salary since my services are compensated by way of
commissions based on the computed premiums paid in full on the policies
obtained thereat;
1.b. I have no fixed working hours and employ my own method in soliticing
insurance at a time and place I see fit;
1.c. I have my own assistant and messenger who handle my daily work load;
1.d. I use my own facilities, tools, materials and supplies in carrying out my
business of selling insurance;
xxxx
6. I have my own staff that handles the day to day operations of my office;
7. My staff are my own employees and received salaries from me;
xxxx
9. My commission and incentives are all reported to the Bureau of Internal
Revenue (BIR) as income by a self-employed individual or professional with a ten
(10) percent creditable withholding tax. I also remit monthly for professionals.
These statements, read with the above comparative analysis of the Manulife and
the Grepalife cases, would have readily yielded the conclusion that no employer-
employee relationship existed between Manulife and Tongko.
Even de Dios’ letter is not determinative of control as it indicates the least amount
of intrusion into Tongko’s exercise of his role as manager in guiding the sales
agents. Strictly viewed, de Dios’ directives are merely operational guidelines on
how Tongko could align his operations with Manulife’s re-directed goal of being
a "big league player." The method is to expand coverage through the use of more
agents. This requirement for the recruitment of more agents is not a means-and-
method control as it relates, more than anything else, and is directly relevant, to
Manulife’s objective of expanded business operations through the use of a bigger
sales force whose members are all on a principal-agent relationship. Tongko was
not supervising regular full-time employees of Manulife engaged in the running
of the insurance business; Tongko was effectively guiding his corps of sales
agents, who are bound to Manulife through the same Agreement that he had with
Manulife, all the while sharing in these agents’ commissions through his
overrides. This is the lead agent concept mentioned above for want of a more
appropriate term, since the title of Branch Manager used by the parties is really
a misnomer given that what is involved is not a specific regular branch of the
company but a corps of non-employed agents, defined in terms of covered
territory, through which the company sells insurance. Tongko was not even
setting policies in the way a regular company manager does; company aims and
objectives were simply relayed to him with suggestions on how these objectives
can be reached through the expansion of a non-employee sales force.
What happened in Tongko’s case was the grant of an expanded sales agency role
that recognized him as leader amongst agents in an area that Manulife defined.
Under this legal situation, the only conclusion that can be made is that the absence
of evidence showing Manulife’s control over Tongko’s contractual duties points
to the absence of any employer-employee relationship between Tongko and
Manulife. In the context of the established evidence, Tongko remained an agent
all along; although his subsequent duties made him a lead agent with leadership
role, he was nevertheless only an agent whose basic contract yields no evidence of
means-and-manner control.
The the sufficiency of Tongko’s failure to comply with the guidelines of de Dios’
letter, as a ground for termination of Tongko’s agency, is a matter that the labor
tribunals cannot rule upon in the absence of an employer-employee relationship.
Jurisdiction over the matter belongs to the courts applying the laws of insurance,
agency and contracts.
RAMY GALLEGO, Petitioner, v. BAYER PHILIPPINES, INC., DANPIN
GUILLERMO, PRODUCT IMAGE MARKETING, INC., and EDGARDO
BERGONIA, Respondents.
[G.R. NO. 179807 : July 31, 2009]
FACTS:
In distinguishing between permissible job contracting and prohibited labor-only
contracting, the totality of the facts and the surrounding circumstances of the
case are to be considered, each case to be determined by its own facts, and all the
features of the relationship assessed.
Petitioner Ramy Gallego was contracted by Bayer Philippines Inc. (BAYER) as
crop protection technician. When Gallego’s employment came to a halt, BAYER
reemployed Gallego through Product Image and Marketing Services, Inc.
(PRODUCT IMAGE) performing the same tasks as that of a crop protection
technician.
After a few years, Gallego claims that he was directed to submit a resignation
latter, but he refused. He was later on transferred to Luzon; moreover, his co-
workers allegedly spread rumors there that he was not anymore connected with
BAYER. Believing himself to be illegally dismissed, he filed with the National
Labor Relations Commission (NLRC) claiming he is entitled for reinstatement,
backwages, and etc. BAYER denied that existence of an employer-employee
relationship between BAYER and Gallego since Gallego was actually under the
control and supervision of PRODUCT IMAGE, an independent contractor.
ISSUE:
Whether PRODUCT IMAGE is a labor-only contactor and BAYER should be
deemed petitioner's principal employer; and
Whether petitioner was illegally dismissed from his employment.
HELD:
Permissible job contracting or subcontracting refers to an arrangement whereby
a principal agrees to farm out with a contractor or subcontractor the
performance of a specific job, work, or service within a definite or predetermined
period, regardless of whether such job, work or, service is to be performed or
completed within or outside the premises of the principal. Under this
arrangement, the following conditions must be met: (a) the contractor carries on
a distinct and independent business and undertakes the contract work on his
account under his own responsibility according to his own manner and method,
free from the control and direction of his employer or principal in all matters
connected with the performance of his work except as to the results thereof; (b)
the contractor has substantial capital or investment; and (c) the agreement
between the principal and contractor or subcontractor assures the contractual
employees’ entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and social
welfare benefits.
In distinguishing between permissible job contracting and prohibited labor-only
contracting, the totality of the facts and the surrounding circumstances of the
case are to be considered, each case to be determined by its own facts, and all the
features of the relationship assessed.
In the case at bar, the Court finds substantial evidence to support the finding of
the NLRC that PRODUCT IMAGE is a legitimate job contractor.
The Court notes that PRODUCT IMAGE was issued by the Department of Labor
and Employment (DOLE) Certificate of Registration Numbered NCR-8-0602-
176. 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.Gallego’s bare assertions fail to rebut this presumption. Further, 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.
Independently of the DOLE’s Certification, among the circumstances that
establish the status of PRODUCT IMAGE as a legitimate job contractor are: (1)
PRODUCT IMAGE had, during the period in question, a contract with BAYER
for the promotion and marketing of BAYER products; (2) PRODUCT IMAGE
has an independent business and provides services nationwide to big companies
such as Ajinomoto Philippines and Procter and Gamble Corporation; and (3)
PRODUCT IMAGE’s total assets from 1998 to 2000 amounted to P405,639,
P559,897, and P644,728, respectively. PRODUCT IMAGE also posted a bond in
the amount of P100,000 to answer for any claim of its employees for unpaid wages
and other benefits that may arise out of the implementation of its contract with
BAYER.
PRODUCT IMAGE cannot thus be considered a labor-only contractor.
COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner,
vs.
RICKY E. DELA CRUZ, ROLANDO M. GUASIS, MANNY C. PUGAL,
RONNIE L. HERMO, ROLANDO C. SOMERO, JR., DIBSON D. DIOCARES,
and IAN B. ICHAPARE, Respondents.
G.R. No. 184977 December 7, 2009
FACTS:
Respondents Dela Cruz, Guasis, Pugal, Hermo, Somero, Jr., Diocares, and
Ichapare were route helpers assigned to work with petitioner Coca-Cola
Bottlers's trucks. Pursuant to their work, respondents go from the Coca- Cola
sales offices or plants to customer outlets such as sari-sari stores, restaurants,
groceries, supermarkets and the like. They likewise claim that they were hired
either directly by the petitioner or by its contractors, but they do not enjoy the
full remuneration, benefits and privileges granted to the petitioner’s regular sales
force. As a result, they filed to separate complaints for their regularization with
money claims against petitioner. They argued that the services they rendered
were necessary and desirable in the regular business of the petitioner. On the
other hand, petitioner Coca-Cola Bottlers contended that it did not have
employer-employee relationship with the respondents on the ground that it
entered into contracts of services with Peerless and Excellent Partners
Cooperative, Inc. which entitled the latter the right to select, hire, dismiss,
supervise, control and discipline and pay the salaries of all personnel they assign
to the petitioner. Respondents disclaimed the contention of the petitioner,
claiming that they worked under the control and supervision of the company’s
supervisors who prepared their work schedules and assignments and that
Peerless was in the nature of a labor-only contractor because of its insufficient
capital to provide services to petitioner.
LA: Dismissed the complaint for lack of jurisdiction after finding that the
respondents were employees of Peerless and not of Coca-Cola Bottlers.
NLRC: Affirmed LA's ruling.
CA: Reversed the previous decisions and ruled that Peerless was engaged in
labor-only contract based on the respondents’ assertions and the petitioner’s
admissions that Peerless simply supplied the company with manpower.
Furthermore, the Court found no proof in the records that Peerless met the
required capitalization and tools.
ISSUE:
1. Whether or not Peerless and Excellent Partners Cooperative, Inc. is a labor-
only contractor.
2. Whether or not the respondents are regular employees.
HELD:
1.The Court ruled in affirmative.
Labor-only contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job, work
or service for a principal, and any of the following elements are present: 1. The
contractor or subcontractor does not have sufficient 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, 2. The
contractor does not exercise the right to control over the performance of the work
of the contractual-employee.
By "right to control”, it pertains to the prerogative of a party to determine, not
only the end result sought to be achieved, but also the means and manner to be
used to achieve this end.
A key consideration in resolving whether either of the two elements of a labor-
only contractor is present in a given case is the contract between the company
and the purported contractors. However, the contract between the principal and
the contractor is not the final word on how the contracted workers relate to the
principal and the purported contractor; the relationships must be tested on the
basis of how they actually operate.
The facts of the case show that the respondents, acting as sales route helpers, were
only engaged in the marginal work of helping in the sale and distribution of
company products. They only provided the muscle work that sale and
distribution required and were thus necessarily under the company’s control and
supervision in doing these tasks. Also, respondents were not independently selling
and distributing company products, using their own equipment, means and
methods of selling and distribution. They only supplied the manpower that helped
the company in the handing of products for sale and distribution. Therefore,
Peerless and Excellent were mere labor-only contractors who had no sufficient
capitalization and equipment to undertake sales and distribution of softdrinks as
independent activities separate from the manufacture of softdrinks, and who had
no control and supervision over the contracted personnel.
2. The Court ruled in affirmative.
It found that respondents, for being engaged in component functions in the main
business of the company under the latter’s supervision and control, were regular
employees who are entitled to their respective claims.
COCA-COLA BOTTLERS PHILS., INC., Petitioner,
vs.
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, Respondents.
G.R. No. 179546 February 13, 2009
DOCTRINE: (Labor-only contracting)
Labor-only contracting is an arrangement wherein the contractor merely acts as
an agent in recruiting and supplying the principal employer with workers for the
purpose of circumventing labor law provisions setting down the rights of
employees.
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.
A finding by the appropriate authorities that a contractor is a “labor-only”
contractor establishes an employer-employee relationship between the principal
employer and the contractor’s employees and the former becomes solidarily
liable for all the rightful claims of the employees.
FACTS:
Agito, et al. are salesmen assigned at the Lagro Sales Office of Coca-Cola for a
number of years but were not regularized. Their employment was terminated
without just cause and due process. They filed complaints against Coca-Cola,
Interserve, Peerless Integrated Services, Inc. Better Builders, Inc., and Excellent
Partners, Inc. However, they failed to state a reason for filing complaints against
Interserve, Peerless, Better Builders and Excellent Partners.
Coca-Cola averred that Agito, et al. were employees of Interserve who were
tasked to perform contracted services in accordance with the provision of the
Contract of Services. The contract covering the period of April 1, 2002 to
September 30, 2002 constituted legitimate job contracting.
To prove that Interserve is an independent contractor, Coca-Cola presented the
following: (1) AOI of Interserve; (2) Certificate of Registration of Interserve with
BIR; (3) ITR with Audited Financial Statements of Interserve for 2001; and (4)
Certificate of Registration of Interserve as an independent contractor issued by
DOLE.
As a result, Coca-Cola asserted that Agito, et al. were employees of Interserve
since it was the latter which hired them, paid their wages and supervised their
work, as proven by: (1) PDFs are in the records of Interserve; (2) Contracts of
Temporary Employment with Interserve; and (3) payroll records of Interserve.
LA found for Coca-Cola and held that Interserve was a legitimate job contractor.
The complaints against Peerless, Better Building and Excellent Partners was
dismissed for failure to pursue the case.
On appeal, NLRC affirmed LA's decision.
CA reversed the NLRC decision and ruled that Interserve was a labor-only
contractor with insufficient capital and investments for the services which it was
contracted to perform. Additionally, CA determined that Coca-Cola had effective
control over the means and method of Agito, et al.'s 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.
Respondents' tasks were directly related and necessary to the main business of
Coca-Cola. Finally, certain provisions of the Contract of Service between Coca-
Cola and Interserve suggested that the latter's undertaking did not involve a
specific job but rather the supply of manpower.
ISSUE:
Whether or not Interserve is a legitimate job contractor
HELD:
Yes. A legitimate job contract, wherein an employer enters into a contract with a
job contractor for the performance of the formers work, is permitted by law.
Thus, the employer-employee relationship between the job contractor and his
employees is maintained. In legitimate job contracting, the law creates an
employer-employee relationship between the employer and the contractors
employees only for a limited purpose, i.e., to ensure that the employees are paid
their wages. The 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 employer is not responsible for any
claim made by the contractors employees.
On the other hand, labor-only contracting is an arrangement wherein the
contractor merely acts as an agent in recruiting and supplying the principal
employer with workers for the purpose of circumventing labor law provisions
setting down the rights of employees. It is not condoned by law.
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.
No substantial capital and no type of work indicated in the contract
In the present case, the Court clarifies found although Interserve has an
authorized capital stock amounting to P2,000,000.00, only P625,000.00 thereof
was paid up as of 31 December 2001. There is no absolute figure for what it
considers substantial capital for an independent job contractor, but it measures
the same against the type of work which the contractor is obligated to perform
for the principal. However, this is rendered impossible in this case since the
Contract between petitioner and Interserve does not even specify the work or the
project that needs to be performed or completed by the latter’s employees, and
uses the dubious phrase tasks and activities that are considered contractible
under existing laws and regulations.
The importance of identifying with particularity the work or task which
Interserve was supposed to accomplish for petitioner becomes even more evident,
considering that the Articles of Incorporation of Interserve states that its primary
purpose is to operate, conduct, and maintain the business of janitorial and allied
services.
As to substantial capital, the contractor, not the employee, has the burden of
proof that it has the substantial capital, investment, and tool to engage in job
contracting. Petitioner failed to submit evidence to establish that the service
vehicles and equipment of Interserve, valued at P510,000.00 and P200,000.00,
respectively, were sufficient to carry out its service contract with petitioner.
Absent such evidence, the Court will not presume that Interserve had sufficient
investment in service vehicles and equipment, especially since respondents
allegation that they were using equipment, such as forklifts and pallets belonging
to petitioner, to carry out their jobs was uncontroverted.
Lack of control
The lack of control of Interserve over the respondents can be gleaned from the
Contract of Services between Interserve (as the CONTRACTOR) and petitioner
(as the CLIENT).
The Court pointed out the following provisions in the contract to conclude that
Coca-Cola exercised control over respondents:
· Respondents should comply with CLIENT as well as CLIENTs
policies, rules and regulations.
· Respondents should subject themselves to on-the-spot searches by
petitioner or its duly authorized guards or security men on duty every time
the said personnel entered and left the premises of petitioner.
· Coca-Cola may demand the removal or replacement of any employee
in the guise of his or her inability to complete a project in time or to deliver
the desired result.
· Interserve would provide relievers and replacements in case of
absences of its personnel. (The Court commented that an independent job
contractor, who is answerable to the principal only for the results of a
certain work, job, or service need not guarantee to said principal the daily
attendance of the workers assigned to the latter.)
· 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
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.
With the finding that Interserve was engaged in prohibited labor-only
contracting, petitioner shall be deemed the true employer of respondents. As
regular employees of petitioner, respondents cannot be dismissed except for just
or authorized causes, none of which were alleged or proven to exist in this case,
the only defense of petitioner against the charge of illegal dismissal being that
respondents were not its employees. Records also failed to show that petitioner
afforded respondents the twin requirements of procedural due process, i.e., notice
and hearing, prior to their dismissal. Respondents were not served notices
informing them of the particular acts for which their dismissal was sought. Nor
were they required to give their side regarding the charges made against them.
Certainly, the respondents dismissal was not carried out in accordance with law
and, therefore, illegal.
REPUBLIC OF THE PHILIPPINES, represented by the NATIONAL PARKS
DEVELOPMENT COMMITTEE, petitioner,
vs.
THE HON. COURT OF APPEALS and THE NATIONAL PARKS
DEVELOPMENT SUPERVISORY ASSOCIATION & THEIR MEMBERS,
respondents.
G.R. No. 87676 December 20, 1989
FACTS:
National Parks Development Committee (NPDC) was originally created in 1963
under Executive Order No. 30, as the Executive Committee for the development
of Quezon Memorial, Luneta and other national parks. The Committee was
registered with the SEC as a non-stock and non-profit corporation.
However, in 1987, due to failure to comply with SEC requirements (i.e. to submit
General Information Sheet and Financial Statements from 1981 to 1987; to
register its Corporate Books; and to operate for a continuous period for at least
5 years since 1967) NPDC was attached to the Ministry of Tourism. Pursuant
thereto, Civil Service Commission notified NPDC that all appointments and other
personnel actions shall be submitted to the former.
The Rizal Park Supervisory Employees Association was organized, and it
affiliated with the Trade Union of the Philippines and Allied Service (TUPAS, for
brevity) under Certificate No. 1206. However, NPDC entered into a separate
CBA with NPDCEA (TUPAS Local Chapter No. 967), and NPDCSA (TUPAS
Chapter No. 1206) for a period of two (2) years. Pursuant thereto, these unions
staged a strike alleging unfair labor practices by NPDC.
Contention of the NPDC: The strike is illegal on ground that the strikers, being
government employees, the strikers have no right to strike, although they may
form a union.
Ruling of the Trial Court and CA: Complaint is dismissed for lack of jurisdiction,
to wit: (1) there exists an employer-employee relationship between NPDC and the
strikers; (2) the acts complained of falls under par 5, Art. 217, in relation to Art.
265 of the Labor Code. Hence, the case properly falls under the jurisdiction of
DOLE. On appeal, CA affirmed the decision of the trial court.
ISSUE:
Whether the petitioner, National Parks Development Committee (NPDC), is a
government agency, or a private corporation, for on this issue depends the right
of its employees to strike
HELD:
In Jesus P. Perlas, Jr. vs. People of the Philippines, G.R. Nos. 84637-39, August
2, 1989, we ruled that the NPDC is an agency of the government, not a
government-owned or controlled corporation, hence, the Sandiganbayan had
jurisdiction over its acting director who committed estafa. We held thus:
The National Parks Development Committee was created
originally as an Executive Committee on January 14,1963, for
the development of the Quezon Memorial, Luneta and other
national parks (Executive Order No. 30). It was later designated
as the National Parks Development Committee (NPDC) on
February 7, 1974 (E.O. No. 69). On January 9, 1966, Mrs.
Imelda R. Marcos and Teodoro F. Valencia were designated
Chairman and Vice- Chairman respectively (E.O. No. 3).
Despite an attempt to transfer it to the Bureau of Forest
Development, Department of Natural Resources, on December
1, 1975 (Letter of Implementation No. 39, issued pursuant to PD
No. 830, dated November 27, 1975), the NPDC has remained
under the Office of the President (E.O. No. 709, dated July 27,
1981).
Since 1977 to 1981, the annual appropriations decrees listed
NPDC as a regular government agency under the Office of the
President and allotments for its maintenance and operating
expenses were issued direct to NPDC (Exh. 10-A Perlas, Item
No. 2, 3).
Since NPDC is a government agency, its employees are covered by civil service
rules and regulations (Sec. 2, Article IX, 1987 Constitution). Its employees are
civil service employees (Sec. 14, Executive Order No. 180).
While NPDC employees are allowed under the 1987 Constitution to organize and
join unions of their choice, there is as yet no law permitting them to strike. In case
of a labor dispute between the employees and the government, Section 15 of
Executive Order No. 180 dated June 1, 1987 provides that the Public Sector
Labor- Management Council, not the Department of Labor and Employment,
shall hear the dispute. Clearly, the Court of Appeals and the lower court erred in
holding that the labor dispute between the NPDC and the members of the NPDSA
is cognizable by the Department of Labor and Employment.
COVERAGE OF LABOR CODE
EXCLUDED EMPLOYMENT
MANILA PUBLIC SCHOOL TEACHERS ASSOCIATION, FIDEL
FABABIER MERLIN ANONUEVO, MINDA GALANG and other teacher-
members so numerous similarly situated, petitioners-appellants,
vs.
THE HON. PERFECTO LAGUIO JR., in his capacity as Presiding Judge of the
Regional Trial Court of Manila, Branch 18, HON. ISIDRO CARIÑO, in his
capacity as Secretary of Education, Culture and Sports and the HON.
ERLINDA LOLARGA in her capacity as Manila City Schools Superintendent,
respondents-appellees.
G.R. No. 95445 August 6, 1991
FACTS:
The series of events that touched off these cases started with the so-called "mass
action" undertaken by some 800 public school teachers, among them members of
the petitioning associations in both cases, on September 17, 1990 to "dramatize
and highlight"1 the teachers' plight resulting from the alleged failure of the public
authorities to act upon grievances that had time and again been brought to the
latter's attention.
September 17, 1990 fell on a Monday, which was also a regular school day. There
is no question that the some 800 teachers who joined the mass action did not
conduct their classes on that day; instead, as alleged in the petition in G.R. No.
95590,4 they converged at the Liwasang Bonifacio in the morning whence they
proceeded to the National Office of the Department of Education, Culture and
Sport (DECS) for a whole-day assembly. At about 1:00 o'clock p.m., three
representatives of the group were allowed to see the respondent Secretary of
Education who "brushed aside their grievances," warned them that they would
lose their jobs for going on illegal and unauthorized mass leave. Upon leaving said
respondent's presence, they were handed an order directing all participants in
the mass action to return to work in 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. 5
Those directives notwithstanding, the mass actions continued into the week, with
more teachers joining in the days that followed. In its issue of September 19, 1990,
the newspaper Manila Standard reported that the day previous, the respondent
Secretary of Education had relieved 292 teachers who did not return to their
classes. The next day, however, another daily, Newsday, reported that the
Secretary had revoked its dismissal order and instead placed 56 of the 292
teachers under preventive suspension, despite which the protesters' numbers had
swelled to 4,000.6
On the record, what did happen was that, based on reports submitted by the
principals of the various public schools in Metro Manila, the respondent
Secretary of Education had filed motu proprio administrative complaints against
the teachers who had taken part in the mass actions and defied the return-to-
work order on assorted charges like grave misconduct, gross neglect of duty,
gross violation of the Civil Service Law, absence without official leave, etc., and
placed them under 90-day preventive suspension. The respondents were served
copies of the charge sheets and given five (5) days to submit answer or
explanation. Later, on October 8, 1990, the respondent Secretary constituted an
investigating committee of four (4) to determine and take the appropriate course
of action on the formal charges and designated the special prosecutors on detail
with the DECS to handle their prosecution during the formal hearings. 7
ISSUE:
Whether or not the petitioners have the right to strike.
HELD:
None.
The Court's Resolution of December 18, 1990, supra, denying the petitioners' plea
for restoration of the status quo ante and to restrain/enjoin further suspensions
of, and the initiation or continuation of, administrative proceedings against the
teachers involved, is based on the following postulates:
(1) the undenied indeed, the pleaded and admitted fact that about 800
teachers, among them the individual petitioners and other unnamed but
"similarly situated" members of the petitioning associations in both
cases, unauthorizedly absented themselves from their classes on a
regular school day, September 17, 1990, in order to participate in a
"mass action" to dramatize their grievances concerning, in the main, the
alleged failure of the public authorities, either to implement at all or to
implement in a just and correct manner, certain laws and measures
intended to benefit them materially;
(2) the fact, too, that in the days that followed, more mass actions for the
same purpose were undertaken, notwithstanding a return-to-work order
issued by the respondent Secretary of Education; more teachers joined
the so-called "peaceful assemblies" on September 18, 1990 and the
number rising to 4,000 on September 19, 1990; 17
(3) that from the pleaded and admitted facts, these "mass actions" were
to all intents and purposes a strike; they constituted a concerted and
unauthorized stoppage of, or absence from, work which it was the
teachers' duty to perform, undertaken for essentially economic reasons;
(4) that this court had already definitively ruled that employees in the
public (civil) service, unlike those in the private sector, do not have the
right to strike, although guaranteed the right to self-organization, 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;18
(5) that upon the foregoing premises, it was prima facie lawful and within
his statutory authority for the respondent Secretary of Education to take
the actions complained of, to wit: issue a return-to-work 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;19
The Court has not since been presented with any consideration of law or
established fact that would impair the validity of these postulates or preclude
continued reliance thereon for the purpose of resolving the present petitions on
their merits.
HON. ISIDRO CARIÑO, 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, petitioners,
vs.
THE COMMISSION ON HUMAN RIGHTS, GRACIANO BUDOY, JULIETA
BABARAN, ELSA IBABAO, HELEN LUPO, AMPARO GONZALES, LUZ
DEL CASTILLO, ELSA REYES and APOLINARIO ESBER, respondents.
G.R. No. 96681 December 2, 1991
FACTS:
On September 17, 1990, a Monday and a class day, some 800 public school
teachers, among them members of the Manila Public School Teachers
Association (MPSTA) and Alliance of Concerned Teachers (ACT) undertook
what they described as "mass concerted actions" to "dramatize and highlight"
their plight resulting from the alleged failure of the public authorities to act upon
grievances that had time and again been brought to the latter's attention.
According to them they had decided to undertake said "mass concerted actions"
after the protest rally staged at the DECS premises on September 14, 1990
without disrupting classes as a last call for the government to negotiate the
granting of demands had elicited no response from the Secretary of Education.
The "mass actions" consisted in staying away from their classes, converging at
the Liwasang Bonifacio, gathering in peaceable assemblies, etc. Through their
representatives, the teachers participating in the mass actions were served with
an order of the Secretary of Education to return to work in 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. Those directives notwithstanding, the mass actions continued into
the week, with more teachers joining in the days that followed.
ISSUE:
Where a particular subject-matter is placed by law within the jurisdiction of a
court or other government agency or official for purposes of trial and
adjudgment, may the Commission on Human Rights take cognizance of the same
subject-matter for the same purposes of hearing and adjudication?
HELD:
The Court declares the Commission on Human Rights to have no such power;
and that it was not meant by the fundamental law to be another court or quasi-
judicial agency in this country, or duplicate much less take over the functions of
the latter.
The most that may be conceded to the Commission in the way of adjudicative
power is that it may investigate, i.e., receive evidence and make findings of fact as
regards claimed human rights violations involving civil and political rights. But
fact finding is not adjudication, and cannot be likened to the judicial function of
a court of justice, or even a quasi-judicial agency or official. The function of
receiving evidence and ascertaining therefrom the facts of a controversy is not a
judicial function, properly speaking. To be considered such, the faculty of
receiving evidence and making factual conclusions in a controversy must be
accompanied by the authority of applying the law to those factual conclusions to
the end that the controversy may be decided or determined authoritatively, finally
and definitively, subject to such appeals or modes of review as may be provided by
law. 21 This function, to repeat, the Commission does not have. 22
DULCE M. ABANILLA, in her capacity as General Manager of the
Metropolitan Cebu Water District, Cebu City, Petitioners, v. COMMISSION
ON AUDIT, its CHAIRMAN CELSO D. GANGAN, COMMISSIONERS
RAUL C. FLORES and EMMANUEL M. DALMAN, Respondents and
REGIONAL DIRECTOR OF COA REGION VII, METROPOLITAN CEBU
WATER DISTRICT EMPLOYEES UNION, Petitioner-in-Intervention.
[G.R. NO. 142347 : August 25, 2005]
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)
Board Resolution No. 054-83 dated May 23, 1983 granting hospitalization
privileges; (2) Board Resolution Nos. 091-83 and 0203-85 dated October 21,
1983 and November 20, 1985, respectively, allowing the monetization of leave
credits; (3) Board Resolution No. 0161-86 dated November 29, 1986 granting
Christmas bonus; and (4) Board Resolution No. 083-88 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.
· On January 1, 1992, the parties renewed their CBA.
· On November 13, 1995, an audit team headed by Bernardita T. Jabines
of the COA Regional Office No. VII at Cebu City, one of the herein
respondents, conducted an audit of the accounts and transactions of MCWD.
· 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 hospitalization benefits, mid-year bonus, 13th
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, et al. vs. CSC and COA, shall continue up
to the respective expiry dates of the benefits or CBA whichever comes earlier.
COA= Denied petitioners appeal. COA cited this Courts ruling in Davao City
Water District vs. Civil Service Commission 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.Respondent COA
then held that there is no question that the CBA was concluded after the decision
in the Davao case was promulgated. As far as the CBA is concerned the critical
moment is the date of the promulgation itself. Any transaction (CBA) concluded
after this date in violation of existing laws and regulations applicable to
government entities is void and of no effect. It conferred no demandable right, it
created no enforceable obligation. MR= Denied.
ISSUE:
WON COA acted with GADALEJ in disallowing the benefits and privileges and
contravened the LC provisions on non-diminution of benefits. (NO.)
HELD:
The petition is bereft of merit. In light of this Courts ruling in Davao City Water
District that 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.
In Alliance of Government Workers vs. Minister of Labor and Employment, this
Court held:
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 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.
In Querubin vs. Regional Cluster Director, Legal and Adjudication Office, COA
Regional Office VI, Pavia, Iloilo City, citing De Jesus vs. Commission on Audit, this
Court held:
Considering, however, that all the parties here acted in good faith, we
cannot countenance the refund of subject incentive benefits for the year
1992, which amounts the petitioners have already received. Indeed, no
indicia of bad faith can be detected under the attendant facts and
circumstances. The officials and chiefs of offices concerned disbursed
such incentive benefits in the honest belief that the amounts given were
due to the recipients and the latter accept the same with gratitude,
confident that they richly deserve such benefits.
x x x. Petitioners here received the additional allowances and bonuses in
good faith under the honest belief that LWUA Board Resolution No. 313
authorized such payment. At the time petitioners received the additional
allowances and bonuses, the Court had not yet decided Baybay Water
District. Petitioners had no knowledge that such payment was without
legal basis. Thus, being in good faith, petitioners need not refund the
allowances and bonuses they received but disallowed by the COA.
SC= Petition is DENIED. COA 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.
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.
TECSON vs.
GLAXO WELLCOME PHILIPPINES, INC.
G.R. No. 162994 September 17, 2004
TINGA, J.
Facts: Petitioner, Pedro Tecson was hired by respondent Glaxo as medical
representative, after Tecson had undergone training and orientation. He signed a
contract of employment which stipulates, among others, that he agrees to study and
abide by existing company rules; to disclose to management any existing or future
relationship by consanguinity or affinity with co-employees or employees of
competing drug companies and should management find that such relationship poses
a possible conflict of interest, to resign from the company. If management perceives a
conflict of interest or a potential conflict between such relationship and the employee’s
employment with the company, the management and the employee will explore the
possibility of a "transfer to another department in a non-counterchecking position" or
preparation for employment outside the company after six months.
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-
Camarines Norte sales area. He subsequently entered into a romantic relationship with
Bettsy, branch coordinator of Astra Pharmaceuticals in Albay, a competitor of Glaxo.
She supervised the district managers and medical representatives of her company and
prepared marketing strategies for Astra in that area. The two married even with the
several reminders given by the District Manager to Tecson. In January 1999, Tecson’s
superiors informed him that his marriage to Bettsy gave rise to a conflict of interest,
and advised that one of them should resign from their jobs. Despite several reminders
and time allowances, Tecson was not able to resolve the issue on conflicting interest.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan
del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request was
denied. This situation eventually led to his alleged constructive dismissal.
Petitioners contend that Glaxo’s policy against employees marrying employees of
competitor companies violates the equal protection clause of the Constitution because
it creates invalid distinctions among employees on account only of marriage. They
claim that the policy restricts the employees’ right to marry.
Glaxo asserts that the policy does not prohibit marriage per se but only proscribes
existing or future relationships with employees of competitor companies, and is
therefore not violative of the equal protection clause. It maintains that considering the
nature of its business, the prohibition is based on valid grounds.
This is a petition for review on certiorari assailing CA’s decision and resolution.
Issue:
Is Glaxo’s policy prohibiting its employees from marrying an employee of a
competitor company valid?
Held:
Yes. No reversible error can be ascribed to the Court of Appeals when it ruled that
Glaxo’s policy prohibiting an employee from having a relationship with an employee
of a competitor company is a valid exercise of management prerogative. Glaxo has a
right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors, especially so that it and
Astra are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxo’s employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying
down the assailed company policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No
less than the Constitution recognizes the right of enterprises to adopt and enforce such
a policy to protect its right to reasonable returns on investments and to expansion and
growth. Indeed, while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that every labor dispute will
be decided in favor of the workers. The law also recognizes that management has
rights, which are also entitled to respect and enforcement in the interest of fair play.
Constitutional Issue Ruling: The challenged company policy does not violate the
equal protection clause of the Constitution as petitioners erroneously suggest. It is a
settled principle that the commands of the equal protection clause are addressed only
to the state or those acting under color of its authority.
2.8 Terms and conditions upon hiring; non-compete clauses
WILLIAM OLLENDORFF vs. IRA ABRAHAMSON
G.R. No. 13228 September 13, 1918
Fisher, J.
Facts: The record discloses that Ollendorf is and for a long time past has been engaged
in the city of Manila and elsewhere in the Philippines in the business of manufacturing
ladies' embroidered underwear for export. Ollendorf imports the material from which
this underwear is made and adopts decorative designs which are embroidered upon it
by Filipino needle workers from patterns selected and supplied by him. Most of the
embroidery work is done in the homes of the workers. The embroiderers employed by
plaintiff are under contract to work for plaintiff exclusively.
On September 1915, plaintiff and defendant entered into a contract. Under the terms
of this, agreement defendant entered the employ of plaintiff and worked for him until
April 1916, when defendant, on account of ill health, left plaintiff's employ and went
to the United States. While in plaintiff's employ defendant had access to all parts of
plaintiff's establishment, and had full opportunity to acquaint himself with plaintiff's
business methods and business connections. The duties performed by him were such
as to make it necessary that he should have this knowledge of plaintiff s business.
Defendant had a general knowledge of the Philippine embroidery business before his
employment by plaintiff, having been engaged in similar work for several years.
Some months after his departure, defendant returned to Manila as the manager of the
Philippine Underwear Company, a corporation. This corporation does not maintain a
factory in the Philippine Islands, but sends material and embroidery designs from New
York to its local representative here who employs Filipino needle workers to
embroider the designs and make up the garments in their homes. The only difference
between plaintiff's business and that of the firm by which the defendant is employed,
is the method of doing the finishing work — the manufacture of the embroidered
material into finished garments.
Shortly after defendant's return to Manila and the commencement by him of the
discharge of the duties of his position as local manager of the Philippine Embroidery
Company, plaintiff commenced this action, the principal purpose of which is to
prevent, by injunction, any further breach of that part of defendant's contract of
employment by plaintiff, by which he agreed that he would not "enter into or engage
himself directly or indirectly . . . in a similar or competitive business to that of
(plaintiff) anywhere within the Philippine Islands for a period of five years . . ." from
the date of the agreement.
Issue: Whether or not the said contract is valid
Ruling: The contract is a valid one. The only limitation upon the freedom of
contractual agreement is that the pacts established shall not be contrary to "law, morals
or public order." (Civil Code, art. 1255.)
Public welfare is first considered, and if it be not involved, and the restraint upon one
party is not greater than protection to the other party requires, the contract may be
sustained. The question is whether, under the particular circumstances of the case and
the nature of the particular contract involved in it the contract is, or is not,
unreasonable.
The Courts adopt the modern rule that the validity of restraints upon trade or
employment is to be determined by the intrinsic reasonableness of the restriction in
each case, rather than by any fixed rule, and that such restrictions may be upheld when
not contrary to the public welfare and not greater than is necessary to afford a fair
and reasonable protection to the party in whose favor it is imposed.
A business enterprise may and often does depend for its success upon the owner's
relations with other dealers, his skill in establishing favorable connections, his methods
of buying and selling — a multitude of details, none vital if considered alone, but
which in the aggregate constitute the sum total of the advantages which are the result
of the experience or individual aptitude and ability of the man or men by whom the
business has been built up. Failure or success may depend upon the possession of these
intangible but all-important assets, and it is natural that their possessor should seek to
keep them from falling into the hands of his competitors.
It is with this object in view that such restrictions as that now under consideration are
written into contracts of employment. Their purpose is the protection of the employer,
and if they do not go beyond what is reasonably necessary to effectuate this purpose
they should be upheld. We are of the opinion, and so hold, that in the light of the
established facts the restraint imposed upon defendant by his contract is not
unreasonable.
RED LINE TRANSPORTATION CO., INC vs. BACHRACH MOTOR
COMPANY, INC., and RURAL TRANSIT COMPANY, INC.
G.R. No. L-45173 April 27, 1939
LAUREL, J.
Facts: This is a petition for review of an order of the Public Service Commission
granting to the Rural Transit Company, Ltd., a certificate of public convenience to
operate a transportation service between Ilagan in the Province of Isabela and
Tuguegarao in the Province of Cagayan, and additional trips in its existing express
service between Manila Tuguegarao.
On June 4, 1932, Rural Transit filed an application for certification of a new service
between Tuguegarao and Ilagan with the Public Company Service Commission (PSC),
since the present service is not sufficient.
Rural Transit further stated that it is a holder of a certificate of public convenience to
operate a passenger bus service between Manila and Tuguegarao.
Red Line opposed said application, arguing that they already hold a certificate of
public convenience for Tuguegarao and Ilagan, and is rendering adequate service.
They also argued that granting Rural Transit’s application would constitute a ruinous
competition over said route.
On Dec. 21, 1932, Public Service Commission approved Rural Transit’s application,
with the condition that "all the other terms and conditions of the various certificates of
public convenience of the herein applicant and herein incorporated are made a part
hereof."
A motion for rehearing and reconsideration was filed by Red Line since Rural Transit
has a pending application before the Court of First Instance for voluntary dissolution
of the corporation. A motion for postponement was filed by Rural Transit as verified
by M. Olsen who swears "that he was the secretary of the Rural Transit Company, Ltd.
During the hearing before the Public Service Commission, the petition for dissolution
and the CFI’s decision decreeing the dissolution of Rural Transit were admitted
without objection
At the trial of this case before the Public Service Commission an issue was raised as
to who was the real party in interest making the application, whether the Rural Transit
Company, Ltd., as appeared on the face of the application, or the Bachrach Motor
Company, Inc., using name of the Rural Transit Company, Ltd., as a trade name
However, PSC granted Rural Transit’s application for certificate of public
convenience and ordered that a certificate be issued on its name
PSC relied on a Resolution in case No. 23217, authorizing Bachrach Motor to continue
using Rural Transit’s name as its tradename in all its applications and petitions to be
filed before the PSC. Said resolution was given a retroactive effect as of the date of
filing of the application or April 30, 1930
Issue: Can the Public Service Commission authorize a corporation to assume the name
of another corporation as a trade name?
Ruling: Under these circumstances, we are of the opinion that the Court of First
Instance of Manila is without authority to enjoin the operation of the appellants.
Primarily, the Public Service Commission is the entity invested with authority to
authorize the operation of public services and issue certificates of public convenience
therefor. The determination of that question cannot be reviewed by a Court of First
Instance, especially where, as in this case, this court had affirmed the order of the
Public Service Commission upon a proper petition for review. To permit the Court of
First Instance to enjoin the operator here is to restrain the operator from doing what
the Public Service Commission and this court have authorized to be done. While the
injunction here is against the operator, the result is the same, for what cannot be done
directly cannot be done by indirection. There is no showing here that the appellants
were operating in violation of the conditions of their certificate of public convenience.
If the injunction is, as held by the lower court, to be justified on the ground that the
operation by the appellants is in violation of the negative agreement contained in the
contract Exhibit A, it should be observed that the contract was entered into between
Rural Transit Company, Inc., predecessor in interest of Bachrach Motor Company,
Inc., and the Zuraeks; that negative agreement does not appear to have been expressly
sanctioned by the Public Service Commission; and finally, notwithstanding the
negative agreement, the operation by the appellants appears to have been authorized,
as already stated, by the Public Service Commission and, on appeal, the action taken
by the commission was affirmed by this court. Upon the other hand, we do not
countenance with favor the agreement sought to be enforced in so far as its effect is to
deprive the Public Service Commission of its power to fix routes and schedules of
public utilities independently of contractual stipulations by and between public
operators.
The law concerning contracts which tend to restrain business or trade has gone through
a long series of changes from time to time with the changing condition of trade and
commerce. But regardless of limitations as to time and place spoken of in various
decisions as proper test for validity of contracts of this nature, and whatever may have
been the development of the rule, it is settled that public welfare or public interest is
the primordial consideration, and this we have emphasized in Ollendorff vs.
Abrahamson (38 Phil., 585); Del Castillo vs. Richmond (45 Phil., 679), and Ferrazzini
vs. Gsell (34 Phil., 697). The test of validity is whether under the particular
circumstances of the case and considering the nature of the particular contract
involved, public interest and welfare are not involved and the restraint is not only
reasonably necessary for the protection of the contracting parties but will not affect
public interest or service. The agreement here sought to be enforced is virtually a
division of territory between two operators: the Rural Transit Company, Inc., to
operate on territory south of the municipality of Ilagan, Province of Isabela, and biding
itself not to operate in any of the territory covered by the routes of the Interprovincial
Transportation Company; and the latter company to operate north of the same
municipality and province, and imposing upon itself a similar obligation not to operate
in any territory covered by the routes of the Rural Transit Company, Inc. It is true that
the agreement does not bind other persons than the parties to the agreement, but if the
contract is to be sustained, then the control over them by the Public Service
Commission is pro tanto impaired even to the detriment of public convenience and
interest. It should be observed that public service companies are more strictly limited
than others in entering into contracts in restraint of the free flow of trade, commerce
and communication because of their duty to give equal service to the public. They can
make no contracts inimical to that duty. As a general proposition, all contracts and
agreements, of every kind and character, made and entered into by those engaged in
an employment or business impressed with a public character, which tend to prevent
competition between those engaged in like employment, are opposed to the public
policy and are therefore unlawful. All agreements and contracts tending to create
monopolies and prevent proper competition are by the common law illegal and void.
ROQUE D.A. DATOR v. UNIVERSITY OF SANTO TOMAS, REV. FR.
TAMERLANE LANA and REV. FR. RODEL ALIGAN
G.R. NO. 169464 : August 31, 2006
YNARES-SANTIAGO, J.
Facts: Petitioner Dator was hired by respondent UST in June 1983 as Instructor I of
the Institute of Religion with a maximum teaching load of 24 units. On December 15,
1995, petitioner was also hired as Graft Investigation Officer II with the Office of the
Ombudsman but he failed to disclose such other employment to respondents, who
discovered the same only during the first semester of School Year 2000-2001. Thus,
on June 16, 2000, petitioner was informed that his teaching load would be reduced to
12 hours per week, pursuant to Section 5, Article III of the UST Faculty Code which
states that “faculty members who have a full time outside employment other than
teaching may not be given a teaching load in excess of 12 hours per week.”
Petitioner asked for reconsideration of the reduction in his teaching load which was
granted. He was given an additional load of three teaching hours. On June 15, 2001,
petitioner again requested for an additional load of three units but his request was
denied by respondent Rev. Fr. Aligan. Petitioner filed a Complaint-Affidavit to the
Chairperson of the Grievance Committee, Dr. Gil Gamila, President of the University
of Sto. Tomas Faculty Union, but the complaint was dismissed. Petitioner appealed
to respondent Rev. Fr. Tamerlane Lana, Rector of respondent UST but the appeal was
denied.
Petitioner thus filed a complaint for Illegal Reduction of Teaching Load and Illegal
Change of Employment Status, Damages, Unpaid Benefits and Attorney’s Fees and
illegal constructive dismissal before the Labor Arbiter on February 19, 2002.
Petitioner claimed that his arbitrary demotion from full-time to part-time faculty
member violated the provisions of the CBA, as well as his right to security of
tenure. Likewise, he argued that the UST Faculty Code which respondents relied upon
to reduce his teaching load has been superseded by the CBA, which enumerates
grounds for the reduction of teaching load
Section 5. Reduction of Teaching Load. – The teaching load of a faculty member
may be reduced for any of the following reasons:
a) A reduction in the number of classes or sections in the faculty, college, school
or department concerned, provided that, in such case a compensating load in other
faculties, colleges, school or department shall, as far as possible, be made available to
the faculty member concerned;
b) Non-offering of his/her specialized subject along his/her expertise in any given
semester or school year;
c) By way of sanction for inefficiency duly proven after due process and in
accordance with standards or criteria in force in the UNIVERSITY;
d) Failing Health of the faculty member duly certified by a Board of three (3)
physicians teaching in the Faculty of Medicine and Surgery of the University chosen
as follows: one by the faculty member concerned, one by the UNIVERSITY and one
by the FACULTY UNION.
Petitioner contends that he is a tenured faculty member thus he is entitled to the same
teaching load as he had in the previous semesters; that he was not accorded due process
when respondents unilaterally reduced his teaching load; that Section 5, Article III of
the Faculty Code has no application in this case; and that respondents acted in bad
faith.
On the other hand, respondents maintained that petitioner’s teaching load was reduced
in accordance with Sections 5 and 6 of Article III of the Faculty Code which provide:
SEC. 5 – Faculty members who have a full time outside employment other
than teaching may not be given a teaching load in excess of 12 hours per week.
Respondents maintain that petitioner’s teaching load was reduced in accordance with
Section 5, Article III of the Faculty Code; that they did not violate petitioner’s right to
due process and that he was given an opportunity to be heard; that petitioner falsified
at least 13 written statements where he deliberately failed to mention his full time
employment with the Office of the Ombudsman.
Issue: Whether or not the reduction of petitioner’s teaching load was justified.
Ruling: The SC held that UST committed no illegality when it ordered the reduction
of Dator’s load from twenty-four (24) units to twelve (12) units per semester. While
the CBA provides grounds for reduction of teaching load, the question of whether a
faculty member is considered full-time or part-time is addressed by the Faculty Code
which provides that where the full-time faculty member is at the same time working
as a full-time employee elsewhere, the faculty member is considered part-time and a
12-hour teaching load limitation is imposed.
There is no dispute that petitioner was holding a full-time position with the Office of
the Ombudsman while working as a faculty member in UST. Accordingly, Section 5,
Article III of the Faculty Code applies.
The UST Faculty Code continues to exist and to apply to UST faculty members, but
must give way if its terms are in conflict with what the CBA provides. The standard
in determining the applicable is whether a conflict exists between the provisions the
parties cited.
We see no conflict between the provisions the parties respectively cited as these
provisions apply to different situations. Article IV of the CBA are the rules on the
teaching loads that faculty members may normally expect to carry; it provides as well
the grounds or reasons for giving a tenured faculty member less than his normal
teaching load. These provisions do not address the question of when a faculty member
is to be considered a full-time or a part-time faculty member. Whether a faculty
member should only be on part-time basis is governed by Section 5 Article III of the
UST Faculty Code we have quoted above. Thus, the provisions Dator cited regarding
deloading and the authorized grounds therefore do not apply because what is involved
is a change of status from full-time faculty member to a part-time one due to the faculty
member’s full-time employment elsewhere.
In contrast with the “authorized” causes for deloading under the CBA, the change of
status from full-time faculty member with a 24-unit load to a part-time one with a 12-
unit load in effect involves a “disqualification” to be a full-time faculty member
because of the very practical reason that he or she is already a full-time employee
elsewhere. In the present case, this “disqualification” is compounded by Dator’s
repeated misrepresentations about his employment status outside UST. The present
case therefore is closer to being a disqualification situation coupled with a disciplinary
cause, rather than one involving a purely “authorized” deloading under the CBA.
Petitioner argues that he was under no obligation to disclose his employment with the
Office of the Ombudsman. He claims that the only information required of him
pertained to 1) other colleges where he is teaching, 2) teaching loads outside the
university, and 3) a business firm he is employed with. He argues that the Office of
the Ombudsman, being a government agency, does not fall under any of the foregoing
categories.
Section 6, Article III of the Faculty Code states that all faculty members must submit
each semester a statement of the number of teaching hours per week to be rendered in
other institutions and/or daily hours of work or employment, inside or outside the
University. The rationale behind the rule is unmistakable. As pointed out by
respondents, there is a need to maintain UST’s quality of education as well as to ensure
that government service is not jeopardized.
Petitioner admitted in his letter-request dated July 15, 2001 that “with the
implementation of a CHED Circular, the teaching load assignment of government
employees was limited to only 12 units per semester so as not to prejudice the interests
of both the government and the University and/or college concerned.” It is clear
therefore that petitioner was aware of the limitation.
Moreover, we find that petitioner was not denied due process. It is settled that due
process is simply an opportunity to be heard. In this case, respondents informed
petitioner that his teaching load would be reduced as he was working full-time with
the Office of the Ombudsman. Petitioner asked for reconsideration twice. His first
request was granted and he was given an additional load of three units for School Year
2000-2001. For School Year 2001-2002, petitioner again requested an additional load
of three units but was denied.
All told, petitioner’s complaint cannot be sustained. An employee’s bare allegations
of constructive dismissal, when uncorroborated by the evidence on record, cannot be
given credence. A constructive dismissal occurs when the law deems that there is
effectively a termination of employment or “a quitting because continued employment
is rendered impossible, unreasonable or unlikely, such as in an offer involving a
demotion in rank and a diminution in pay.” Where, as in the present case, the employer
was fully justified in giving a faculty member a lesser load because the latter is
disqualified under applicable rules from handling a full load, and where the faculty
member committed repeated misrepresentations in his bid to maintain his full load, we
cannot see any legal or factual basis to conclude that the faculty member had been
constructively dismissed.
Petition is denied.
JACKQUI R. MORENO v. SAN SEBASTIAN COLLEGE-RECOLETOS,
MANILA
G.R. NO. 175283 : March 28, 2008
Chico-Nazario, J.
Facts: San Sebastian College (SSC-R) employed Jackqui R. Moreno as a teaching
fellow. Moreno was first appointed as a full-time college faculty member. Then,
Moreno became a member of the permanent college faculty. She was also offered the
chairmanship of the Business Finance and Accountancy Department of her college.
The SSC-R HR conducted a formal investigation regarding Moreno’s unauthorized
external teaching engagements and HR found out that Moreno indeed had
unauthorized teaching assignments at the Centro Escolar University and at the College
of the Holy Spirit, Manila.
Moreno received a MEMO from the Dean of her college, requiring her to explain the
reports regarding her unauthorized teaching engagements. The said activities allegedly
violated Section 2.2 of Article II of SSC-R’s Faculty Manual. Moreno admitted her
failure to secure any written permission before she taught in other schools. Moreno
further stated that it was never her intention to jeopardize her work in SSC-R and that
she merely wanted to improve her family’s poor financial conditions.
A Special Grievance Committee was then formed in order to investigate and make
recommendations regarding Moreno’s case. The grievance committee required
Moreno to answer the following series of questions concerning her case:
1. Did you teach in other schools w/o first obtaining the consent of your superiors in
SSC-R?
2. Did you ever go beyond the maximum limit for an outside load?
3. Did you ever truthfully disclose completely to your superiors at SSC-R any outside
Load?
4. Do you deny teaching in CEU?
5. Do you deny teaching at Holy Spirit?
Moreno admitted she did not formally disclose her teaching loads at the College of the
Holy Spirit and at the Centro Escolar University; that the Dean of her college was
aware of her external teaching loads; that she went beyond the maximum limit for an
outside load; that she did not deny teaching part-time in the aforementioned schools;
and that she did not wish to resign because she felt she deserved a second chance.
The grievance committee issued its resolution which unanimously found that she
violated the prohibition against a full-time faculty having an unauthorized external
teaching load. The majority of the grievance committee members recommended
Moreno’s dismissal from employment in accordance with the school manual, but Dean
Espejo dissented and called only for a suspension for one semester.
Moreno was terminated in her work. Moreno instituted with the NLRC a complaint
for illegal termination against SSC-R.
• Labor Arbiter Veneranda C. Guerrero dismissed Moreno’s complaint.
• NLRC reversed the rulings of the Labor Arbiter.
• CA annulled the decision of the NLRC.
SSC-R contends that Moreno’s dismissal from employment was valid because she
knowingly violated the prohibition in the Section 2.2 of Art. II of the SSC-R Faculty
Manual and in employment contract. In so doing, Moreno allegedly committed serious
misconduct and willful disobedience against the school, and thereby submitted herself
to the corresponding penalty which is termination for cause.
Issue: Whether or not the dismissal of Moreno was proper and legal
Ruling: No. The misconduct of Moreno falls below the required level of gravity that
would warrant dismissal as a penalty.
Under Art. 282(a) of the Labor Code, willful disobedience of the employer’s lawful
orders as a just cause for termination of employment envisages the concurrence of at
least two requisites: (1) the employee’s assailed conduct must have been willful or
intentional, the willfulness being characterized by a "wrongful and perverse attitude";
and (2) the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he has been engaged to discharge.
SSC-R failed to adduce any concrete evidence to prove that Moreno indeed harbored
perverse or corrupt motivations in violating the school policy. Even if dismissal for
cause is the prescribed penalty for the misconduct committed, it is disproportionate to
the offense.SSC-R clearly had the discretion to impose a lighter penalty of suspension
according to Moreno’s contract of employment. However, the Court does not
depreciate the misconduct committed by Moreno. Indeed, SSC-R has adequate reasons
to impose sanctions on her. But this should not be dismissal from employment.
Because of the serious implications of this penalty, "our Labor Code decrees that an
employee cannot be dismissed, except for the most serious causes."
The Court deems it appropriate to impose the penalty of suspension of 1 year on
Moreno. Petition is granted.
* Misconduct is defined as improper or wrong conduct. It is the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character and implies wrongful intent and not mere error of judgment. The misconduct
to be serious within the meaning of the act must be of such a grave and aggravated
character and not merely trivial or unimportant. Such misconduct, however serious,
must nevertheless be in connection with the work of the employee to constitute just
cause from his separation.
AVON COSMETICS, INCORPORATED and JOSE MARIE FRANCO vs.
LETICIA H. LUNA
G.R. No. 153674 December 20, 2006
Chico-Nazario, J.
Facts: Leticia Luna started working at Beautifont, Inc., as a supervisor. Later on,
Avon, acquired and took over the management and operations of Beautifont, Inc.
Nonetheless, respondent Luna continued working for said successor company. Aside
from her work as a supervisor, Luna also acted as a make-up artist of petitioner Avon’s
Theatrical Promotion’s Group, for which she received a per diem for each theatrical
performance. Avon and Luna entered into an agreement, entitled Supervisor’s
Agreement, whereby said parties contracted in the manner quoted below: The
Company agrees: x x x x
1) To allow the Supervisor to purchase at wholesale the products of the Company. x x
x x The Supervisor agrees:
1) To purchase products from the Company exclusively for
resale and to be responsible for obtaining all permits and licenses required to sell the
products on retail. x x x x The Company and the Supervisor mutually agree: x x x
2) That this agreement in no way makes the Supervisor an
employee or agent of the Company, therefore, the Supervisor has no authority to bind
the Company in any contracts with other parties.
3) That the Supervisor is an independent retailer/dealer insofar as the
Company is concerned, and shall have the sole discretion to determine where and how
products purchased from the Company will be sold. However, the Supervisor shall not
sell such products to stores, supermarkets or to any entity or person who sells things
at a fixed place of business.
4) That this agreement supersedes any agreement/s between the Company
and the Supervisor.
5) That the Supervisor shall sell or offer to sell, display or promote only and
exclusively products sold by the Company.
6) Either party may terminate this agreement at will, with or without cause,
at any time upon notice to the other.
Then, Luna was invited by a former Avon employee who was then currently a Sales
Manager of Sandré Philippines, Inc., a domestic corporation engaged in direct selling
of vitamins and other food supplements, to sell said products. Respondent Luna
apparently accepted the invitation as she then became a Group Franchise Director of
Sandré Philippines, Inc. concurrently with being a Group Supervisor of petitioner
Avon. As Group Franchise Director, respondent Luna began selling and/or promoting
Sandré products to other Avon employees and friends. Luna requested a law firm to
render a legal opinion as to the legal consequence of the Supervisor’s Agreement she
executed with Avon. In response, a lawyer on the firm opined that the said agreement
was contrary to law and public policy. Thereafter, Avon, through its President and
General Manager, Jose Mari Franco, notified Luna of the termination or cancellation
of her Supervisor’s Agreement with Avon. Accordingly, Luna filed a complaint for
damages against Avon. RTC - ruled in favour of plaintiff. CA - affirmed in toto
Issue: WON the Supervisor’s Agreement executed between Avon and Luna is
contrary to law and public policy.
Ruling: No. EXCLUSIVITY CLAUSE
In business parlance, this is commonly termed as the "exclusivity clause." This is
defined as agreements which prohibit the obligor from engaging in "business" in
competition with the obligee. This exclusivity clause is more often the subject of
critical scrutiny when it is perceived to collide with the Constitutional proscription
against "reasonable restraint of trade or occupation." First off, restraint of trade or
occupation embraces acts, contracts, agreements or combinations which restrict
competition or obstruct due course of trade. Now to the basics. From the wordings of
the Constitution, truly then, what is brought about to lay the test on whether a given
agreement constitutes an unlawful machination or combination in restraint of trade is
whether under the particular circumstances of the case and the nature of the particular
contract involved, such contract is, or is not, against public interest.
Thus, restrictions upon trade may be upheld when not contrary to public welfare and
not greater than is necessary to afford a fair and reasonable protection to the party in
whose favor it is imposed. Even contracts which prohibit an employee from
engaging in business in competition with the employer are not necessarily void for
being in restraint of trade. In sum, contracts requiring exclusivity are not per se void.
Each contract must be viewed vis-à-vis all the circumstances surrounding such
agreement in deciding whether a restrictive practice should be prohibited as imposing
an unreasonable restraint on competition.
2.9 Imposition of weight requirement
ARMANDO G. YRASUEGUI vs. PHILIPPINE AIRLINES, INC.
G.R. No. 168081 October 17, 2008
Reyes, R.T., J.
Facts: This case portrays the peculiar story of an international flight steward who was
dismissed because of his failure to adhere to the weight standards of the airline
company.
The proper weight for a man of his height and body structure is from 147 to 166
pounds, the ideal weight being 166 pounds, as mandated by the Cabin and Crew
Administration Manual of PAL.
In 1984, the weight problem started, which prompted PAL to send him to an extended
vacation until November 1985. He was allowed to return to work once he lost all the
excess weight. But the problem recurred. He again went on leave without pay from
October 17, 1988 to February 1989.

Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner
remained overweight. On January 3, 1990, he was informed of the PAL decision for
him to remain grounded until such time that he satisfactorily complies with the weight
standards. Again, he was directed to report every two weeks for weight checks, which
he failed to comply with.
On April 17, 1990, petitioner was formally warned that a repeated refusal to report for
weight check would be dealt with accordingly. He was given another set of weight
check dates, which he did not report to.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative
Charge for violation of company standards on weight requirements. Petitioner insists
that he is being discriminated as those similarly situated were not treated the same.
On June 15, 1993, petitioner was formally informed by PAL that due to his inability
to attain his ideal weight, “and considering the utmost leniency” extended to him
“which spanned a period covering a total of almost five (5) years,” his services were
considered terminated “effective immediately.”
LABOR ARBITER: held that the weight standards of PAL are reasonable in view of
the nature of the job of petitioner. However, the weight standards need not be complied
with under pain of dismissal since his weight did not hamper the performance of his
duties.
NLRC affirmed.
CA: the weight standards of PAL are reasonable. Thus, petitioner was legally
dismissed because he repeatedly failed to meet the prescribed weight standards. It is
obvious that the issue of discrimination was only invoked by petitioner for purposes
of escaping the result of his dismissal for being overweight.
Issue: WON he was validly dismissed.
Ruling: YES
A reading of the weight standards of PAL would lead to no other conclusion than that
they constitute a continuing qualification of an employee in order to keep the job. The
dismissal of the employee would thus fall under Article 282(e) of the Labor Code.
In the case at bar, the evidence on record militates against petitioner’s claims that
obesity is a disease. That he was able to reduce his weight from 1984 to 1992 clearly
shows that it is possible for him to lose weight given the proper attitude, determination,
and self-discipline. Indeed, during the clarificatory hearing on December 8, 1992,
petitioner himself claimed that “[t]he issue is could I bring my weight down to ideal
weight which is 172, then the answer is yes. I can do it now.”
Petitioner has only himself to blame. He could have easily availed the assistance of the
company physician, per the advice of PAL.
In fine, We hold that 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 that justifies his dismissal from the service. His obesity may not be unintended,
but is nonetheless voluntary. As the CA correctly puts it, “[v]oluntariness basically
means that the just cause is solely attributable to the employee without any external
force influencing or controlling his actions. This element runs 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).”
NOTES:
The dismissal of petitioner can be predicated on the bona fide occupational
qualification defense. 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. The
qualification is called a bona fide occupational qualification (BFOQ). 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 business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew who are on board the aircraft.
The weight standards of PAL should be viewed as imposing strict norms of discipline
upon its employees.
The primary objective of PAL in the imposition of the weight standards for cabin crew
is flight safety. 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
serious misconduct. Neither is it reflective of his moral character.
2.10 Permissible reduction of working hours
PHILIPPINE GRAPHIC ARTS INC., IGMIDIO R. SILVERIO AND CARLOS
CABAL v. NATIONAL LABOR RELATIONS COMMISSION, ROSALINA M.
PULPULAAN AND EMELITA SALONGA
G.R. No. L-80737. September 29, 1988
GUTIERREZ, JR., J.
Facts: The petitioner corporation was forced by economic circumstances to require its
workers to go on mandatory vacation leave with pay but the same was charged against
their respective earned leaves. As a result, the private respondents filed complaints for
unfair labor practice and discrimination.
The Labor Arbiter dismissed the complaint for lack of merit.
Private respondents filed a partial appeal with the NLRC questioning the dismissal of
the complaint and contending that the resultant forced vacation leaves were actually
without pay.
The NLRC affirmed the Labor Arbiter’s decision with modification. According to the
NLRC, the vacation leave was visited with arbitrariness, thus, a refund of the amount
equivalent to the earned leave must be made.
Hence, the petition for certiorari was filed by the petitioner corporation.
Issue: Whether or not the forced vacation leave without pay is ULP and if not, whether
or not it was tainted with arbitrariness.
Ruling: The Supreme Court ruled that there was no ULP. The corporation instituted
the forced leave due to economic crisis which the private respondents do not even
question. Therefore, there is no ULP.
The imposition of forced leave is not tainted with arbitrariness as this was not exercised
for the purpose of circumventing the rights of employees under special laws or valid
agreements. It was a valid exercise of management prerogative. It was a more human
solution instead of a retrenchment and reduction of personnel. In fact, it was only
temporary and it was taken only after notice and consultations with workers and
supervisors.
The decision of the NLRC was set aside and the decision of the Labor Arbiter was
reinstated.
2.11 Reorganization as an exercise of management prerogatives
JONATHAN V. MORALES vs. HARBOUR CENTRE PORT TERMINAL, INC.
G.R. No. 174208 January 25, 2012
Perez, J.
Facts: Petitioner was hired by respondent Harbour Centre Port Terminal, Inc. (HCPTI)
as an Accountant and Acting Finance Officer, with a monthly salary of P18,000.
Morales was later on promoted to Division Manager of the Accounting Department,
for which he was compensated a monthly salary of P33,700.00, plus allowances
. Subsequent to HCPTI’s transfer to its new offices at Vitas, Tondo, Manila Morales
received an inter-office memorandum reassigning him to Operations Cost Accounting,
tasked with the duty of “monitoring and evaluating all consumables requests, gears
and equipment” related to the corporation’s operations and of interacting with its sub-
contractor, Bulk Fleet Marine Corporation. Morales wrote Singson, protesting that his
reassignment was a clear demotion since the position to which he was transferred was
not even included in HCPTI’s plantilla. In response to Morales’ grievance Singson
issued an inter-office memorandum to the effect that “transfer of employees is a
management prerogative” and that HCPTI had “the right and responsibility to find the
perfect balance between the skills and abilities of employees to the needs of the
business. For the whole of the ensuing month Morales was absent from work and/or
tardy. Singson issued to Morales a memorandum denominated as a First Warning
reminding Morales that, as an employee of HCPTI, he was subject to its rules and
regulations and could be disciplinarily dealt with pursuant to its Code of Conduct. In
view of the absences Morales continued to incur, HCPTI issued a Second
Warning and a Notice to Report for Work and Final Warning. In the meantime,
Morales filed a complaint against HCPTI, Filart and Singson, for constructive
dismissal. Respondent filed their position paper, arguing that Morales abandoned his
employment and was not constructively dismissed.
Issue: WON petitioner was constructively dismissed.
Ruling: Constructive dismissal exists where there is cessation of work because
"continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank or a diminution in pay and other benefits. In cases of a
transfer of an employee, the rule is settled that the employer is charged with the burden
of proving that its conduct and action are for valid and legitimate grounds such as
genuine business necessity and that the transfer is not unreasonable, inconvenient or
prejudicial to the employee. If the employer cannot overcome this burden of proof, the
employee’s transfer shall be tantamount to unlawful constructive dismissal.
Petitioner was constructively dismissed. He was already occupying the position of
Division Manager at HCPTI’s Accounting Department and as a consequence of his
promotion to said position. That the reassignment was a demotion is evident from
Morales’ new duties which, far from being managerial in nature, were very simply and
vaguely described as inclusive of “monitoring and evaluating all consumables
requests, gears and equipments related to [HCPTI’s] operations” as well as “close
interaction with its sub-contractor Bulk Fleet Marine Corporation. Morales’ demotion
is evident from the fact that his reassignment entailed a transfer from a managerial
position to one which was not even included in the corporation’s plantilla.
While ordinarily management prerogative is not interfered with, it is also not absolute
and is subject to limitations imposed by law, collective bargaining agreement, and
general principles of fair play and justice. Thus, an employer may transfer or assign
employees from one office or area of operation to another, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and the action
is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. Respondent however failed to justify
the demotion of petitioner on the ground that it was reorganizing its business structure,
this was evidenced by the fact that Morales was able to prove that HCPTI’s existing
plantilla did not include an Operations Cost Accounting Department and/or an
Operations Cost Accountant. As the party belatedly seeking to justify the reassignment
due to the supposed reorganization of its corporate structure, HCPTI, in contrast, did
not even bother to show that it had implemented a corporate reorganization and/or
approved a new plantilla of positions which included the one to which Morales was
being transferred. On the allegation of abandonment on the part of petitioner as a just
and valid ground for dismissal, at any rate, abandonment requires the deliberate,
unjustified refusal of the employee to resume his employment, without any intention
of returning. Since an employee like Morales who takes steps to protest his dismissal
cannot logically be said to have abandoned his work, it is a settled doctrine that the
filing of a complaint for illegal dismissal is inconsistent with abandonment of
employment.
3. POLICIES AS TO EMPLOYEE CLASSIFICATION/STATUS
National Federation of Labor v. NLRC
GR No. 103586
Facts:
1. Wage orders 3, 4, 5 & 6 were implemented for a year which effectively increased
the statutory minimum wages of workers. In the private respondent's company
(Franklin Baker Corp.) the wage rates of the regular employees and casuals were such
that there wasa positive differential between 2 in the amount of P4.56. After Wage
Order No. 5, this differential is not zero. As a result, grievance meetings were held
between the parties. It resulted to the following action on the part of the employer: a)
regularization of casual employees, b) increase in the wages of the regular employees,
and the c) grant of across the board increase of P2 to all the regular employees.
2. The company experienced output slowdown resulting to the dismissal of 205
employees. The petitioner union went on strike and demand the rectification of
thewage distortion. The NLRC in its decision found the existence of a wage distortion
and ordered the respondent company to increase wage by P1.00. However, the NLRC
Fifth division held (after an MR) that the wage distortion only existed for 15 days and
has ceased.
Issue: W/N it is within management prerogative or discretion to implement a
newclassification of its employees
RULING: Yes. It is a decision that lies outside the concept of 'wage distortion.' It is a
decision that the company must make either in conjuction with employee negotiation.
It is not therefore within the power of the NLRC to impose unilaterally anew scheme
for the classification of employees under the guise of rectifying a wage distortion when
none has been established either by CBA or by management decision.
The court held that wage increases given by employers either unilaterally or as a result
of collective bargaining negotiations should be validated as an action on the part of the
employer to correct the wage distortion caused by the implementation of the wage
orders. Moreover, the regularization of the casual employees with the increases in the
wages of the regulars made the issue on wage distortion academic.
Petitioner NFL's principal contention that the wage distortion persisted with respect to
the "old" regular employees and the "newly regularized" employees, is realistically a
claim or demand that the classification of "regular" employees be broken down into a
sub-classification of "new regulars" and "old regulars." A basic problem with this
contention is that, per the record of this case and during the period of time here
relevant, there was in fact no pre-existing sub-classification of regular employees into
"new regulars" and "old regulars" (i.e., on the basis of seniority or longevity) in the
Company. It follows that, as pointed out by the Solicitor-General, no wage distortion
within the meaning of Wage Orders Nos. 3 through 6 (and of Article 124 of the Labor
Code) continued beyond the "regularization" of the casual employees on
21 June 1984. It may be — though here again the record is silent — that the Company
had some other sub-grouping of regular employees on the basis, for instance, of the
kind of functions discharged by employees (e.g., rank and file; supervisory; middle
management; senior management; highly technical, etc.).
The basic point which needs to be stressed is that whether or not a new or additional
scheme of classification of employees for compensation purposes should be
established by the Company (and the legitimacy or viability of the bases of distinction
there embodied) is properly a matter for management judgment and discretion, and
ultimately, perhaps, a subject matter for bargaining negotiations between employer
and employees. It is assuredly something that falls outside the concept of "wage
distortion." The Wage Orders and Article 124 as amended do not require the
establishment of new classifications or sub-classifications by the employer. The NLRC
is not authorized unilaterally to impose, directly or indirectly, under the guise of
rectifying a "wage distortion," upon an employer a new scheme of classification of
employees where none has been established either by management decision or by
collective bargaining.
We conclude that petitioner NFL has not shown any grave abuse of discretion
amounting to lack of excess of jurisdiction on the part of the NLRC in rendering its
decision (through its Fifth Division) dated 16 December 1991.
Pier 8 Arrastre & Stevedoring Services, Inc. vs Boclot
G.R. No. 173849, September 28, 2007
Facts: Petitioner Pier 8 Arrastre and Stevedoring Services, Inc. (PASSI) is a domestic
corporation engaged in the business of providing arrastre and stevedoring services[5]
at Pier 8 in the Manila North Harbor. PASSI has been rendering arrastre and
stevedoring services at the port area since 1974 and employs stevedores who assist in
the loading and unloading of cargoes to and from the vessels. Petitioner Eliodoro C.
Cruz is its Vice-President and General Manager. Respondent Jeff B. Boclot was hired
by PASSI to perform the functions of a stevedore starting 20 September 1999. The
facts show that respondent rendered actual services to PASSI during the following
periods:
Period Duration
September - December 1999 (4 months) 21 days
January - April 2000 (4 months) 20 days
March - December 2001 (10 months) 85 days
January - December 2002 (12 months) 70.5 days
January - June 2003 (6 months) 32 days
Total 36 months 228.5 days
On 15 April 2000, the Philippine Ports Authority (PPA) seized the facilities and took
over the operations of PASSI through its Special Takeover Unit, absorbing PASSI
workers as well as their relievers. By virtue of a Decision dated 9 January 2001 of the
Court of Appeals, petitioners were able to regain control of their arrastre and
stevedoring operations at Pier 8 on 12 March 2001. On 9 May 2003, respondent filed
a Complaint with the Labor Arbiter of the NLRC, claiming regularization; payment of
service incentive leave and 13th month pays; moral, exemplary and actual damages;
and attorney’s fees. Respondent alleged that he was hired by PASSI in October
1999 and was issued company ID No. 304, a PPA Pass and SSS documents. In fact,
respondent contended that he became a regular employee by April 2000, since it was
his sixth continuous month in service in PASSI’s regular course of business. He
argued on the basis of Articles 280[9] and 281 of the Labor Code. He maintains that
under paragraph 2 of Article 280, he should be deemed a regular employee having
rendered at least one year of service with the company. According to respondent, he
remained a casual employee from the time he was first hired to perform the services
of a stevedore. Thus, respondent claimed he was denied the rights and privileges of a
regular employee, including those granted under the Collective Bargaining Agreement
(CBA) such as wage increase; medical, dental and hospitalization benefits; vacation
and sick leaves; uniforms, Christmas gifts, productivity bonus, accident insurance,
special separation pays, and others.
In the instant petition, petitioners are vehemently denying that respondent has become
PASSI regular employee. Petitioners insist that respondent was hired as a mere
stevedore and, thus, could not become a regular stevedore. Petitioners presented a list
of the days when respondent’s services as stevedore were engaged, to support its
claim that respondent is a reliever. Petitioners aver that the employment of the
stevedores is governed by a system of rotation. Based on this system of rotation, the
work available to reliever stevedores is dependent on the actual stevedoring and
arrastre requirements at a current given time. Petitioners posit that respondent, as a
reliever stevedore, is a mere extra worker whose work is dependent on the absence of
regular stevedores during any given shift. During rotation proper as petitioners term
it, all regular employees are first called and given work before any reliever is assigned.
Petitioners assert that while the regular stevedores work an average of 4 days a week
(or 16 days a month), respondent performed services for a total of 228.5 days (or only
for an average of 6.34 days a month) from September 1999 to June 2003. In defense
of the Court of Appeals ruling grounded on Articles 280 and 281 of the Labor Code,
petitioners maintain that the foregoing provisions are inapplicable on the postulation
that respondent is neither a probationary nor a casual employee. For the same reasons,
petitioners argue that Article XXV of the CBA cannot be used to support respondents’
contention that he is a regular employee since the CBA provision he invokes refers to
all incumbent probationary or casual employees and workers in the company and not
to respondent who is neither a casual nor a probationary employee.
Ruling: De Leon v. National Labor Relations Commission succinctly explains the
delineation of the foregoing employee classification, to wit:
The primary standard, therefore, of determining a regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The test is whether the former
is usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the performance is
not continuous or merely intermittent, the law deems the repeated and continuing need
for its performance as sufficient evidence of the necessity if not indispensability of
that activity to the business. Hence, the employment is also considered regular, but
only with respect to such activity and while such activity exists. (Emphasis supplied.)
PASSI is engaged in providing stevedoring and arrastre services in the port area in
Manila. Stevedoring, dock and arrastre operations include, but are not limited to, the
opening and closing of a vessel’s hatches; discharging of cargoes from ship to
truck or dock, lighters and barges, and vice-versa; movement of cargoes inside vessels,
warehouses, terminals and docks; and other related work. In line with this, petitioners
hire stevedores who assist in the loading and unloading of cargoes to and from the
vessels. Petitioners concede that whenever respondent worked as a reliever stevedore
due to the absence of a regular stevedore, he performed tasks that are usually necessary
and desirable to their business. Petitioners, however, contend that this in itself does
not make him a regular stevedore, postulating that the hiring of respondent as a reliever
is akin to a situation in which a worker goes on vacation leave, sick leave, maternity
leave or paternity leave; and the employer is constrained to hire another worker from
outside the establishment to ensure the smooth flow of its operations.
Based on the circumstances of the instant case, this Court agrees. It takes judicial
notice that it is an industry practice in port services to hire reliever stevedores in order
to ensure smooth-flowing 24-hour stevedoring and arrastre operations in the port
area. No doubt, serving as a stevedore, respondent performs tasks necessary or
desirable to the usual business of petitioners. However, it should be deemed part of
the nature of his work that he can only work as a stevedore in the absence of the
employee regularly employed for the very same function. Bearing in mind that
respondent performed services from September 1999 until June 2003 for a period of
only 228.5 days in 36 months, or roughly an average of 6.34 days a month; while a
regular stevedore working for petitioners, on the other hand, renders service for an
average of 16 days a month, demonstrates that respondents employment is subject to
the availability of work, depending on the absences of the regular stevedores.
Moreover, respondent does not contest that he was well aware that he would only be
given work when there are absent or unavailable employees. Respondent also does not
allege, nor is there any showing, that he was disallowed or prevented from offering his
services to other cargo handlers in the other piers at the North Harbor other than
petitioners. As aforestated, the situation of respondent is akin to that of a seasonal or
project or term employee, albeit on a daily basis.
Anent petitioners’ contention that respondent is neither a probationary nor a casual
employee, this Court again refers to Article 280 of the Labor Code. The second
paragraph thereof stipulates in unequivocal terms that all other employees who do not
fall under the definitions in the first paragraph of regular, project and seasonal
employees, are deemed casual employees.[25] Not qualifying under any of the kinds
of employees covered by the first paragraph of Article 280 of the Labor Code, then
respondent is a casual employee under the second paragraph of the same provision.
The same provision, however, provides that a casual employee can be considered as
regular employee if said casual employee has rendered at least one year of service
regardless of the fact that such service may be continuous or broken. Section 3, Rule
V, Book II of the Implementing Rules and Regulations of the Labor Code clearly
defines the term at least one year of service to mean service within 12 months, whether
continuous or broken, reckoned from the date the employee started working, including
authorized absences and paid regular holidays, unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment
contract, is less than 12 months, in which case said period shall be considered one year.
If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity, if not
indispensability, of that activity to the business of the employer. Applying the
foregoing, respondent, who has performed actual stevedoring services for petitioners
only for an accumulated period of 228.5 days does not fall under the classification of
a casual turned regular employee after rendering at least one year of service, whether
continuous or intermittent.
NONETHELESS, this Court still finds respondent to be a regular employee on the
basis of pertinent provisions under the CBA between PASSI and its Workers union,
which was effective from 4 March 1998 to 3 March 2003:
The Company agrees to convert to regular status all incumbent probationary or casual
employees and workers in the Company who have served the Company for an
accumulated service term of employment of not less than six (6) months from his
original date of hiring.
The probationary period for all future workers or employees shall be the following:
(a) All skilled workers such as crane operator, mechanic, carpenter, winchman,
signalman and checkers shall become regular after three (3) months continuous
employment;
(b) All semi-skilled personnel shall become regular after four (4) months of continuous
employment;
(c) All non-skilled personnel shall be regular after six (6) months continuous
employment.
Petitioners were crucified on this argument raised by respondent. The union which
negotiated the existing CBA is the sole and exclusive bargaining representative of all
the stevedores, dock workers, gang bosses, rank and file employees working at Pier 8,
and its offices. The NLRC ruled that respondents’ reliance on the CBA to show that
he has become a regular employee is misplaced for the reason that the CBA applies
only to regular workers of the company. Respondent assents that he is not a member
of the union, as he was not recognized by PASSI as its regular employee, but this Court
notes that PASSI adopts a union-shop agreement, culling from Article II of the CBA
which stipulates:
The Union and the Company (PASSI) hereby agree to adopt the Union Shop as a
condition of employment to the position (sic) covered by this Agreement. Under a
union-shop agreement, although nonmembers may be hired, an employee is required
to become a union member after a certain period, in order to retain employment. This
requirement applies to present and future employees.[36] The same article of the CBA
stipulates that employment in PASSI cannot be obtained without prior membership in
the union. Apropos, applying the foregoing provisions of the CBA, respondent should
be considered a regular employee after six months of accumulated service. It is clearly
stipulated therein that petitioners shall agree to convert to regular status all incumbent
probationary or casual employees and workers in PASSI who have served PASSI for
an accumulated service term of employment of not less than six months from the
original date of hiring. Having rendered 228.5 days, or eight months of service to
petitioners since 1999, then respondent is entitled to regularization by virtue of the said
CBA provisions.
In light of the foregoing, petitioners must accord respondent the status of a regular
employee.
GOYA, INC. v. GOYA, INC. EMPLOYEES UNION-FFW
G.R. No. 170054 : January 21, 2013
Peralta, J.
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 or not the act of hiring contractual employees is a valid exercise of
management prerogative
Ruling: 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
Company’s 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 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.
Respondent company did not make known the reasonable standards under which
he will qualify as a regular employee at the time of his engagement. Hence, he was
deemed to have been hired from day one as a regular employee.
ZOSIMO CIELO vs. THE HONORABLE NATIONAL LABOR RELATIONS
COMMISSION, HENRY LEI and/or HENRY LEI TRUCKING
Facts:
Petitioner is a truck driver who claims he was illegally dismissed by the private
respondent, the Henry Lei Trucking Company. Petitioner were made to sign an
agreement with the private respondent that they don’t have an employer-employee
relationship but in an affidavit that petitioner is being forced to sign states that he
received his salary and allowanced from the private respondent. Upon refusal to sign,
private respondent dismissed petitioner on the basis of disrespect and insubordination.
Issue:
Whether or not petitioner was legally dismissed
Held:
No. The private respondent's argument that the petitioner could at least be considered
on probation basis only and therefore separable at will is self-defeating. The Labor
Code clearly provides as follows: Art. 281. Probationary employment. — Probationary
employment shall not exceed six (6) months from the date the employee started
working, unless it is covered by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged on a probationary basis
may be terminated for a just cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer to the employee
at the time of his engagement. An employee who is allowed to work after a
probationary period shall be considered a regular employee. There is no question that
the petitioner was not engaged as an apprentice, being already an experienced truck
driver when he began working for the private respondent. Neither has it been shown
that he was informed at the time of his employment of the reasonable standards under
which he could qualify as a regular employee. It is plain that the petitioner was hired
at the outset as a regular employee. At any rate, even assuming that the original
employment was probationary, the Labor Arbiter found that the petitioner had
completed more than six month's service with the trucking company and so had
acquired the status of a regular employee at the time of his dismissal.
While security of tenure is a constitutionally guaranteed right of the employees,
it does not, however, mean perpetual employment for the employee because our
law, while affording protection to the employee, does not authorize oppression or
destruction of an employer.
PHILIPPINE VILLAGE HOTEL vs. NATIONAL LABOR RELATIONS
COMMISSION (SECOND DIVISION) AND TUPAS LOCAL CHAPTER NO.
1362, JUANITO ACUIN, MAMERTA MANGUBAT, RAUL SONON, ELGAR
PEMIS, ORLANDO PARAGUISON, FERDINAND VELASCO, MIKE
ASTULERO, MAGNO DECALSO, NENITA OROSEA, JOSE TIMING,
ANTONIO MANALILI, RODELIO QUERIA and REYNALDO SANTOS
Facts:
Private respondents were employees of petitioner. However, on May 19, 1986,
petitioner had to close and totally discontinue its operations due to serious financial
and business reverses resulting in the termination of the services of its employees.
Thereafter, the Philippine Village Hotel Employees and Workers Union filed against
petitioner a complaint for separation pay, unfair labor practice and illegal lock-out.
Tthe Labor Arbiter issued and Order finding the losses suffered by petitioner to be
actual, genuine and of such magnitude as to validly terminate the services of private
respondents but directed petitioner "to give priority to the complainants (herein private
respondents) in [the] hiring of personnel should they resume their business operations
in the future.”
The NLRC affirmed the validity of the closure of petitioner but ordered petitioner to
pay private respondent separation pay at the rate of 1/2 month pay every year of
service. However, private respondents have yet to receive their separation pay.
Petitioner decided to have a one (1) month dry-run operation to ascertain the feasibility
of resuming its business operations. Petitioner hired casual workers, including private
respondents, for a one (1) month period, or from February 1, 1989 to March 1, 1989,
as evidenced by the latter's Contract of Employment. After evaluating the individual
performance of all the employees and upon the lapse of the contractual one-month
period or on March 2, 1989, petitioner terminated the services of private respondents.
Private respondents and Tupas Local Chapter No. 1362 filed a complaint against
petitioner for illegal dismissal and unfair labor practice with the NLRC-NCR
Arbitration Branch which was dismissed but was reversed by the NLRC on appeal
which ordered to reinstate respondents to their former or substantially equivalent
positions without loss of seniority rights plus full backwages from the time they were
actually dismissed.
Issue:
Whether or not respondents are regular employees
Held:
In the instant case, private respondents were validly terminated by the petitioner when
the latter had to close its business due to financial losses. Following the directives of
the NLRC to give priority in hiring private respondents should it resume its business,
petitioner hired private respondents during their one (1) month dry-run operation.
However, this does not mean that private respondents were deemed to have continued
their regular employment status, which they had enjoyed before their aforementioned
termination due to petitioner's financial losses.
It should be borne in mind that when complainants were first terminated as a result of
the company's cessation from operation in May, 1986 the employer-employee
relationship between the parties herein was totally and completely severed. Such being
the case, respondent acted well within its discretion when in rehiring the complainants
(herein private respondents) it made them casual and for a specific period. The
complainants are no better than the new employees of respondent (petitioner) for the
matter of what status or designation to be given them exclusively rests in the discretion
of management.
The prior employment which was terminated cannot be joined or tacked to the new
employment for purposes of security of tenure. While it is true that security of tenure
is a constitutionally guaranteed right of the employees, it does not, however, mean
perpetual employment for the employee because our law, while affording protection
to the employee, does not authorize oppression or destruction of an employer. It is well
settled that the employer has the right or is at liberty to choose who will be hired and
who will be denied employment.
An employee cannot be dismissed except for cause as provided by law (i.e., Labor
Code, Arts. 282-283) and only after due notice and hearing. If an employee is
dismissed without cause, he has a right to be reinstated without loss of seniority
rights and other privileges and to be paid full backwages, inclusive of allowances
and other benefits. If he is dismissed without notice and hearing, although for a
just cause, he will be entitled to the payment of indemnity.
GEORGE ANDERSON vs. NLRC
Facts:
Petitioner was recruited by respondent Pacific Business Ventures, Inc. to work as
foreman of the Fiberglass Division of the Bitar Metal Fabrication Factory in Damman,
Kingdom of Saudi Arabia. After 9 months on the job, petitioner was told that his
services were being terminated. On March 30, 1989, petitioner filed with the POEA a
complaint for illegal dismissal, recovery of benefits and recruitment violations. POEA
found petitioner to have been illegally dismissed and ordered private respondents to
pay the balance of petitioner’s salary for two years and salary differential. Private
respondents appeal to the NLRC stating that during the 3-month probationary period
of Mr. Anderson’s employment contract, Mr. Anderson’s performance as Supervisor
was miserable in that he had no leadership ability and that he relied too much on his
subordinates in the performance of his work in the fiber glass section. NLRC set aside
the decision of the POEA and dismissed petitioner’s complaint.
Issue:
Whether or not petitioner was illegally dismissed
Held:
Yes. An employee cannot be dismissed except for cause as provided by law (i.e., Labor
Code, Arts. 282-283) and only after due notice and hearing. If an employee is
dismissed without cause, he has a right to be reinstated without loss of seniority rights
and other privileges and to be paid full backwages, inclusive of allowances and other
benefits. If he is dismissed without notice and hearing, although for a just cause, he
will be entitled to the payment of indemnity.
If the contract is for a fixed term and the employee is dismissed without just cause, he
is entitled to the payment of his salaries corresponding to the unexpired portion of his
contract. In this case, as petitioner’s contract was for two years and his dismissal was
not for a just cause, he is entitled to be paid his salary for 15 months corresponding the
balance of the contract. The grant to him of a termination pay under his employment
contract may be considered indemnity for his dismissal without prior notice and
hearing.

Article 280 of the Labor Code does not proscribe or prohibit an employment
contract with a fixed period. Even if the duties of the employee consist of activities
necessary or desirable in the usual business of the employer, the parties are free
to agree on a fixed period of time for the performance of such activities. There is
nothing essentially contradictory between a definite period of employment and
the nature of the employee’s duties
AMA COMPUTER COLLEGE, PARAÑAQUE vs. ROLANDO A. AUSTRIA
Facts
Petitioner is an educational institution duly organized under the laws of the
Philippines. Respondent was hired by AMA on probationary employment as a college
dean on April 24, 2000. On August 22, 2000, respondent’s appointment as dean was
confirmed by AMA’s Officer-in-Charge (OIC), Academic Affairs. Sometime in
August 2000, respondent was charged with violating AMA’s Employees’ Conduct and
Discipline provided in its Orientation Handbook, as follows: 1) leaking of test
questions; 2) failure to monitor general requirements vital to the operations of the
company; and 3) gross inefficiency.
Eventually, on September 29, 2000, respondent was informed of his dismissal.
Respondent filed a Complaint for Illegal Dismissal, Illegal Suspension, Non-Payment
of Salary and 13th Month Pay with prayer for Damages and Attorney's Fees against
AMA and the rest of the petitioners. Trial on the merits ensued.
The Labor Arbiter's Ruling
The Labor Arbiter held that respondent substantially refuted the charges of gross
inefficiency, incompetence, and leaking of test questions filed against him. But since
respondent can no longer be reinstated beyond September 17, 2000 as his designation
as college dean was only until such date, respondent should instead be paid his
compensation and transportation allowance for the period from September 8, 2000 to
September 17, 2000, or the salary and benefits withheld prior thereto. Aggrieved,
respondent appealed the said Decision to the NLRC.
The NLRC's Ruling
The NLRC held that the Labor Arbiter erred in declaring that respondent's appointment
was only from April 24 to September 17, 2000. Accordingly, the NLRC declared that
respondent was a regular employee and that he was illegally dismissed. The CA
affirmed the NLRC.
Issue
Whether or not respondent was lawfully dismissed
Held
Yes. Article 280 of the Labor Code does not proscribe or prohibit an employment
contract with a fixed period. Even if the duties of the employee consist of activities
necessary or desirable in the usual business of the employer, the parties are free to
agree on a fixed period of time for the performance of such activities. There is nothing
essentially contradictory between a definite period of employment and the nature of
the employee’s duties
First. The letter of appointment was clear. Respondent was confirmed as Dean of AMA
College, Parañaque, effective from April 17, 2000 to September 17, 2000. In numerous
cases, that by way of practice and tradition, the position of dean is normally an
employment for a fixed term. Although it does not appear on record─ and neither was
it alleged by any of the parties─ that respondent, other than holding the position of
dean, concurrently occupied a teaching position, it can be deduced from the last
paragraph of said letter that the respondent shall be considered for a faculty position
in the event he gives up his deanship or fails to meet AMA's standards. Such provision
reasonably serves the intention set forth in Brent School that the deanship may be
rotated among the other members of the faculty.
Second. The fact that respondent did not sign the letter of appointment is of no
moment.
The fact that respondent voluntarily accepted the employment, assumed the position,
and performed the functions of dean is clear indication that he knowingly and
voluntarily consented to the terms and conditions of the appointment, including the
fixed period of his deanship. Other than the handwritten notes made in the letter of
appointment, no evidence was ever presented to show that respondent’s consent was
vitiated, or that respondent objected to the said appointment or to any of its conditions.
Furthermore, in his status as dean, there can be no valid inference that he was shackled
by any form of moral dominance exercised by AMA and the rest of the petitioners.
Thus, the unanimous finding of the Labor Arbiter, the NLRC and the CA that
respondent adequately refuted all the charges against him assumes relevance only
insofar as respondent’s dismissal from the service was effected by petitioners before
expiration of the fixed period of employment. True, petitioners erred in dismissing the
respondent, acting on the mistaken belief that respondent was liable for the charges
leveled against him. But respondent also cannot claim entitlement to any benefit
flowing from such employment after September 17, 2000, because the employment,
which is the source of the benefits, had, by then, already ceased to exist.
Finally, while this Court adheres to the principle of social justice and protection to
labor, the constitutional policy to provide such protection to labor is not meant to be
an instrument to oppress employers. The commitment under the fundamental law is
that the cause of labor does not prevent us from sustaining the employer when the law
is clearly on its side.
WHEREFORE, the instant Petition is GRANTED and the CA Decision in CA-G.R.
SP No. 78455 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter,
dated December 6, 2000, is hereby REINSTATED. No costs.
The necessity and desirability of the work performed by the employees are not
the determinants in term employment, but rather the "day certain" voluntarily
agreed upon by the parties. It would be unusual for a company like Innodata to
undertake a project that had no relationship to its usual business.
ALUMAMAY O. JAMIAS, JENNIFER C. MATUGUINAS AND JENNIFER F.
CRUZ,*Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION
(SECOND DIVISION), HON. COMMISSIONERS: RAUL T. AQUINO,
VICTORIANO R. CALAYCAY AND ANGELITA A. GACUTAN; HON.
LABOR ARBITER VICENTE R. LAYAWEN; INNODATA PHILIPPINES,
INC., INNODATA PROCESSING CORPORATION, (INNODATA
CORPORATION), AND TODD SOLOMON
Facts:
Respondent Innodata Philippines, Inc. (Innodata), a domestic corporation engaged in
the business of data processing and conversion for foreign clients, hired the petitioners
on various dates and under a project based contract for a period of one year.
After their respective contracts expired, petitioners filed a complaint for illegal
dismissal claiming that Innodata had made it appear that they had been hired as project
employees in order to prevent them from becoming regular employees.
The petitioners maintain that they should be accorded regular status to the employees
because the work they performed were necessary and desirable to the business of data
encoding, processing and conversion.
Issue:
Whether or not the contract of employment signed by the petitioners were invalid.
Ruling:
In holding that their contract of employment were valid, the Court reiterated that a
fixed period in a contract of employment does not by itself signify an intention to
circumvent Article 280 of the Labor Code.
A fixed term agreement, to be valid, must strictly conform with the requirements and
conditions provided in Article 280 of the Labor Code. The test to determine whether a
particular employee is engaged as a project or regular employee is whether or not the
employee is assigned to carry out a specific project or undertaking, the duration or
scope of which was specified at the time of his engagement. The fixed period of
employment must be knowingly and voluntarily agreed upon by the parties, without
any force, duress or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent, or it must satisfactorily appear
that the employer and employee dealt with each other on more or less equal terms with
no moral dominance whatsoever being exercised by the former on the latter.
The fixing by Innodata of the period specified in the contracts of employment
according to the duration of the projects the company were engaged to perform did not
indicate any ill-motive to circumvent the petitioners’ security of tenure. Furthermore,
there is no indication that the petitioners were made to sign the contracts against their
will. Hence, they knowingly agreed to the terms of and voluntarily signed their
respective contracts.
Also, the necessity and desirability of the work performed by the employees are not
the determinants in term employment, but rather the "day certain" voluntarily agreed
upon by the parties. It would be unusual for a company like Innodata to undertake a
project that had no relationship to its usual business.
In fine, the employment of the petitioners who were engaged as project employees for
a fixed term legally ended upon the expiration of their contract.
Reinstatement means restoration to a state or condition from which one had been
removed or separated. In case of probationary employment, Article 281 of the
Labor Code requires the employer to make known to his employee at the time of
the latter’s engagement of the reasonable standards under which they may
qualify as a regular employee.
JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO, DANILO
C. BALANAG, FERDINAND DELLA, EDWARD A. ABELLERA,
ALEXANDER ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA,
ARTHUR M. ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT A.
ORDOO, BERNARD V. JULARBAL, IGNACIO C. ALINGBAS and LEODEL
N. SORIANO v. NATIONAL LABOR RELATIONS COMMISSION (THIRD
DIVISION), and BENGUET ELECTRIC COOPERATIVE, INC. (BENECO)
FACTS:
Petitioners’ services as meter readers were contracted for hardly a month’s duration,
from October 8 to 31, 1990. Petitioners were allowed to work until January 2, 1991.
On January 3, 1991, they were each served their identical notices of termination. On
the same date, they filed complaints for illegal dismissal. Private respondent BENECO
invoked Article 283 of the Labor Code in defense of the questioned dismissal.
The Labor Arbiter dismissed the complaints for lack of merit. However, it ordered
BENECO to extend to the petitioners the contract of temporary employment that the
former had offered, with the exception of Viernes. Also, the Labor Arbiter directed
BENECO to pay each the amount equivalent to their monthly salary as indemnity for
its failure to give complainants the 30-day notice mandated under Article 283 of the
Labor Code.
Modifying the Arbiter’s decision, the NLRC rendered that the dismissal was illegal. It
ordered petitioners’ reinstatement to their former position as meter readers or to any
equivalent position with payment of backwages limited to one year deleting the award
of indemnity.
ISSUES:
Whether or not the petitioners should be reinstated to their former position as meter
readers on probationary status despite the finding that they are regular employees
under Article 280 of the Labor Code
HELD:
YES. Reinstatement means restoration to a state or condition from which one had been
removed or separated. In case of probationary employment, Article 281 of the Labor
Code requires the employer to make known to his employee at the time of the latter’s
engagement of the reasonable standards under which they may qualify as a regular
employee.
In the case at bar, there is nothing on the letter of appointment that their employment
as meter readers was on probationary basis. It was not shown that they were informed
either, at the time of their appointment, the reasonable standards under which they
could qualify as regular employees. Instead, they were initially engaged to perform
their job for a limited period, their employment being fixed for a definite period. The
principle enunciated in Brent School, Inc. vs. Zamora applies only to fixed term
employments. While it is true that the petitioners were initially employed on a fixed
term basis as their employment contracts were only for a month, they were allowed to
continue working in the same capacity as meter readers without the benefit of a new
contract or without the term of their employment being fixed anew. After October 31,
1991, the employment of petitioners is no longer on a fixed term basis. The complexion
of the employment relationship is totally changed for the petitioners have attained the
status of regular employees.
Under Article 280 of the Labor Code, there are two instances whereby it is determined
that an employee is regular: (1) the particular activity performed by the employee is
necessary or desirable to the usual trade or business of the employer; or (2) if the
employee has been performing the job for at least one year. The petitioners fall under
the first category.
The job of a meter reader is necessary to the business of BENECO since unless the
meter reader records the electric consumption of the subscribing public, there could
not be a valid basis for billing the customers of BENECO. The fact that the petitioners
were allowed to continue working after the expiration of their employment is evidence
of the necessity and desirability of their service to BENECO’s business. Since
petitioners are already regular employees at the time of their illegal dismissal from
employment, they are entitled to be reinstated to their former position as regular
employees, not merely probationary. Moreover, under Article 279, as amended by
R.A. No. 6715, an illegally dismissed employee is entitled to full backwages, inclusive
of allowances and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual
reinstatement. Therefore, petitioners’ backwages should not be limited to one year
only.
A project employee is one whose “employment has been fixed for a specific
project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
service to be performed is seasonal in nature and the employment is for the
duration of the season.
COCOMANGAS HOTEL BEACH RESORT and/or SUSAN MUNRO vs.
FEDERICO F. VISCA, JOHNNY G. BAREDO, RONALD Q. TIBUS,
RICHARD G. VISCA and RAFFIE G. VISCA
Facts:
Visca et. al., who worked for the maintenance and repairs of the petitioner, filed
complaint against Cocomangas for illegal dismissal. They alleged that they were
regular employees, but were eventually informed by Cocomangas not to report for
work because they caused irritation and annoyance to resorts’ guests, and budgetary
constraints. Eventually, they found out that Cocomangas hired new employees as their
replacement. Cocomangas alleged that there was no employer-employee relationship,
and that Visca was an independent contractor who was called upon from time to time
when repairs were needed.
Labor Arbiter ruled that Visca was an independent contractor, and that the other
respondents were hired by him; and that there was no illegal dismissal but rather
completion of projects; and that respondents were project workers, not regular
employees. NLRC affirmed the decision. CA reversed.
Issue:
Whether or not Visca et. al. were regular employees.
Held:
Yes. A project employee is one whose “employment has been fixed for a specific
project or undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.”
Before an employee hired on a per-project basis can be dismissed, a report must be
made to the nearest employment office, of the termination of the services of the
workers every time completes a project, pursuant to Policy Instruction No. 20.
Visca cannot be classified as project employees, since they worked continuously for
Cocomangas from three to twelve years without any mention of a project to which
they were specifically assigned. While they had designations as foreman, carpenter
and mason, they performed work other than carpentry or masonry. They were tasked
with the maintenance and repair of the furniture, motor boats, cottages, and
windbreakers and other resort facilities. There was likewise no evidence of the project
employment contracts covering Visca’s alleged periods of employment. More
importantly, there is no evidence that Cocomangas reported the termination of Visca’s
supposed project employment to the DOLE as project employees. DO 19, as well as
the old Policy Instructions No. 20, requires employers to submit a report of an
employees’ termination to the nearest public employment office every time his
employment is terminated due to a completion of a project. Cocomangas’ failure to
file termination reports is an indication that Visca et. al. were not project employees
but regular employees.
An employment ceases to be coterminous with specific projects when the employee is
continuously rehired due to the demands of employers business and re-engaged for
many more projects without interruption. Once a project or work pool employee has
been: (1) continuously, as opposed to intermittently, rehired by the same employer for
the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must
be deemed a regular employee, pursuant to Article 280 of the Labor Code and
jurisprudence.
Employees who are hired for carrying out a separate job, distinct from the other
undertakings of the company, the scope and duration of which has been
determined and made known to the employees at the time of the employment, are
properly treated as project employees and their services may be lawfully
terminated upon the completion of a project.
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK
KON KIM and/or JHUNIE ADAJAR, vs.
FELICITO IBAÑEZ, ALIGWAS CAROLINO, ELMER GACULA, ENRIQUE
DAGOTDOT AND RUEL CALDA,
FACTS:
Felicito Ibanez (tireman), Elmer Gacula (Crane Operator), Elmer Dagotdot (Welder),
Aligwas Carolino
(Welder), Ruel Calda (Warehouseman) filed a complaint at the NLRC for illegal
dismissal with prayer for
reinstatement and payment of backwages. The group alleged that the contract they
have is good for 3 months, subject to automatic renewal if there is no notice of
termination from Hanjin, and that the contract would automatically terminate upon the
completion of the project. They further averred that during the time they were
dismissed, the project was still ongoing and Hanjin hired people for the positions that
they had vacated. Lastly, they also allege that they are entitled to a completion bonus
as part of the industry practice and this was substantiated by past payroll payments.
Hanjin failed to furnish a copy of the contract agreements with the dismissed group.
Instead it showed the quitclaims that had been executed by the group that released
Hanjin and its representatives from any claims with their employment. It contained
clearance certificates that show that respondents are free from accountability.
ISSUE:
WON the members of the dismissed group are project employees
HELD:
No, Hanjin was unable to prove they were not regular employees. The rehiring of
construction workers on a project to project basis does not confer upon them regular
employment status, since their rehiring is only a natural consequence of the fact that
experienced construction workers are preferred.
Employees who are hired for carrying out a separate job, distinct from the other
undertakings of the company, the scope and duration of which has been determined
and made known to the employees at the time of the employment, are properly treated
as project employees and their services may be lawfully terminated upon the
completion of a project. Should the terms of their employment fail to comply with this
standard, they cannot be considered project employees. Hanjin was unable to show the
written contracts it had with the workers. While the absence of the contract does not
grant permanent status it is the burden of the employer to prove that the employees
were aware that their contract with the company is for per project only.
While Hanjin submitted a termination report including the worker’s names to prove
that the services of their services were only contracted for a per project basis, Hanjin
only submitted one report. It was unable to disprove the allegation of the workers that
they were part of a pool that Hanjin contacts once a project is to be completed.
Employers cannot mislead their employees, whose work is necessary and desirable in
the former's line of business, by treating them as though they are part of a work pool
from which workers could be continually drawn and then assigned to various projects
and thereafter denied regular status at any time by the expedient act of filing a
Termination Report. This would constitute a practice in which an employee is unjustly
precluded from acquiring security of tenure, contrary to public policy, morals, good
customs and public order.
Hanjin alleged that per Department Order 19, Series of 1993 of DOLE, the payment
of completion bonus is further proof that the workers were only project employees as
Hanjin is mandated by law to pay it to the temporary workers whose contracts are
about to end upon the completion of the project. SC views the completion bonus
terminology here reflects the fact that the project has already been completed and that
is the premium they wished to pay. Quitclaims are viewed with disfavour, especially
when –
a. There is clear proof that the waiver was wangled from an unsuspecting or gullible
person
b.Where the terms are unconscionable in its face.
For quitclaims to be valid, it must constitute a reasonable settlement commensurate to
their legal rights. It does not preclude them from seeking benefits they were entitled to
suchas back wages. The respondents were also not granted the twin requirements of
notice and hearing.
The alleged projects stated in the employment contracts were either too vague or
imprecise to be considered as the "specific undertaking" contemplated by law.
Petitioner's act of repeatedly and continuously hiring respondents to do the same
kind of work belies its contention that respondents were hired for a specific
project or undertaking. The absence of a definite duration for the project/s has
led the Court to conclude that respondents are, in fact, regular employees.
PNOC-ENERGY DEVELOPMENT CORPORATION, Southern Negros
Geothermal Project v. NATIONAL LABOR RELATIONS COMMISSION,
Fourth Division, Cebu City, and PNOC-EDC, SNGPEU-ASSOCIATED LABOR
UNIONS-TUCP, LEONORA A. TORRES, ALEJANDRO B.TABAÑERA, JR.,
ARNEL T. AMOR, ROSELA S. CALIMPONG, WILSON D. NUAY, and
ROBERTO S. RENZAL
Facts:
Petitioner PNOC-Energy Development Corporation is a government-owned and
controlled corporation engaged in the exploration, development, and utilization of
energy. To augment its manpower requirement occasioned by the increased activities
in the development of PAL II, petitioner hired private respondents in the
Administration and Maintenance Section. The termination/expiration of their
respective employment were specified in their initial employment contracts, which,
however, were renewed and extended on their respective expiry dates.
Eventually, petitioner furnished respondents uniformly worded notices of termination,
stating that they were being terminated from employment effective June 30, 1998 due
to the substantial completion of the civil works phase of PAL II.
On October 29, 1998, respondents, filed before the NLRC a complaint for illegal
dismissal with payment of other benefits against petitioner. Respondents further
contended that their dismissal from employment was a clear case of union busting for
they had previously sought union membership and actually filed a notice of strike.
For its part, petitioner asseverated that respondents were contractual employees; as
such, they cannot claim to have been illegally dismissed because upon the expiration
of the term of the contract or the completion of the project, their employer-employee
relationship also ended. The Labor Arbiter dismissed their complaint but was reversed
by the NLRC and was affirmed by the CA.
Issue:
Whether or not private respondents are regular employees.
Ruling:
Yes. Article 280 of the Labor Code states: REGULAR AND CASUAL EMPLOYEES.
- The provisions of written agreement to the contrary notwithstanding and regardless
of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season. An employment shall be deemed to be
casual if it is not covered by the preceding paragraph. Provided, That, any employee
who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such activity exists.
Project employees are those workers hired (1) for a specific project or undertaking,
and (2) the completion or termination of such project or undertaking has been
determined at the time of the engagement of the employee. However, petitioner failed
to substantiate its claim that respondents were hired merely as project employees. A
perusal of the records of the case reveals that the supposed specific project or
undertaking of petitioner was not satisfactorily identified in the contracts of
respondents.
Unmistakably, the alleged projects stated in the employment contracts were either too
vague or imprecise to be considered as the "specific undertaking" contemplated by
law. Petitioner's act of repeatedly and continuously hiring respondents to do the same
kind of work belies its contention that respondents were hired for a specific project or
undertaking. The absence of a definite duration for the project/s has led the Court to
conclude that respondents are, in fact, regular employees.
An employee is deemed regular where he is engaged in necessary or desirable
activities in the usual business or trade of the employer, except for project
employees. A project employee has been defined to be one whose employment has
been fixed for a specific project or undertaking, the completion or termination of
which has been determined at the time of the engagement of the employee, or
where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO
MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA
MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA
MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA
ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO
MERCADO and LEON SANTILLAN vs. NATIONAL LABOR RELATIONS
COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER LUCIANO
AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA
and LETICIA DE BORJA; and STO. NIÑO REALTY, INCORPORATED
Facts:
Petitioners were agricultural workers for a sugar plantation. Their employment with
the private respondent was seasonal which means their services are usually utilized
during the planting season and during harvest season of sugar cane. Petitioners filed a
complaint for illegal dismissal and recovery of benefits against private respondents.
Petitioners alleged in their complaint that they were agricultural workers utilized by
private respondents in all the agricultural phases of work on the sugar land of the
respondents and that they worked in the farm since 1949 to 1979.
Private respondent Cruz denied that said petitioners were her regular employees and
instead averred that she engaged their services, through Spouses Mercado, their
"mandarols", that is, persons who take charge in supplying the number of workers
needed by owners of various farms, but only to do a particular phase of agricultural
work necessary in rice production and/or sugar cane production, after which they
would be free to render services to other farm owners who need their services.
Petitioners submit that it would be unjust, if not unlawful, to consider them as casual
workers since they have been doing all phases of agricultural work for so many years,
activities which are undeniably necessary, desirable and indispensable in the rice and
sugar cane production business of the private respondents citing Art. 280 of the Labor
Code specifically on paragraph 2. The Labor Arbiter, as affirmed by the NLRC, ruled
in favor of private respondents
Issue:
Whether or not petitioners are regular and permanent farm workers and therefore
entitled to the benefits which they pray for
Held:
No. The Court held, petitioners contention that the provision in the second paragraph
of Art. 280’s applicability to their case and should have been considered as regular
employees by virtue of said provision is without merit. The first paragraph of Art. 280
of the Labor Code answered the question of who are employees. It states that,
regardless of any written or oral agreement to the contrary, an employee is deemed
regular where he is engaged in necessary or desirable activities in the usual business
or trade of the employer, except for project employees.
A project employee has been defined to be one whose employment has been fixed for
a specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee, or where the work or
service to be performed is seasonal in nature and the employment is for the duration
of the season as in the present case. The second paragraph of Art. 280 demarcates as
"casual" employees, all other employees who do not fan under the definition of the
preceding paragraph. The proviso, in said second paragraph, deems as regular
employees those "casual" employees who have rendered at least one year of service
regardless of the fact that such service may be continuous or broken.
The general rule is that a provision is to qualify or modify only the phrase immediately
preceding it or restrain or limit the generality of the clause that it immediately follows.
Thus, it has been held that a provision is to be construed with reference to the
immediately preceding part of the provision to which it is attached, and not to the
statute itself or to other sections thereof. The only exception to this rule is where the
clear legislative intent is to restrain or qualify not only the phrase immediately
preceding it but also earlier provisions of the statute or even the statute itself as a
whole. Clearly, therefore, petitioners being project employees, or, to use the correct
term, seasonal employees, their employment legally ends upon completion of the
project or the season. The termination of their employment cannot and should not
constitute an illegal dismissal.
The primary standard of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation
to the usual trade or business of the employer. The test is whether the former is
usually necessary or desirable in the usual trade or business of the employer. The
connection can be determined by considering the nature of the work performed
and its relation to the scheme of the particular business or trade in its entirety.
Also if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated
and continuing need for its performance as sufficient evidence of the necessity if
not indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity
exists.
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS
and CRISTINE SEGURA vs. NATIONAL FEDERATION OF SUGARCANE
WORKERS-FOOD AND GENERAL TRADE
Facts:
In the course of a labor dispute between the petitioner and respondent union, the union
members were not given work for more than one month. In protest, complainants
staged a strike which was however settled upon the signing of a Memorandum of
Agreement. A conciliation meeting was conducted wherein Luisa Rombo, Ramona
Rombo, Bobong Abrega, and Boboy Silva were not considered by the company as
employees, and thus may not be members of the union. It was also agreed that a
number of other employees will be reinstated. When respondents again reneged on its
commitment, complainants filed the present complaint. It is alleged by the petitioners
that the above employees are mere seasonal employees.
ISSUE:
Whether or not the seasonal employees have become regular employees.
HELD:
Yes. For respondents to be excluded from those classified as regular employees, it is
not enough that they perform work or services that are seasonal in nature. They must
have also been employed only for the duration of one season. The evidence proves the
existence of the first, but not of the second, condition. The fact that respondents -- with
the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva --
repeatedly worked as sugarcane workers for petitioners for several years is not denied
by the latter. Evidently, petitioners employed respondents for more than one season.
Therefore, the general rule of regular employment is applicable.
The primary standard of determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade
or business of the employer. The test is whether the former is usually necessary or
desirable in the usual trade or business of the employer. The connection can be
determined by considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the employee has been
performing the job for at least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its performance
as sufficient evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but only with respect to such
activity and while such activity exists.
Seasonal employees may be considered as regular employees. Regular seasonal
employees are those called to work from time to time. The nature of their
relationship with the employer is such that during the off-season, they are
temporarily laid off; but re-employed during the summer season or when their
services may be needed. They are in regular employment because of the nature
of their job, and not because of the length of time they have worked. The rule,
however, is not absolute. For regular employees to be considered as such, the
primary standard used is the reasonable connection between the particular
activity they perform and the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade
of the employer. Also if the employee has been performing the job for at least one
year, even if the performance is not continuous or merely intermittent, the law
deems that repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the business.
JAIME N. GAPAYAO vs. ROSARIO FULO, SOCIAL SECURITY SYSTEM
and SOCIAL SECURITY COMMISSION
Facts:
Jaime Fulo died of acute renal failure secondary to 1st degree burn 70% secondary
electrocution while doing repairs at the residence and business establishment of
petitioner at Sorsogon. Petitioner extended some financial assistance to private
respondent. The latter executed an Affidavit of Desistance stating that she was not
holding them liable for the death of her late husband, Jaime Fulo, and was thereby
waiving her right and desisting from filing any criminal or civil action against
petitioner. Both parties executed a compromise agreement, whereby 40,000 pesos was
given to the surviving spouse. Thereafter, private respondent filed a claim for social
security benefits with the SSS.
However, it was discovered that the deceased was not a registered member of the SSS.
Private respondent insisted that her late husband had been employed by petitioner from
January 1983 up to his untimely death on November 4, 1997. Consequently, SSS
demanded that petitioner remit the social security contributions of the deceased.
Petitioner denied that the deceased was his employee, SSS required private respondent
to present evidence to refute petitioners allegations. Instead of presenting evidence,
respondent filed a petition before the SSC. In her petition, she sought social security
coverage and payment of contributions in order to avail herself of the benefits accruing
from the death of her husband.
Petitioner claims that the deceased was not a former employee, but was an independent
contractor whose tasks were not subject to petitioners control and supervision. Hence,
petitioner was under no obligation to report the formers demise to the SSS. SSS filed
a petition- in- intervention before the SSC.
SSC rendered a resolution finding Jaime Fulo to be employed by respondent Gapayao
and hereby ordering them to pay the unpaid SSS contributions on behalf of deceased
Jaime Fulo. SSS was also directed by the SSC to pay Rosario Fulo the death benefit.
Petitioner appealed to the CA who ruled in favor of private respondent and affirmed
the previous decision.
ISSUE:
Whether there exists between the deceased Jaime Fulo and petitioner an employer-
employee relationship that would merit an award of benefits in favor of private
respondent under social security laws?
HELD:
Yes. Farm workers generally fall under the definition of seasonal employees. We have
consistently held that seasonal employees may be considered as regular employees.
Regular seasonal employees are those called to work from time to time. The nature of
their relationship with the employer is such that during the off-season, they are
temporarily laid off; but re-employed during the summer season or when their services
may be needed. They are in regular employment because of the nature of their job, and
not because of the length of time they have worked. The rule, however, is not absolute.
For regular employees to be considered as such, the primary standard used is the
reasonable connection between the particular activity they perform and the usual trade
or business of the employer. The test is whether the former is usually necessary or
desirable in the usual business or trade of the employer. The connection can be
determined by considering the nature of the work performed and its relation t the
scheme of the particular business in its entirety. Also if the employee has been
performing the job for at least one year, even if the performance is not continuous or
merely intermittent, the law deems that repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that
activity to the business.
Hence, the employment is also considered regular, but only with respect to such
activity and while such activity exists. A reading of the records reveals that the
deceased was indeed a farm worker who was in the regular employ of petitioner. From
year to year, starting January 1983 up until his death, the deceased has been working
on petitioners land by harvesting abaca and coconut, processing copra, and clearing
weeds. His employment was continuous in the sence that it was done for more than
one harvesting season. Moreover, no amount of reasoning could detract from the fact
that these tasks were necessary in the usual business of petitioner. As found by the
SSC, the deceased was a construction worker in the building and helper in the bakery,
grocery, hardware, and piggery- all owned by petitioner. This fact only proves that
even during the off season, the deceased was still in the employ of petitioner.
Managerial employees vs. Supervisory employees
RURAL BANK OF CANTILAN, INC., and WILLIAM HOTCHKISS III v.
ARJAY RONNEL H. JULVE, Respondent.
FACTS: On August 1, 1997, the Rural Bank of Cantilan, Inc., petitioner, hired
respondent as a management trainee. Later, he was appointed as planning and
marketing officer.
On June 18, 2001, William Hotchkiss III (also a petitioner), president of petitioner
bank, issued a memorandum addressed to all its branch managers informing them of
the abolition of the positions of planning and marketing officer and remedial officer;
that this was undertaken in accordance with the bank’s Personnel Streamlining
Program; and that the operations officer shall absorb the functions of the abolished
offices.
On July 18, 2001, Hotchkiss sent respondent a memorandum stating that he has been
appointed bookkeeper I at the bank’s branch in Madrid, Surigao del Sur effective
immediately with the same salary corresponding to his old position. Initially,
respondent agreed to accept the appointment, but eventually, he changed his mind and
withdrew because he felt that this was a demotion.
Respondent filed with the Regional Arbitration Branch No. XIII, National Labor
Relations Commission (NLRC), Butuan City, a complaint for constructive dismissal
against petitioners.
ISSUE: WON the transfer was valid.
HELD: YES. Under the doctrine of management prerogative, every employer has the
inherent right to regulate, according to his own discretion and judgment, all aspects of
employment, including hiring, work assignments, working methods, the time, place
and manner of work, work supervision, transfer of employees, lay-off of workers, and
discipline, dismissal, and recall of employees.2 The only limitations to the exercise of
this prerogative are those imposed by labor laws and the principles of equity and
substantial justice.
Concerning the transfer of employees, these are the following jurisprudential
guidelines: (a) a transfer is a movement from one position to another of equivalent
rank, level or salary without break in the service or a lateral movement from one
position to another of equivalent rank or salary;4 (b) the employer has the inherent
right to transfer or reassign an employee for legitimate business purposes;5 (c) a
transfer becomes unlawful where it is motivated by discrimination or bad faith or is
effected as a form of punishment or is a demotion without sufficient cause;6 (d) the
employer must be able to show that the transfer is not unreasonable, inconvenient, or
prejudicial to the employee.7
Constructive dismissal is defined as "quitting when continued employment is rendered
impossible, unreasonable, or unlikely as the offer of employment involves a demotion
in rank and diminution of pay.
Respondent contends that the abolition of his position as planning and marketing
officer and his appointment as bookkeeper I and assistant branch head of the Madrid
Branch is a demotion. However, a look at the functions of his new position shows the
contrary. The bookkeeper and assistant branch head is not only charged with preparing
financial reports and monthly bank reconciliations, he is also the head of the
Accounting Department of a branch. Under any standard, these are supervisory and
administrative tasks which entail great responsibility. Moreover, respondent’s transfer
did not decrease his pay.
Nor was respondent’s transfer motivated by ill-will or prejudice on the part of
petitioners. His position was not the only one abolished pursuant to the bank’s
Personnel Streamlining Program. We recall that the position of remedial officer was
likewise abolished. Petitioners’ reason was to acquire savings from the salaries it
would pay to full-time personnel in these positions.
Finally, we note that despite respondent’s refusal to accept the new appointment,
petitioners did not dismiss him. Rather, it was he who opted to terminate his
employment when he purposely failed to report for work.
UNIVERSAL ROBINA SUGAR MILLING CORPORATION and RENE
CABATI, Petitioners,
vs.
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA, RENE
ABELLAR, DIOMEDES ALICOS, MIGUEL ALICOS, ROGELIO AMAHIT,
LARRY AMASCO, FELIPE BALANSAG, ROMEO BALANSAG, MANUEL
BANGOT, ANDY BANJAO, DIONISIO BENDIJO, JR., JOVENTINO
BROCE, ENRICO LITERAL, RODGER RAMIREZ, BIENVENIDO
RODRIGUEZ, DIOCITO PALAGTIW, ERNIE SABLAN, RICHARD
PANCHO, RODRIGO ESTRABELA, DANNY KADUSALE and
ALLYROBYL OLPUS, Respondents.
G.R. No. 186439 January 15, 2014
FACTS:
URSUMCO is a domestic corporation engaged in the sugar cane milling business;
Cabati is URSUMCO’s Business Unit General Manager.
The complainants were employees of URSUMCO. They were hired on various dates
(between February 1988 and April 1996) and on different capacities, 8 i.e., drivers,
crane operators, bucket hookers, welders, mechanics, laboratory attendants and aides,
steel workers, laborers, carpenters and masons, among others. At the start of their
respective engagements, the complainants signed contracts of employment for a period
of one (1) month or for a given season. URSUMCO repeatedly hired the complainants
to perform the same duties and, for every engagement, required the latter to sign new
employment contracts for the same duration of one month or a given season.
On August 23, 2002,9 the complainants filed before the LA complaints for
regularization, entitlement to the benefits under the existing Collective Bargaining
Agreement (CBA),and attorney’s fees.
In the decision10 dated October 9, 2002, the LA dismissed the complaint for lack of
merit. The LA held that the complainants were seasonal or project workers and not
regular employees of URSUMCO. The LA pointed out that the complainants were
required to perform, for a definite period, phases of URSUMCO’s several projects that
were not at all directly related to the latter’s main operations. As the complainants
were project employees, they could not be regularized since their respective
employments were coterminous with the phase of the work or special project to which
they were assigned and which employments end upon the completion of each project.
Accordingly, the complainants were not entitled to the benefits granted under the CBA
that, as provided, covered only the regular employees of URSUMCO.
Of the twenty-two original complainants before the LA, seven appealed the LA’s
ruling before the NLRC, namely: respondents Ferdinand Acibo, Eddie Baldoza, Andy
Banjao, Dionisio Bendijo, Jr., Rodger Ramirez, Diocito Palagtiw, Danny Kadusale and
Allyrobyl Olpus.
NLRC: In its decision11 of July 22, 2005, the NLRC reversed the LA’s ruling; it
declared the complainants as regular URSUMCO employees and granted their
monetary claims under the CBA. The NLRC pointed out that the complainants
performed activities which were usually necessary and desirable in the usual trade or
business of URSUMCO, and had been repeatedly hired for the same undertaking every
season
CA: In its November 29, 2007 decision,14 the CA granted in part the petition; it
affirmed the NLRC’s ruling finding the complainants to be regular employees of
URSUMCO, but deleted the grant of monetary benefits under the CBA.
ISSUE:
1) whether the respondents are regular employees of URSUMCO; and
(2) whether affirmative relief can be given to the fifteen (15) of the complainants who
did not appeal the LA’s decision.
HELD:
We resolve to partially GRANT the petition.
1. On the issue of the status of the respondents’ employment
The petitioners maintain that the respondents are contractual or project/seasonal
workers and not regular employees of URSUMCO. They thus argue that the CA erred
in applying the legal parameters and guidelines for regular employment to the
respondents’ case. They contend that the legal standards – length of the employee’s
engagement and the desirability or necessity of the employee’s work in the usual trade
or business of the employer – apply only to regular employees under paragraph 1,
Article 280 of the Labor Code, and, under paragraph 2 of the same article, to casual
employees who are deemed regular by their length of service.
We disagree with the petitioners’ position.1âwphi1We find the respondents to be
regular seasonal employees of URSUMCO.
As the CA has explained in its challenged decision, Article 280 of the Labor Code
provides for three kinds of employment arrangements, namely: regular,
project/seasonal and casual. Regular employment refers to that arrangement whereby
the employee "has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer[.]" 19 Under the definition, the
primary standard that determines regular employment is the reasonable connection
between the particular activity performed by the employee and the usual business or
trade of the employer;20 the emphasis is on the necessity or desirability of the
employee’s activity. Thus, when the employee performs activities considered
necessary and desirable to the overall business scheme of the employer, the law
regards the employee as regular.
Unlike in a regular employment under Article 280 of the Labor Code, however, the
length of time of the asserted "project" employee’s engagement is not controlling as
the employment may, in fact, last for more than a year, depending on the needs or
circumstances of the project. Nevertheless, this length of time (or the continuous
rehiring of the employee even after the cessation of the project) may serve as a badge
of regular employment when the activities performed by the purported "project"
employee are necessary and indispensable to the usual business or trade of the
employer.23 In this latter case, the law will regard the arrangement as regular
employment.24
Seasonal employment operates much in the same way as project employment, albeit it
involves work or service that is seasonal in nature or lasting for the duration of the
season.25 As with project employment, although the seasonal employment
arrangement involves work that is seasonal or periodic in nature, the employment itself
is not automatically considered seasonal so as to prevent the employee from attaining
regular status. To exclude the asserted "seasonal" employee from those classified as
regular employees, the employer must show that: (1) the employee must be performing
work or services that are seasonal in nature; and (2) he had been employed for the
duration of the season.26 Hence, when the "seasonal" workers are continuously and
repeatedly hired to perform the same tasks or activities for several seasons or even
after the cessation of the season, this length of time may likewise serve as badge of
regular employment.27 In fact, even though denominated as "seasonal workers," if
these workers are called to work from time to time and are only temporarily laid off
during the off-season, the law does not consider them separated from the service
during the off-season period. The law simply considers these seasonal workers on
leave until re-employed
In light of the above legal parameters laid down by the law and applicable
jurisprudence, the respondents are neither project, seasonal nor fixed-term employees,
but regular seasonal workers of URSUMCO. The following factual considerations
from the records support this conclusion:
First, the respondents were made to perform various tasks that did not at all pertain to
any specific phase of URSUMCO’s strict milling operations that would ultimately
cease upon completion of a particular phase in the milling of sugar; rather, they were
tasked to perform duties regularly and habitually needed in URSUMCO’s operations
during the milling season. The respondents’ duties as loader operators, hookers, crane
operators and drivers were necessary to haul and transport the sugarcane from the
plantation to the mill; laboratory attendants, workers and laborers to mill the sugar;
and welders, carpenters and utility workers to ensure the smooth and continuous
operation of the mill for the duration of the milling season, as distinguished from the
production of the sugarcane which involves the planting and raising of the sugarcane
until it ripens for milling. The production of sugarcane, it must be emphasized, requires
a different set of workers who are experienced in farm or agricultural work. Needless
to say, they perform the activities that are necessary and desirable in sugarcane
production. As in the milling of sugarcane, the plantation workers perform their duties
only during the planting season.
Second, the respondents were regularly and repeatedly hired to perform the same tasks
year after year. This regular and repeated hiring of the same workers (two different
sets) for two separate seasons has put in place, principally through jurisprudence, the
system of regular seasonal employment in the sugar industry and other industries with
a similar nature of operations.
Third, while the petitioners assert that the respondents were free to work elsewhere
during the off-season, the records do not support this assertion. There is no evidence
on record showing that after the completion of their tasks at URSUMCO, the
respondents sought and obtained employment elsewhere.
DOCTRINE OF EQUAL PAY AND EQUAL WORK
PHILEX GOLD PHILIPPINES, INC., GERARDO H. BRIMO, LEONARD P.
JOSEF, and JOSE B. ANIEVAS, petitioners, vs. PHILEX BULAWAN
SUPERVISORS UNION, represented by its President, JOSE D. PAMPLIEGA,
respondents.
G.R. No. 149758. August 25, 2005
Doctrine:If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work—hence, the doctrine of
“equal pay for equal work” in International School Alliance of Educators was
correctly applied
Facts:
Respondent Philex Bulawan Supervisors Union (“Philex Supervisors Union”) is the
sole and exclusive bargaining representative of all supervisors of petitioner Philex
Gold Philippines, Incorporated (“Philex Gold”), a gold mining company with mine
site at Vista Alegre, Nabulao, Sipalay, Negros Occidental. On July 2, 1997, respondent
union entered into a Collective Bargaining Agreement (CBA) with petitioner company
effective August 1, 1996 up to July 31, 2001.
It appears, however, that after the signing of the CBA, Philex Gold made the
employees of Philex Mining Corporation from Padcal, Tuba, Benguet, its regular
supervisory employees effective July 1, 1997. Some of the so-called “ex-Padcal”
supervisors began to work in the Bulawan mines of Philex Mining Corporation in 1992
as ordinary rank-and-file workers.
When Philex Gold was incorporated in 1996 to exclusively handle gold mining, it took
over the operations of the Bulawan mines and absorbed some of the ex-Padcal
employees.
Philex Gold conveyed to Philex Supervisors Union the status of the ex-Padcal
supervisors in November 1997 upon the insistence of the union to be informed of their
standing.
It turned out that the ex-Padcal supervisors were maintained under a confidential
payroll, receiving a different set of benefits and higher salaries compared to the locally
hired supervisors of similar rank and classification doing parallel duties and functions.
Philex Supervisors Union filed a Complaint against Philex Gold with the National
Conciliation and Mediation Board (NCMB), Bacolod City, for the payment of wage
differential and damages and the rectification of the discriminatory salary structure
and benefits between the ex-Padcal supervisors and the local-hires.
The voluntary arbitrator decided in favor of the union. The decision provided that the
monthly salary of the union members be the same with that of the supervisory
employees from Padcal. Both parties subsequently filed their motion for
reconsideration and the Voluntary arbitrator reverse his earlier decision. The
subsequent decision provided that there was no discrimnation on the part of Philex.
Nevertheless, the VA decided to adjust the salary of the employees to Php 8,000.
Union filed an appeal before the CA. CA reversed the decision of the Voluntary
Arbitrator. The CA based its decision based on the CBA between the parties did not
disclose this multi-tiered classification of supervisors. Second, as found by the
voluntary arbitrator in his original decision, the local-hires actually received salaries
less than those they were supposed to be entitled. Third, the minimum wage rate for a
higher category happened to be lesser than the maximum rate of a lower category such
that a supervisor with a rank of “S-1” maximum would get less upon his promotion to
“S-2” minimum. And finally, this pay structure was kept from the knowledge of the
union and was only revealed in the course of the proceedings before the voluntary
arbitrator.
Issue:
Whether the doctrine of “equal pay for equal work” should not remove management
prerogative to institute difference in salary on the basis of seniority, skill, experience
and the dislocation factor in the same class of supervisory workers doing the same kind
of work.
Ruling:
Petitioners admit that the “same class of workers [are] doing the same kind of work.”
This means that an ex-Padcal supervisor and a locally hired supervisor of equal rank
do the same kind of work. If an employer accords employees the same position and
rank, the presumption is that these employees perform equal work. Hence, the doctrine
of “equal pay for equal work” in International School Alliance of Educators was
correctly applied by the Court of Appeals.
Petitioners now contend that the doctrine of “equal pay for equal work” should not
remove management prerogative to institute difference in salary on the basis of
seniority, skill,experience and the dislocation factor in the same class of supervisory
workers doing the same kind of work.
In this case, the Court cannot agree because petitioners failed to adduce evidence to
show that an ex-Padcal supervisor and a locally hired supervisor of the same rank are
initially paid the same basic salary for doing the same kind of work. They failed to
differentiate this basic salary from any kind of salary increase or additional benefit
which may have been given to the ex-Padcal supervisors due to their seniority,
experience and other factors.
The records only show that an ex-Padcal supervisor is paid a higher salary than a
locally hired supervisor of the same rank. Therefore, petitioner failed to prove with
satisfactory evidence that it has not discriminated against the locally hired supervisor
in view of the unequal salary.
PROBATIONARY EMPLOYEES
REGINA S. BIBOSO, NENITA B. BISO, FE CUBIN, MAGELENDE H.
DEMEGILLO, EMERITA O. PANALIGAN, NILDA P. TAYO, NELDA
TORMON, ARDE M. VALENCIANO, MA. LINDA E. VILLA, and the VICMICO
SUPERVISORY EMPLOYEES ASSOCIATION (VICSEA), petitioners, vs.
VICTORIAS MILLING COMPANY, INC. and the OFFICE OF THE PRESIDENT
OF THE PHILIPPINES, respondents.
No. L-44360. March 31, 1977
Doctrine: During the period of probation, they could remain in their positions and any
circumvention of their rights, in accordance with the statutory scheme, subject to
inquiry and thereafter correction by the Department of Labor. Thus there was the
safeguard as to the duration of their employment being respected. To that extent, their
tenure was secure. The moment, however, the period expired in accordance with
contracts freely entered into, they could no longer invoke the constitutional protection.
To repeat, that was what transpired in this case.
Facts:
Petitioners in this case were hired as teachers for private respondent’s school, St. Mary
Mazzarello School and were notified by the school’s directress that they will not be
rehired for the school year 1973-74. The necessary report for such action was filed by
respondent with the Department of Labor on May 28, 1973, informing that
complainants’ services were thus terminated after the business hours on June 30,
1973.” The petitioners were able to obtain a favorable ruling from then National Labor
Relations Commission and subsequently the Secretary of Justice. Aggrieved,
employer filed an appeal before the Office of the President who rendered a decision in
favor of the respondent. The Office of the President ruled that complainants were hired
as teachers of the school on a year-to-year basis and that they reapplied before the
expiration of the contracts and/or signed new ones, as the case may be, if the school
decided to renew the same. None of the complainants who testified disputed the fact
that they all signed identical contracts of employment which provided for a definite
period of employment which provided for a definite period of employment expiring
June 30 of the particular school year. Thus, under ‘Status of Employment’ of said
contracts, the complainants were hired as ‘temporary as and when required until June
30, 1973,’ or whatever year the contract is supposed to terminate.
Hence this petition which the court treated a petition for certiorari because of the
complainants claim of abuse of discretion amounting to lack or excess of jurisdiction.
Issue:
Are the complainants whose employment contract is on a year-to-year basis regular
employees?
Will the petition for certiorari prosper?
Ruling:
No. The Supreme Court started by quoting various decisions it had previously
rendered, highlighting that the Constitutional provision regarding requiring the State
to assure workers security of tenure, it was stressed that there should be “fealty to
[such] constitutional command and cited various cases upholding the labor’s security
of tenure.
However the case at hand does not fall within the cases protected by the security of
tenure. Neither did the court found gave abuse of discretion on the part of the Office
of the President in rendering the decision. The decision reads:
This is by no means to assert that the security of tenure protection of the Constitution
does not apply to probationary employees. The Labor Code has wisely provided for
such a case thus: “The termination of employment of probationary employees and
those employed with a fixed period shall be subject to such regulations as the Secretary
of Labor may prescribe to prevent the circumvention of the right of the employees to
be secured in their employment as provided herein.” There is no question here, as
noted in the assailed order of Presidential Executive Assistant Clave, that petitioners
did not enjoy a permanent status. During such period they could remain in their
positions and any circumvention of their rights, in accordance with the statutory
scheme, subject to inquiry and thereafter correction by the Department of Labor. Thus
there was the safeguard as to the duration of their employment being respected. To
that extent, their tenure was Secure, The moment, however, the period expired in
accordance with contracts freely entered into, they could no longer invoke the
constitutional protection. To repeat, that was what transpired in this case. The ruling
of the Office of the President, now assailed, is not without support in law.
MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO, petitioners, vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry
of Labor and Employment, and JOAQUIN A. DEQUILA, respondents.
G.R. No. 74246. January 26, 1989
Doctrine:The employer and the employee may by agreement extend the probationary
period of employment beyond the 6-months period in Art. 282 of the Labor Code.
Facts:
Private respondent Dequila was hired by MARIWASA as a general utility worker and
placed on probation for a period of six months. However after the expiration of the
period, the employer found his performance unsatisfactory and with the concurrence
of Dequila, extended his probationary period for another three months to give him the
opportunity to improve his performance. Despite this, Dequila’s performance did not
improve, prompting MARIWASA to terminate his employment.
Aggrieved, Dequiled filed a complaint for illegal dismissal against MARIWASA and
its Vice-President for administration, Angel Dazo. The Director of the Ministry’s
National Capital Region, dismissed the petition and ruled that the termination of
Dequila’s employment was in the circumstances justified and rejected his money
claims for insufficiency of evidence. On appeal to the Office of the Minister, however,
said disposition was reversed. Respondent Deputy Minister Vicente Leogardo, Jr. held
that Dequila was already a regular employee at the time of his dismissal, therefore,
could not have been lawfully dismissed for failure to meet company standards as a
probationary worker.
Petitioners filed a petition for certiorari and prohibition alleging grave abuse of
discretion on the part of respondent Minister in rendering the assailed decision.
Issue:
Whether or not the termination of an employee whose probationary period was
extended valid.
Ruling:
Yes. In Buiser vs. Leogardo, Jr. the Court recognized agreements stipulating longer
probationary periods as constituting lawful exceptions to the statutory prescription
limiting such periods to six months, when it upheld as valid an employment contract
between an employer and two of its employees that provided for an eigthteen-month
probation period. It is in this case when the court ruled that Generally, the probationary
period of employment is limited to six (6) months. The exception to this general rule
is when the parties to an employment contract may agree otherwise, such as when the
same is established by company policy or when the same is required by the nature of
work to be performed by the employee.In the latter case, there is recognition of the
exercise of managerial prerogatives in requiring a longer period of probationary
employment, inclusive, especially where the employee must learn a particular kind of
work such as selling, or when the job requires certain qualifications, skills experience
or training.
By voluntarily agreeing to an extension of the probationary period, Dequila in effect
waived any benefit attaching to the completion of said period if he still failed to make
the grade during the period of extension. The Court finds nothing in the law which by
any fair interpretation prohibits such a waiver. And no public policy protecting the
employee and the security of his tenure is served by proscribing voluntary agreements
which, by reasonably extending the period of probation, actually improve and further
a probationary employee’s prospects of demonstrating his fitness for regular
employment.
INTERNATIONAL CATHOLIC MIGRATION COMMISSION, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and BERNADETTE
GALANG, respondents
G.R. No. 72222. January 30, 1989
Doctrine: Being in the nature of a “trial period” the essence of a probationary period
of employment fundamentally lies in the purpose or objective sought to be attained by
both the employer and the employee during said period. The length of time is
immaterial in determining the correlative rights of both in dealing with each other
during said period.
Facts:
Bernadette Galang was hired by petitioner International Catholic Migration
Commission as a probationary cultural orientation teacher. Three months thereafter
Galang was informed, orally and in writing, that her services were being terminated
for her failure to meet the prescribed standards of petitioner as reflected in the
performance evaluation of her supervisors during the teacher evaluation program she
underwent along with other newly-hired personnel. Aggrieved, Galang filed a
complaint for illegal dismissal, unfair labor practice and unpaid wages against
petitioner with the then Ministry of Labor and Employment, praying for reinstatement
with backwages, exemplary and moral damages. The Labor Arbiter denied Galang’s
petition and her prayers for payment of damages but ordering the petitioner to pay
private respondent the sum of P6,000.00 as payment for the last three (3) months of
the agreed employment period pursuant to her verbal contract of employment. NLRC
affirmed the decision in toto.
Dissatisfied, petitioner filed the instant petition. Petitioner maintains that private
respondent is not entitled to the award of salary for the unexpired three-month portion
of the probationary period since her services were terminated during such period when
she failed to qualify as a regular employee in accordance with the reasonable standards
prescribed by petitioner.
Issue:
Whether or not a probationary employee is entitled to the salary of the unexpired
portion of her probationary period.
Ruling:
No. There is justifiable basis for the reversal of public respondent’s award of salary
for the unexpired three-month portion of private respondent’s six-month probationary
employment in the light of its express finding that there was no illegal dismissal.
Article 281 of the Labor Code gives ample authority to the employer to terminate a
probationary employee for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the employer to
the employee at the time of his engagement. There is nothing under Article 281 of the
Labor Code that would preclude the employer from extending a regular or a permanent
appointment to an employee once the employer finds that the employee is qualified
for regular employment even before the expiration of the probationary period.
Conversely, if the purpose sought by the employer is neither attained nor attainable
within the said period, Article 281 of the Labor Code does not likewise preclude the
employer from terminating the probationary employment on justifiable causes as in
the instant case.

We find unmeritorious, therefore, public respondent’s argument that the security of
tenure of probationary employees within the period of their probation, as in the case
of herein private respondent, justified the award of salary for the unexpired portion of
her probationary employment. The termination of private respondent predicated on a
just cause negates the application in this case of the pronouncement in the case of
Biboso v. Victorias Milling Co., Inc., on the right of security of tenure of probationary
employees.
EXTENDED PROBATIONARY PERIOD WHEN ALLOWED
ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and MA.
MERCEDES P. INTENGAN, petitioners, vs. HON. VICENTE LEOGARDO, JR., in
his capacity as Deputy Minister of the Ministry of Labor & Employment, and
GENERAL TELEPHONE DIRECTORY, CO., respondents.
No. L-63316. July 31, 1984
Doctrine: Generally, the probationary period of employment is limited to six (6)
months. The exception to this general rule is when the parties to an employment
contract may agree otherwise, such as when the same is established by company policy
or when the same is required by the nature of work to be performed by the employee.
Facts:
Petitioners were employed by the private respondent GENERAL TELEPHONE
DIRECTORY COMPANY as sales representatives and charged with the duty of
soliciting advertisements for inclusion in a telephone directory. Upon employment,
petitioners signed an employment contract placing them on probationary status for a
period of eighteen (18) months. Corollary to this, the private respondent prescribed
sales quotas to be accomplished or met by the petitioners. Failing to meet their
respective sales quotas, the petitioners were dismissed from the service by the private
respondent. The records show that the private respondent terminated the services of
petitioners Iluminada Ver Buiser and Cecilia RilloAcuña on May 14, 1981 and
petitioner Ma. Mercedes P. Intengan on May 18, 1981 for their failure to meet their
sales quotas.
Aggrieved, petitioners filed with the National Capital Region, Ministry of Labor and
Employment, a complaint for illegal dismissal with claims for backwages, earned
commissions and other benefits. The Regional Director of said ministry, in an Order
dated, dismissed the complaints of the petitioners, except the claim for allowances
which private respondent was ordered to pay. Appeal was made to the Deputy Minister
who affirmed the decision of the Regional Director. Hence, petitioner filed the instant
petition for certiorari, alleging grave abuse of discretion amounting to lack or excess
of jurisdiction.
Issue:
Whether the 18- month probationary period is valid.
Ruling:
Yes. Generally, the probationary period of employment is limited to six (6) months.
The exception to this general rule is when the parties to an employment contract may
agree otherwise, such as when the same is established by company policy or when the
same is required by the nature of work to be performed by the employee. In the latter
case, there is recognition of the exercise of managerial prerogatives in requiring a
longer period of probationary employment, such as in the present case where the
probationary period was set for eighteen (18) months, i.e. from May, 1980 to October,
1981 inclusive, especially where the employee must learn a particular kind of work
such as selling, or when the job requires certain qualifications, skills, experience or
training.
In the case at bar, it is shown that private respondent Company needs at least eighteen
(18) months to determine the character and selling capabilities of the petitioners as
sales representatives. The Company is engaged in advertisement and publication in the
Yellow Pages of the PLDT Telephone Directories. Publication of solicited ads are only
made a year after the sale has been made and only then will the company be able to
evaluate the efficiency, conduct, and selling ability of its sales representatives, the
evaluation being based on the published ads. Moreover, an eighteen-month
probationary period is recognized by the Labor Union in the private respondent
company. And as indicated earlier, the very contracts of employment signed and
acquiesced to by the petitioners specifically indicate that “the company hereby
employs the employee as telephone sales representative on a probationary status for a
period of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive.” This
stipulation is not contrary to law, morals and public policy.
UNIVERSITY OF THE EAST, DEAN ELEANOR JAVIER, RONNIE GILLEGO
and DR. JOSE C. BENEDICTO, petitioners, vs. ANALIZA F. PEPANIO and
MARITI D. BUENO, respondent
G.R. No. 193897. January 23, 2013
Doctrine: A school CBA must be read in conjunction with statutory and administrative
regulations governing faculty qualifications. Such regulations form part of a valid
CBA without need for the parties to make express reference to it. While the contracting
parties may establish such stipulations, clauses, terms and conditions, as they may see
fit, the right to contract is still subject to the limitation that the agreement must not be
contrary to law or public policy.
Facts:
The case started when the Department of Education, Culture and Sports (DECS) issued
the Revised Manual of Regulations for Private Schools,requiring that teachers must
acquire a postgraduate degree in order to have regular employment in private schools.
This was issued in 1992. In 1994, a CBA effective for a period of five years was
created by the petitioner school providing that only semester-to-semester
appointments to college faculty staff who did not possess the minimum qualifications.
Those with such qualifications shall be given probationary appointments and their
performance on a full-time or full-load basis shall be reviewed for four semesters.
It was in 1997 when Pepanio and Bueno were hired by UE. Unable to obtain the
minimum requirements to be regular teachers, both were hired in a semester-to-
semester basis.
(Note: here is the extended version of what transpired)
Both the teachers were not able to acquire postgraduate degrees during the whole
duration of the 1994 CBA until the 2001 CBA took effect which gave the university
power to appoint new teachers with the required qualifications.Petitioner Dean later
sent notices to the faculty members and Bueno said she has no intention of acquiring
postgrad and Pepanio said she’s acquiring a degree from PUP. Pepanio requested to
be renewed for three sems which was rejected by dean who insisted she take only two
sems. Neither reported for work and subsequently sent letters demanding they be
recognized as regular employees for the duration of their continued employment of
six-and-a-half-year for Buena and three-and-a-half years of service on a full-load basis
for Pepipanio. UE did not heed their demands prompting Bueno and Pepanio to file a
complaint against UE.
The labor arbiter granted the complaint finding the complainants regular employees of
UE. The same was reversed by NLRC, that ruled that the four-semester probationary
period provided under the old CBA did not automatically confer permanent status to
Bueno and Pepanio. They still had to meet the standards for permanent employment
provided under the Manual of Regulations and the Joint Order. However, CA reversed
the ruling and reinstated the decision of the labor arbiter. Hence the current petition
for certiorari.
Issue: Whether or not Bueno and Pepanio are regular employees of UE.
Ruling:
No. Respondents argue that UE hired them in 1997 and 2000, when what was in force
was the 1994 CBA between UE and the faculty union. Since that CBA did not yet
require a master’s degree for acquiring a regular status and since respondents had
already complied with the three requirements of the CBA.
But the policy requiring postgraduate degrees of college teachers was provided in the
Manual of Regulations as early as 1992. Indeed, recognizing this, the 1994 CBA
provided even then that UE was to extend only semester-to-semester appointments to
college faculty staffs, like respondents, who did not possess the minimum
qualifications for their positions.
Besides, as the Court held in Escorpizo v. University of Baguio, a school CBA must
be read in conjunction with statutory and administrative regulations governing faculty
qualifications. Such regulations form part of a valid CBA without need for the parties
to make express reference to it. While the contracting parties may establish such
stipulations, clauses, terms and conditions, as they may see fit, the right to contract is
still subject to the limitation that the agreement must not be contrary to law or public
policy.
TRAINING PLUS PROBATIONARY PERIOD; WHEN ALLOWED
HOLIDAY INN MANILA and/or HUBERT LINER and BABY DISQUITADO,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (Second
Division) and ELENA HONASAN, respondents.
G.R. No. 109114. September 14, 1993
Doctrine: Probation is the period during which the employer may determine if the
employee is qualified for possible inclusion in the regular force. In the case at bar, the
period was for three weeks, during Honasan’s on-the-job training. When her services
were continued after this training, the petitioners in effect recognized that she had
passed probation and was qualified to be a regular employee.
Facts:
Elena Honasan applied for employment with the Holiday Inn and was accepted for
“on-the-job training” as a telephone operator for a period of three weeks. For her
services, she received food and transportation allowance. After completing her
training, she was employed on a “probationary basis” for a period of six months ending
November 12, 1991.
Her employment contract stipulated that the Hotel could terminate her probationary
employment at any time prior to the expiration of the six-month period in the event of
her failure (a) to learn or progress in her job; (b) to faithfully observe and comply with
the hotel rules and the instructions and orders of her superiors; or (c) to perform her
duties according to hotel standards.
Four days before the expiration of the stipulated deadline, Holiday Inn notified her of
her dismissal, on the ground that her performance had not come up to the standards of
the Hotel.
Aggrieved, Honasan filed a complaint for illegal dismissal, claiming that she was
already a regular employee at the time of her separation and so was entitled to full
security of tenure.
The labor arbiter dismissed the complaint and ruled that there is just cause in
terminating the employment of complainant. NLRC later reversed the decision of the
LA, ruling that Elena had become a regular employee and should only be terminated
for just cause.
Issue: Whether or not Elena had become a regular employee.
Ruling:
Yes. On the issue of illegal dismissal, we find that Honasan was placed by the
petitioner on probation twice, first during her on-the-job training for three weeks, and
next during another period of six months, ostensibly in accordance with Article 281.
Her probation clearly exceeded the period of six months prescribed by this article.
Probation is the period during which the employer may determine if the employee is
qualified for possible inclusion in the regular force. In the case at bar, the period was
for three weeks, during Honasan’s on-the-job training. When her services were
continued after this training, the petitioners in effect recognized that she had passed
probation and was qualified to be a regular employee.
Honasan was certainly under observation during her threeweek on-the-job training. If
her services proved unsatisfactory then, she could have been dropped as early as during
that period. But she was not. On the contrary, her services were continued, presumably
because they were acceptable, although she was formally placed this time on
probation.
The consequence is that she could no longer be summarily separated on the ground
invoked by the petitioners. As a regular employee, she had acquired the protection of
Article 279 of the Labor Code.
NO NEED TO INFORM PROBATIONARY EMPLOYEES THAT HE HAS TO
COMPLY WITH COMPANY RULES AND REGULATIONS
PHILIPPINE DAILY INQUIRER, INC., petitioner, vs. LEON M. MAGTIBAY, JR.
and PHILIPPINE DAILY INQUIRER EMPLOYEES UNION (PDIEU),
respondents.
G.R. No. 164532. July 27, 2007
Doctrine: All employees, be they regular or probationary, are expected to comply with
company-imposed rules and regulations, else why establish them in the first place.
Probationary employees unwilling to abide by such rules have no right to expect, much
less demand, permanent employment.
Facts:
Magtibay was employed by Inquirer as a contractual employee tasked with assisting
the regular telephone operator for a period of five months. Upon expiration of his
contract, the parties agreed to extend his contract for fifteen days. After the expiration
of Magtibay’s contractual employment, as extended, Inquirer announced the creation
and availability of a new position for a second telephone operator who would undergo
probationary employment.
Magtibay eventually applied for the position and was employed as a probationary
employee. A week before the expiration of his probationary status, Magtibay was
terminated for his alleged failure to meet company standards. Aggrieved, Magtibay
immediately filed a complaint for illegal dismissal and damages before the Labor
Arbiter.
Magtibay claims that he should be considered as a regular employee since he has been
working for the company for an accumulated period of 10 months. He also claimed
that he was not apprised at the beginning of his employment of the performance
standards of the company, hence, there was no basis for his dismissal.
In their defense, Inquirer claims that Magtibay was dismissed for violation of company
rules and policies, such as allowing his lover to enter and linger inside the telephone
operator’s booth and for failure to meet prescribed company standards which were
allegedly made known to him at the start through an orientation seminar conducted by
the company.
The labor arbiter dismissed the complaint of Magtibay and found that there was just
cause for terminating his employment based on the following considerations:
(1) he repeatedly violated the company rule prohibiting unauthorized persons from
entering the telephone operator’s room; (2) he intentionally omitted to indicate in his
application form his having a dependent child; and (3) he exhibited lack of sense of
responsibility by locking the door of the telephone operator’s room.
NLRC reversed the decision. It ruled that Magtibay is a regular employee of Inquirer.
This prompted Inquirer to appeal the case to the Court of Appeals. The CA ruled in
favor of Magtibay in their decision stating that observation that “nowhere can it be
found in the list of Basic Responsibility and Specific Duties and Responsibilities of
respondent Magtibay that he has to abide by the duties, rules and regulations that he
has allegedly violated” is a strained rationalization of an unacceptable conduct of an
employee. Hence the current petition before the Supreme Court.
Issue:
Is complainant validly dismissed despite his claims that he was not informed that he
must comply with company rules and regulations?
Ruling:
Yes. Within the limited legal six-month probationary period, probationary employees
are still entitled to security of tenure. It is expressly provided in the afore-quoted
Article 281 that a probationary employee may be terminated only on two grounds: (a)
for just cause, or (b) when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his
engagement. Magtibay was removed based on the second ground.
It is on record that Magtibay committed obstinate infractions of company rules and
regulations, which in turn constitute sufficient manifestations of his inadequacy to
meet reasonable employment norms. The suggestion that Magtibay ought to have been
made to understand during his briefing and orientation that he is expected to obey and
comply with company rules and regulations strains credulity for acceptance. The CA’s
observation that “nowhere can it be found in the list of Basic Responsibility and
Specific Duties and Responsibilities of respondent Magtibay that he has to abide by
the duties, rules and regulations that he has allegedly violated” is a strained
rationalization of an unacceptable conduct of an employee. Common industry practice
and ordinary human experience do not support the CA’s posture. All employees, be
they regular or probationary, are expected to comply with company imposed rules and
regulations, else why establish them in the first place. Probationary employees
unwilling to abide by such rules have no right to expect, much less demand, permanent
employment.
BUT PROBATIONARY NATURE TO PREVAIL OVER TERM
YOLANDA M. MERCADO, CHARITO S. DE LEON, DIANA R. LACHICA,
MARGARITO M. ALBA, JR., and FELIX A. TONOG, petitioners, vs. AMA
COMPUTER COLLEGE-PARAÑAQUE CITY, INC. , respondent.
G.R. No. 183572. April 13, 2010
Doctrine: Given the clear constitutional and statutory intents, we cannot but conclude
that in a situation where the probationary status overlaps with a fixed-term contract
not specifically used for the fixed term it offers, Article 281 should assume primacy
and the fixed-period character of the contract must give way.
Facts:
Petitioners in this case were former professors and instructors of AMA Computer
College. The petitioners executed individual Teacher’s Contracts for each of the
trimesters that they were engaged to teach, and the same stipulates that they accept a
non tenured employment. For the school year 2000-2001, AMACC implemented new
faculty screening guidelines, set forth in its Guidelines on the Implementation of
AMACC Faculty Plantilla. Under the new screening guidelines, teachers were to be
hired or maintained based on extensive teaching experience, capability, potential, high
academic qualifications and research background. The performance standards under
the new screening guidelines were also used to determine the present faculty members’
entitlement to salary increases. The petitioners failed to obtain a passing rating based
on the performance standards; hence AMACC did not give them any salary increase.
Because of AMACC’s action on the salary increases, the petitioners filed a complaint
with the Arbitration Branch of the NLRC, for underpayment of wages, non-payment
of overtime and overload compensation, 13th month pay, and for discriminatory
practices. Subsequently, the petitioners individually received a memorandum from
AMACC, through Human Resources Supervisor Mary Grace Beronia, informing them
that with the expiration of their contract to teach, their contract would no longer be
renewed. The petitioners amended their labor arbitration complaint to include the
charge of illegal dismissal against AMACC.
The labor arbiter ruled in favor of the employees finding that they have been illegally
dismissed. The LA ruled that Article 281 of the Labor Code on probationary
employment applied to the case; that AMACC allowed the petitioners to teach for the
first semester of school year 2000-2001; that AMACC did not specify who among the
petitioners failed to pass the PAST and who among them did not comply with the other
requirements of regularization, promotions or increase in salary; and that the
petitioners’ dismissal could not be sustained on the basis of AMACC’s “vague and
general allegations” without substantial factual basis. The NLRC affirmed the
decision in toto.
However, CA reversed the decision and granted the appeal of AMACC. To the CA,
the petitioners were not actually dismissed; their respective contracts merely expired
and were no longer renewed by AMACC because they failed to satisfy the school’s
standards for the school year 2000-2001 that measured their fitness and aptitude to
teach as regular faculty members. The CA emphasized that in the absence of any
evidence of bad faith on AMACC’s part, the court would not disturb or nullify its
discretion to set standards and to select for regularization only the teachers who
qualify, based on reasonable and non-discriminatory guidelines.
Issue:
Whether or not petitioners were illegally dismissed.
Ruling:
Yes. The existence of the term-to-term contracts covering the petitioners’ employment
is not disputed, nor is it disputed that they were on probationary status—not permanent
or regular status—from the time they were employed on May 25, 1998 and until the
expiration of their Teaching Contracts on September 7, 2000. As the CA correctly
found, their teaching stints only covered a period of at least seven (7) consecutive
trimesters or two (2) years and three (3) months of service.
To be sure, nothing is illegitimate in defining the school-teacher relationship in this
manner. The school, however, cannot forget that its system of fixed-term contract is a
system that operates during the probationary period and for this reason is subject to
the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the
requirements of this Article on probationary status would be fully negated as the school
may freely choose not to renew contracts simply because their terms have expired. The
inevitable effect of course is to wreck the scheme that the Constitution and the Labor
Code established to balance relationships between labor and management.
Given the clear constitutional and statutory intents, we cannot but conclude that in a
situation where the probationary status overlaps with a fixed-term contract not
specifically used for the fixed term it offers, Article 281 should assume primacy and
the fixed-period character of the contract must give way. This conclusion is
immeasurably strengthened by the petitioners’ and the AMACC’s hardly concealed
expectation that the employment on probation could lead to permanent status, and that
the contracts are renewable unless the petitioners fail to pass the school’s standards.
COLEGIO DEL SANTISIMO ROSARlO and SR. ZENAIDA S. MOFADA, OP,
petitioners, vs. EMMANUEL ROJO, respondent.
G.R. No. 170388. September 4, 2013
Doctrine: For teachers on probationary employment, in which case a fixed term
contract is not specifically used for the fixed term it offers, it is incumbent upon the
school to have not only set reasonable standards to be followed by said teachers in
determining qualification for regular employment, the same must have also been
communicated to the teachers at the start of the probationary period, or at the very
least, at the start of the period when they were to be applied.
Facts:
Rojo was hired by Colegio del Santissimo as a teacher in school years 1992-1993,
1993-19947 and 1994-1995 and placed him under probation. It was in 1995 when his
contract was not renewed. Aggrieved, Rojo filed a labor complaint for illegal
dismissal. He alleged that since he had served three consecutive school years which is
the maximum number of terms allowed for probationary employment, he should be
extended permanent employment. Citing paragraph 75 of the 1970 Manual of
Regulations for Private Schools. On the other hand, petitioners argued that respondent
knew that his Teacher’s Contract for school year 1994-1995 with CSR would expire
on March 31, 1995.12 Accordingly, respondent was not dismissed but his probationary
contract merely expired and was not renewed.
The labor arbiter ruled in favor of Rojo, finding that after teaching for three school
years he should be considered as the regular employee of Colegio del Santissimo.
Thus, the non-renewal of his contract for school year 1995-1996 constitutes illegal
dismissal.
On appeal, the NLRC affirmed the LA’s Decision with modification. It held that after
serving three school years, respondent had attained the status of regular employment
especially because CSR did not make known to respondent the reasonable standards
he should meet. CA also dismissed petitioner’s petition for certiorari. Hence this
petition.
Issue:
Whether or not Rojo was illegally dismissed.
Ruling:
Yes. For teachers on probationary employment, in which case a fixed term contract is
not specifically used for the fixed term it offers, it is incumbent upon the school to
have not only set reasonable standards to be followed by said teachers in determining
qualification for regular employment, the same must have also been communicated to
the teachers at the start of the probationary period, or at the very least, at the start of
the period when they were to be applied. These terms, in addition to those expressly
provided by the Labor Code, would serve as the just cause for the termination of the
probationary contract. The specific details of this finding of just cause must be
communicated to the affected teachers as a matter of due process. Corollarily, should
the teachers not have been apprised of such reasonable standards at the time specified
above, they shall be deemed regular employees.
In this case, glaringly absent from petitioners’ evidence are the reasonable standards
that respondent was expected to meet that could have served as proper guidelines for
purposes of evaluating his performance. Nowhere in the Teacher’s Contract could such
standards be found. Neither was it mentioned that the same were ever conveyed to
respondent. Even assuming that respondent failed to meet the standards set forth by
CSR and made known to the former at the time he was engaged as a teacher on
probationary status, still, the termination was flawed for failure to give the required
notice to respondent.
TERM OF EMPLOYMENT
BRENT SCHOOL, INC.DIMACHE vs. RONALDO ZAMORA and DOROTEO R.
ALEGRE
G.R. No. L-48494 February 5, 1990
Facts:
Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner
Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a
specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of
execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated
March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms
and conditions, including the expiry date, as those contained in the original contract of
July 18, 1971.
On April 20,1976, Alegre was given a copy of the report filed by Brent School with
the Department of Labor advising of the termination of his services effective on July
16, 1976. The stated ground for the termination was "completion of contract,
expiration of the definite period of employment." Although protesting the announced
termination stating that his services were necessary and desirable in the usual business
of his employer, and his employment lasted for 5 years - therefore he had acquired the
status of regular employee - Alegre accepted the amount of P3,177.71, and signed a
receipt therefor containing the phrase, "in full payment of services for the period May
16, to July 17, 1976 as full payment of contract."
The Regional Director considered Brent School's report as an application for clearance
to terminate employment (not a report of termination), and accepting the
recommendation of the Labor Conciliator, refused to give such clearance and instead
required the reinstatement of Alegre, as a "permanent employee," to his former
position without loss of seniority rights and with full back wages.
ISSUE:
Whether or not Alegre has been illegally dismissed.
RULING:
Respondent Alegre's contract of employment with Brent School having lawfully
terminated with and by reason of the expiration of the agreed term of period thereof,
he is declared not entitled to reinstatement.
The employment contract between Brent School and Alegre was executed on July 18,
1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been
promulgated. At that time, the validity of term employment was impliedly recognized
by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it
was the Code of Commerce (Article 302) which governed employment without a fixed
period, and also implicitly acknowledged the propriety of employment with a fixed
period. The Civil Code of the Philippines, which was approved on June 18, 1949 and
became effective on August 30,1950, itself deals with obligations with a period. No
prohibition against term-or fixed-period employment is contained in any of its articles
or is otherwise deducible therefrom.
It is plain then that when the employment contract was signed between Brent School
and Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the
duration thereof Stipulations for a term were explicitly recognized as valid by this
Court.
The status of legitimacy continued to be enjoyed by fixed-period employment
contracts under the Labor Code (PD 442), which went into effect on November 1,
1974. The Code contained explicit references to fixed period employment, or
employment with a fixed or definite period. Nevertheless, obscuration of the principle
of licitness of term employment began to take place at about this time.
Article 320 originally stated that the "termination of employment of probationary
employees and those employed WITH A FIXED PERIOD shall be subject to such
regulations as the Secretary of Labor may prescribe." Article 321 prescribed the just
causes for which an employer could terminate "an employment without a definite
period." And Article 319 undertook to define "employment without a fixed period" in
the following manner: …where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement
of the employee or where the work or service to be performed is seasonal in nature
and the employment is for the duration of the season.
Subsequently, the foregoing articles regarding employment with "a definite period"
and "regular" employment were amended by Presidential Decree No. 850, effective
December 16, 1975.
Article 320, dealing with "Probationary and fixed period employment," was altered by
eliminating the reference to persons "employed with a fixed period," and was
renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and literal
interpretation, not only fails to exhaust the gamut of employment contracts to which
the lack of a fixed period would be an anomaly, but would also appear to restrict,
without reasonable distinctions, the right of an employee to freely stipulate with his
employer the duration of his engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The law must be given a reasonable
interpretation, to preclude absurdity in its application. Outlawing the whole concept of
term employment and subverting to boot the principle of freedom of contract to
remedy the evil of employer's using it as a means to prevent their employees from
obtaining security of tenure is like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed
period of employment as still good rule—a rule reaffirmed in the recent case of
Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the
fairly analogous case of a teacher being served by her school a notice of termination
following the expiration of the last of three successive fixed-term employment
contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her
employment was probationary, contractual in nature, and one with a definitive period.
At the expiration of the period stipulated in the contract, her appointment was deemed
terminated and the letter informing her of the non-renewal of her contract is not a
condition sine qua non before Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes' contract of employment was
due to expire and that the contract would no longer be renewed. It is not a letter of
termination.
Paraphrasing Escudero, respondent Alegre's employment was terminated upon the
expiration of his last contract with Brent School on July 16, 1976 without the necessity
of any notice. The advance written advice given the Department of Labor with copy
to said petitioner was a mere reminder of the impending expiration of his contract, not
a letter of termination, nor an application for clearance to terminate which needed the
approval of the Department of Labor to make the termination of his services effective.
In any case, such clearance should properly have been given, not denied.
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner, vs. HON.
BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE
LEOGARDO, JR., in his capacity as Deputy Minister; ETHELYNNE B.
FARRALES and MARIA MOONYEEN MAMASIG, respondents.
G.R. No. 61594. September 28, 199
FACTS: morals, good customs, public order & policy. Thus, the principle of autonomy of
Pakistan International Airlines Corporation (“PIA”), a foreign corporation licensed to contracting parties must be counterbalanced with the general rule that provisions of
do business in the Philippines, executed in Manila two (2) separate contracts of the applicable law are deemed written into the contract.
employment, one with private respondent Ethelynne B. Farrales and the other with
private respondent Ma. M.C. Mamasig. In this case, the law relating to labor and employment is an area which the parties are
not at liberty to insulate themselves and their relationship from by simply contracting
The contracts provided that (1) the Duration of Employment is for a period of 3 years, with each other.
(2) PIA reserves the right to terminate this agreement at any time by giving the
EMPLOYEE notice in writing in advance one month before the intended termination
or in lieu thereof, by paying the EMPLOYEE wages equivalent to one month’s salary;
and (3) the agreement shall be construed and governed under and by the laws of
Pakistan, and only the Courts of Karachi, Pakistan shall have the jurisdiction to
consider any matter arising out of or under this agreement.

Farrales and Mamasig then commenced training in Pakistan and after such, they began
discharging their job functions as flight attendants with base station in Manila and
flying assignments to different parts of the Middle East and Europe.

Roughly one (1) year and four (4) months prior to the expiration of the contracts of
employment, PIA sent separate letters to private respondents advising both that their
services as flight stewardesses would be terminated. PIA claimed that both were
habitual absentees, were in the habit of bringing in from abroad sizeable quantities of
“personal effects”.

Prior Proceedings: Regional Director of MOLE ordered the reinstatement of private

respondents with full backwages or, in the alternative, the payment to them of the
amounts equivalent to their salaries for the remainder of the fixed three-year period of
their employment contracts having attained the status of regular employees.

On appeal the Deputy Minister of MOLE, adopted the findings of fact and conclusions
of the Regional Director and affirmed the latter’s award save for the portion thereof
giving PIA the option, in lieu of reinstatement, “to pay each of the complainants
[private respondents] their salaries corresponding to the unexpired portion of the
contract[s] [of employment] . . .”

Hence, this instant Petition for Certiorari by PIA.

ISSUE:

Whether or not the provisions of the contract superseded the general provisions of the
Labor Code

RULING:

No. The principle of freedom to contract is not absolute. Art. 1306 provides that
stipulations by the parties may be allowed provided they are not contrary to law,