#5 MAXIMO CALALANG vs A. D. WILLIAMS, ET AL. G.R. No. 47800 December 2, 1940 Doctrine: Social Justice LAUREL, J.: Facts: The National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend to the Director of the Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be prohibited from passing along the following for a period of one year from the date of the opening of the Colgante Bridge to traffic: 1) Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street from 7:30Am to 12:30 pm and from 1:30 pm to 530 pm; and 2) along Rizal Avenue extending from the railroad crossing at Antipolo Street to Echague Street from 7 am to 11pm. The Chairman of the National Traffic Commission on July 18, 1940 recommended to the Director of Public Works with the approval of the Secretary of Public Works the adoption of the measure proposed in the resolution aforementioned in pursuance of the provisions of the Commonwealth Act No. 548 which authorizes said Director with the approval from the Secretary of the Public Works and Communication to promulgate rules and regulations to regulate and control the use of and traffic on national roads. On August 2, 1940, the Director recommended to the Secretary the approval of the recommendations made by the Chairman of the National Traffic Commission with modifications. The Secretary of Public Works approved the recommendations on August 10, 1940. The Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulation. As a consequence, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places above mentioned to the detriment not only of their owners but of the riding public as well. Issues: 1) Whether the rules and regulations promulgated by the respondents pursuant to the provisions of Commonwealth Act NO. 548 constitute an unlawful inference with legitimate business or trade and abridged the right to personal liberty and freedom of locomotion? 2) Whether the rules and regulations complained of infringe upon the constitutional precept regarding the promotion of social justice to insure the well-being and economic security of all the people? Held: 1) No. The promulgation of the Act aims to promote safe transit upon and avoid obstructions on national roads in the interest and convenience of the public. In enacting said law, the National Assembly was prompted by considerations of public convenience and welfare. It was
inspired by the desire to relieve congestion of traffic, which is a menace to the public safety. Public welfare lies at the bottom of the promulgation of the said law and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. Persons and property may be subject to all kinds of restraints and burdens in order to secure the general comfort, health, and prosperity of the State. To this fundamental aims of the government, the rights of the individual are subordinated. Liberty is a blessing which should not be made to prevail over authority because society will fall into anarchy. Neither should authority be made to prevail over liberty because then the individual will fall into slavery. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring insuring its preserving. 2) No. Social justice is “neither communism, nor despotism, nor atomism, nor anarchy,” but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principles of salus populi est suprema lex.
Social justice must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting health, comfort and quiet of all persons, and of bringing about “the greatest good to the greatest number.” Labor Law Justification: Ultimate Goal: Industrial Peace #6 PNOC-EDC, et al. vs Frederick Abella G.R. No. 153904January 17, 2005 FACTS: On 01 June 1989, Frederick V. Abella started working with PNOC-EDC as a probationary Security Assistant at its SNGP in Ticala, Valencia, Negros Oriental. Subsequently, he became a regular employee. On 20 April 1990, Abella was informed that his employment with PNOCEDC would be terminated effective 21 May 1990, allegedly due to a company-wide reorganization pursuant to its Manpower Reduction Program, wherein the position of Security Assistant at PNOC-EDC SNGP had been abolished. Aggrieved, Abella filed a case of illegal dismissal, and for actual, moral, and exemplary damages with the NLRC at Dumaguete City. NLRC held that Abella was illegally dismissed as the company and its officers failed to show a" clear scheme and convincing proof of reorganization. All other claims are dismissed. An appeal was timely filed with the NLRC. Meanwhile, with said appeal still pending in the NLRC, the labor arbiter issued an order dated 20 November 1991, directing the company to "admit back to work or reinstate the complainant under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll."Pursuant to the above order, Abella was reinstated in the payroll as a General Services Assistant (PAL II) , his original position of Security Assistant having been
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abolished by virtue of the company-wide reorganization. Subsequently, he was re-slotted as a Pipeline Foreman, while he was actually discharging the functions of a Security Assistant. As insisted by the petitioners, this situation was due to the fact that the original position of the private respondent had already been abolished in the previous company-wide reorganization in 1991.But then, the private respondent was re-slotted as Security Assistant when he was transferred to the Leyte Geothermal Project. He was, thus, performing the functions of a Security Assistant and at the same time occupying the official position of a Security Assistant though in a geographically different location, when said position became vacant. In the meantime, for failing to heed the directives of his supervisors, Abella received another "show cause" memorandum dated 14 July 1994, from Tongco, ordering him to explain in writing why no disciplinary action should be taken against him for insubordination and for being AWOL. Abella, in his reply dated 16 July 1994,countered that "he is not guilty of insubordination since he was not reinstated to his former position as Security Assistant at Ticala, Valencia, Negros Oriental, per Writ of Execution issued by the labor arbiter." Abella ended up filing three complaint before the NLRC for unfair labor practice, illegal suspension, non payment of midyear bonus and 13th month pay for 1990 and 1991, claim for hazard pay, and annual salary increase against the company and its officers. After hearing the parties, the Labor Arbiter Geoffrey Villahermosa rendered declaring the respondents not guilty of unfair labor practice and illegally dismissing the complainant. On appeal, the NLRC reversed and set aside the Decision. The company came to the Court of Appeal, wherein the appellate court dismissed the petition for lack of merit. ISSUE: Whether or not the reinstatement of respondent was a faithful compliance of the provisions of Paragraph 3, Article223 of the Labor Code. RULING: Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. Accordingly, an employee who is separated from his employment on a false or nonexistent cause is entitled to be reinstated to his former position because the separation is illegal. If the position is no longer available for any other valid and justifiable reason, however, the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. The law itself cannot exact compliance with what is impossible. Ad imposible tenetur. The employer’s remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above. Of relevant significance in the case at bar is the right of the employer to transfer employees in their work station. We have previously held that it is the employer’s prerogativ e, based on its assessment and perception of its employees’ qualifications, aptitudes and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit of the company. This right flows from ownership and from the established rule that labor (law) does not authorize the substitution of judgment of the employer in the conduct of his business, unless it is shown to be contrary to law, morals, or public policy. The rationale b ehind this rule is that an employee’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. Especially so in this case where the respondent was not appointed for a security assistant for a specified
place but was only designated therein. But of course, the managerial prerogative to transfer personnel must be exercised without grave abuse of discretion --- not unnecessary, inconvenient nor prejudicial to the displaced employee, meaning there is no demotion in rank or diminution of salary, benefits and other privileges. #7 THE COCA-COLA EXPORT CORPORATION v. CLARITA P. GACAYAN G.R. No. 149433December 15, 2010LEONARDO-DE CASTRO, J.: FACTS: Clarita P. Gacayan was a Senior Financial Accountant of Coca Cola Export Corporation. One of her benefits was the reimbursement of meal and transportation expenses incurred while rendering overtime work. This reimbursement was allowed only when the employee worked overtime. The maximum amount allowed to be reimbursed wasP150.00 pesos. Because of the alleged alterations (date and food purchase) in three receipts (McDonald’s and Shakey’s) which Gacayan submitted to support her claim for reimbursement of meal expenses, Cocacola called the attention of Gacayan and required her to explain. Gacayan denied any personal knowledge in the commission of the alterations in the subject receipts. She asserted that her sister’s driver/messenger may have caused the alteration, but she could not be certain about it. With regard to the Shakey’s receipt, respondent maintained that what she ordered was a buddy pack with extra mojos. Her explanation was referred to the Assistant Manager of the Shakey’s Pizza Parlor and upon verification, it was discovered that the receipt was actually for three orders of Bunch of Lunch, and not for Buddy Pack which has a different item code. A memorandum was sent to Gacayan inviting her to a hearing and formal investigation and to give her an opportunity to explain the issues against her. Gacayan appeared at the initial hearing but failed to appear on the second due to her doctor’s advice to rest since she was suffering from “severe mixed migraine and muscle contraction headache.” Gacayan also complained of the alleged partiality of the investigating committee against her. During that second hearing the personnel of Shakey’s denied the allegations of Gacayan. Coca Cola then sent another notice informing Gacayan of the re-setting of the continuation of the formal investigation but Gacayan failed to attend such hearing. Coca Cola then concluded the formal investigation. In a letter, Coca Cola dismissed Gacayan for fraudulently submitting tampered and/or altered receipts in support of her petty cash reimbursements in gross violation of the company’s rules and regulations. Gacayan then filed a complaint for illegal dismissal. Gacayan averred that, assuming that she altered the receipts in question, dismissal was too harsh a penalty for her considering that: “(a) it was her f irst offense in her 9 ½ years of service; (b)the offense imputed was minor, as only the dates and items, not the amounts, were altered or the amounts involved were very minimal; (c) the company did not suffer material damage, as she was really entitled to the P150.00 allowance even without accompanying receipt; and (d) respondent acted without malice, as she really rendered (unpaid) overtime work on those three dates.” Coca Cola maintained that Gacayan was dismissed for cause, that of “tampering official receipts to substantiate her claim for (meal) reimbursement which reflects her questionable integrity and honesty.”Petitioner added that in terminating the services of an employee for breach of trust, “it is enough that the misconduct of the employee tends to prejudice the employer’s interest since it would be unreasonable to require the employer to wait until he is materially injured before removing the cause of the impending evil.”The Labor Arbiter ru led in favor of Coca Cola and dismissed the complaint. It was held that Coca Cola complied with the notice requirement strictly and
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that Gacayan was terminated for repeatedly submitting fraudulent items of expense, clearly in violation of company rules and regulations which consequently resulted in loss of trust and confidence. NLRC affirmed. The Court of Appeals reversed and set aside the Resolutions ruling that the penalty of dismissal imposed was too harsh. Coca Cola appealed, contending that Gacayan’s repeated submission of altered or tampered receipts to support her claim for reimbursement constitutes a betrayal of the employer’s trust and confidence and a serious misconduct, thus, giving cause for the termination of her employment. ISSUE: WON there is serious misconduct. HELD: The Labor Code mandates that before an employer may validly dismiss an employee from the service, the requirement of substantial and procedural due process must be complied with. Under the requirement of substantial due process, the grounds for termination of employment must be based on just or authorized causes. Article 282 of the Labor Code enumerates the just causes for the termination of employment, thus: ART. 282. Termination by employer. - An employer may terminate an employment for any of the following causes:(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;(b) Gross and habitual neglect by the employee of his duties;(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and(e) Other causes analogous to the foregoing. In the instant case, it was only in the Reply to Respondent’s Comment, that petitioner made mention of another ground for the dismissal of respondent, that of serious misconduct, when she submitted altered or tampered receipts to support her claim for reimbursement. Such allegation appears to be a mere afterthought, being tardily raised only in the Reply. In a case, it was held that: Misconduct has been 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 character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however serious, must nevertheless be in connection with the employee’s work to constitute just cause for his separation. Thus, for misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer. Indeed, an employer may not be compelled to continue to employ such person whose continuance in the service would be patently inimical to his employer’s business. In this light, the alleged infractions of respondent could hardly be considered serious misconduct. It is well to stress that in order to constitute serious misconduct which will warrant the dismissal of an employee, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been done with wrongful intent. Such is, however, lacking in the instant case.
#8 Maternity Children's Hospital vs. Secretary of Labor, 174 SCRA 632 Facts: The petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover President. The hospital derives its finances from the club itself as well as from paying patients, averaging 130 per month. It is also partly subsidized by the Philippine Charity Sweepstakes Office and the Cagayan De Oro City government. On May 23, 1986, ten employees of the petitioner employed in different capacities/positions filed a complaint with the Office of the Regional Director of Labor and Employment for underpayment of their salaries and ECOLAs, which was docketed as ROX Case No. CW-71-86. On June 16, 1986, the Regional Director directed two of his Labor Standard and Welfare Officers to inspect the records of the petitioner to ascertain the truth of the allegations in the complaints. Payrolls covering the periods of May, 1974, January, 1986, November, 1985 and May, 1986, were duly submitted for inspection. On July 17, 1986, the Labor Standard and Welfare Officers submitted their report confirming that there was underpayment of wages and ECOLAs of all the employees by the petitioner. As a result, the petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S. Sanchez, who rendered a Decision on September 24, 1986, modifying the said Order in that deficiency wages and ECOLAs, should be computed only from May 23, 1983 to May 23, 1986. On October 24, 1986, the petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in his Order dated May 13, 1987, for lack of merit. Petitioner likewise maintains that the Order of the respondent Regional Director of Labor, as affirmed with modifications by respondent Secretary of Labor, does not clearly and distinctly state the facts and the law on which the award was based. In its "Rejoinder to Comment,” the petitioner further questions the authority of the Regional Director to award salary differentials and ECOLAs to private respondents, alleging that the original and exclusive jurisdiction over money claims is properly lodged in the Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code. Issue: Whether or not the Regional Director had jurisdiction over the case. Held: This is a labor standards case, and is governed by Art. 128 of the Labor Code. Labor standards refer to the minimum requirements prescribed by existing laws, rules, and regulations relating to wages, hours of work, cost of living allowance and other monetary and welfare benefits, including occupational, safety, and health standards. Under the present rules, a Regional Director exercises both visitorial and enforcement power over labor standards cases, and is therefore empowered to adjudicate money claims, provided there still exists an employer-employee relationship, and the findings of the regional office is not contested by the employer concerned.
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#9 Mariveles Shipyard V CA G.R. No. 144134; November 11, 2003; 415 SCRA 573 December 8, 2010
Held: Petitioner’s liability is joint and several with that of Longest Force, pursuant to Articles 106, 107 and 109 of the Labor Code which provide as follows:
Facts: Sometime on October 1993, Mariveles Shipyard Corporation engaged the services of Longest Force Investigation and Security Agency, Inc. to render security services at its premises. Pursuant to their agreement, Longest Force deployed its security guards, the private respondents herein, at the petitioner’s shipyard in Mariveles, Bataan.
ART. 106. CONTRACTOR OR SUBCONTRACTOR. — Whenever an employer enters into a contract with another person for the performance of the former’s work, the employees of the contractor and of the latter’s sub contractor, if any, shall be paid in accordance with the provisions of this Code.
According to petitioner, it religiously complied with the terms of the security contract with Longest Force, promptly paying its bills and the contract rates of the latter. However, it found the services being rendered by the assigned guards unsatisfactory and inadequate, causing it to terminate its contract with Longest Force on April 1995. Longest Force, in turn, terminated the employment of the security guards it had deploy ed at petitioner’s shipyard.
In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him.
On September 1996, private respondents filed a case for illegal dismissal, underpayment of wages pursuant to the PNPSOSIA-PADPAO rates, non-payment of overtime pay, premium pay for holiday and rest day, service incentive leave pay, 13th month pay and attorney’s fees, against both Longest Force and petitioner, before the Labor Arbiter. The case sought the guards’ reinstatement with full back wages and without loss of seniority rights.
ART. 107. INDIRECT EMPLOYER. — The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project.
Longest Force admitted that it employed private respondents and assigned them as security guards at the premises of petitioner rendering a 12 hours duty per shift for the said period. It likewise admitted its liability as to the non-payment of the alleged wage differential in the total amount of P2,618,025 but passed on the liability to petitioner.
ART. 109. SOLIDARY LIABILITY. — The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.
The petitioner denied any liability on account of the alleged illegal dismissal, stressing that no employer-employee relationship existed between it and the security guards. It further pointed out that it would be the height of injustice to make it liable again for monetary claims which it had already paid. Anent the cross-claim filed by Longest Force against it, petitioner prayed that it be dismissed for lack of merit. Petitioner averred that Longest Force had benefited from the contract; it was now estopped from questioning said agreement on the ground that it had made a bad deal.
In this case, when petitioner contracted for security services with Longest Force as the security agency that hired private respondents to work as guards for the shipyard corporation, petitioner became an indirect employer of private respondents pursuant to Article 107 abovecited. Following Article 106, when the agency as contractor failed to pay the guards, the corporation as principal becomes jointly and severally liable for the guards’ wages. This is mandated by the Labor Code to ensure compliance with its provisions, including payment of statutory minimum wage.
The Labor Arbiter rendered judgment that Longest Force and Mariveles Shipping be jointly and severally liable to pay the money claims of the complainants. Petitioner appealed the foregoing to the NLRC. The labor tribunal, affirmed the decision of the Labor Arbiter. Petitioner moved for reconsideration, but this was denied by the NLRC. The petitioner then filed a special civil action for certiorari assailing the NLRC judgment for having been rendered with grave abuse of discretion with the Court of Appeals. The Court of Appeals denied due course to the petition and dismissed it outright.
The security agency is held liable by virtue of its status as direct employer, while the corporation is deemed the indirect employer of the guards for the purpose of paying their wages in the event of failure of the agency to pay them. This statutory scheme gives the workers the ample protection consonant with labor and social justice provisions of the 1987 Constitution. Petitioner cannot evade its liability by claiming that it had religiously paid the compensation of guards as stipulated under the contract with the security agency. Labor standards are enacted by the legislature to alleviate the plight of workers whose wages barely meet the spiraling costs of their basic needs. Labor laws are considered written in every contract. Stipulations in violation thereof are considered null. Similarly, legislated wage increases are deemed amendments to the contract. Thus, employers cannot hide behind their contracts in order to evade their (or their contractors’ or subcontractors’) liability for noncompliance with the statutory minimum wage.
Issue: WON Longest Force should be held solely and ultimately liable.
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However, the court emphasizes that the solidary liability of petitioner with that of Longest Force does not preclude the application of the Civil Code provision on the right of reimbursement from his co-debtor by the one who paid. As held in Del Rosario & Sons Logging Enterprises, Inc. v. NLRC , the joint and several liability imposed on petitioner is without prejudice to a claim for reimbursement by petitioner against the security agency for such amounts as petitioner may have to pay to complainants, the private respondents herein. The security agency may not seek exculpation by claiming that the principal’s payments to it were inadequate for the guards’ lawful compensation. As an employer, the security agency is charged with knowledge of labor laws; and the adequacy of the compensation that it demands for contractual services is its principal concern and not any other’s. #10 Philippine National Bank vs. Cabansag, [G. R. No. 157010, June 21, 2005]. Here, respondent was hired by the Singapore branch of petitioner-bank while she was a tourist in Singapore in 1998. Petitioner is a private banking corporation organized and existing under the laws of the Philippines, with principal offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, too, the Branch Office had two (2) types of employees: (a) expatriates or the regular employees, hired in Manila and assigned abroad including Singapore; and (b) locally (direct) hired. She applied for and was hired as Branch Credit Officer. After her 3-month probationary period, she was terminated. Subsequently, she filed a complaint before a Labor Arbiter. One of the issues presented before the Supreme Court was whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy. The Supreme Court, in answering this query in the affirmative, ruled that the Labor Arbiter has jurisdiction because the issue here involves termination of an OFW. While she may have been directly hired in Singapore by petitioner, however, noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. The Certificate declared her a bona-fide contract worker in Singapore. Thus, even assuming arguendo that she was considered at the start of her employment as a "direct hire" governed by and subject to the laws, common practices and customs prevailing in Singapore, she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. At the time her employment was illegally terminated, she already possessed the POEA Employment Certificate. Moreover, petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore. Significantly, respondent's employment by the Singapore branch office had to be approved by the president of the bank whose principal offices were in Manila. This circumstance militates against petitioner's contention that respondent was "locally hired"; and totally "governed by and subject to the laws, common practices and customs" of Singapore, not of the Philippines. Instead, with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker, in this case one deployed in Singapore. Hence, petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the Labor Arbiter.
#11 CASIMIRO v. STERN REAL ESTATE, INC. Respondent Stern Real Estate & Development Corporation is a corporation engaged in the business of purchasing, selling and operating buildings and other real properties for profit. One such property it owns is the Hotel Rembrandt. The respondent hotel undertook a Special Separation Program (SSP) which all employees can avail of for the limited period, due to the dire financial status it was experiencing. Forty-nine (49) employees were accepted for this separation program. The private respondents then decided that a retrenchment program was further needed in order to stem the losses. The private respondents then informed the DOLE through an Establishment Termination Report, that they were retrenching twenty-nine (29) employees. The private respondents likewise informed these twenty-nine (29) employees that their services would be terminated thirty (30) days after the receipt of the written notification. After one month from receipt of the letters of termination, the twenty-nine (29) employees were given their separation pay and the corresponding quitclaims were signed. Petitioners were among the retrenched employees. They later filed a complaint for "illegal dismissal in the guise of retrenchment and underpayment/non-payment of overtime pay, premium compensation for holiday and rest day" with prayer for moral and exemplary damages and attorney’s fees before the National Labor Relations Commission (NLRC). Issue: Will retrenchment, on account of economic loss, be justified on the face of constitutional pro-labor mandate? Ruling: Article 283 of the Labor Code of the Philippines authorizes retrenchment as one of the valid causes to dismiss employees as a measure to avoid or minimize business losses. Retrenchment is the "termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation." Simply put, it is a reduction in manpower, a measure utilized by an employer to minimize losses incurred in the operation of its business. It is a management prerogative consistently recognized and affirmed by this Court. We enumerated the requirements for a valid retrenchment which the employer must prove by clear and convincing evidence: 1) that retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) that the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher; (4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure; and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained
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among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers. #12 INNODATA PHILIPPINES, INC. vs. QUEJADA-LOPEZ and NATIVIDAD-PASCUAL G.R. No. 162839 October 12, 2006
Indeed, a contract of employment is impressed with public interest. For this reason, provisions of applicable statutes are deemed written into the contract. Hence, the "parties are not at liberty to insulate themselves and their relationships from the impact of labor laws 19 and regulations by simply contracting with each other. " Moreover, in case of doubt, the 20 terms of a contract should be construed in favor of labor . #13 INT’L SCHOOL ALLIANCE OF EDUCATORS (ISAE) v. QUISUMBING
Facts: Estrella G. Natividad and Jocelyn L. Quejada were employed as formatters by Innodata Philippines, Inc., a company engaged in the encoding/data conversion business. They worked from March 4, 1997, until their separation on March 3, 1998. They filed a complaint for illegal dismissal as they contended that the nature of their employment was regular and not on a fixed term basis, as the job in the company is necessary and desirable to the usual business of the corporation. On the other hand, the company contended that the dismissal was valid as their employment contracts have expired, as those were only for a fixed period of one (1) year. The Labor Arbiter ruled in favor of Natividad and Quejada, thus, Innodata to reinstate them to their former position without loss of seniority rights, and to award them backwages computed from the time they were illegally dismissed up to the date of the decision. Innodata appealed before the National Labor Relations Commission which declared that the contract between the employees and the company was for a fixed term and therefore, the dismissal at the end of their one year term agreed upon, was valid. On appeal to the Court of Appeals, it ruled that respondents were regular employees in accordance with Section 280 of the Labor Code. It said that the fixed-term contract prepared by petitioner was a crude attempt to circumvent respondents’ right to security of tenure. Issue: Whether or not fixed-term employment contracts are valid under the law. Held: While the SC has recognized the validity of fixed-term employment contracts in a number of 10 cases, it has consistently emphasized that when the circumstances of a case show that the periods were imposed to block the acquisition of security of tenure, they should be struck 11 down for being contrary to law, morals, good customs, public order or public policy . If the contract was really for a fixed term, the employer should not have been given the discretion to dismiss the employee during the one year period of employment for reasons other than the just and authorized causes under the Labor Code. Settled is the rule that an employer can terminate the services of an employee only for valid and just causes which must be shown by clear and convincing evidence. Article 1700 of the Civil Code declares: “The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects."
FACTS: Petitioners work under private respondent International School. The school hires both local and foreign hires. Foreign hires are granted with more benefits and higher salary. Respondent says this is because of dislocation factor and limited tenure. Petitioners contested the difference in salary rates between foreign and local hires. They claim that it is discriminatory to Filipinos and it constitutes racial discrimination. HELD: There is violation of equal protection. Equal pay for equal work, persons who work with substantially equal qualifications, skills, effort, and responsibility under similar conditions should be paid similar salaries. If an employer accords the same rank and position, the presumption is that they perform equal work. Here, both groups have similar functions which they perform under similar conditions. There is no evidence that foreign hires perform 25% more efficient than local hires. The dislocation factor and tenure are properly accorded by the benefits they received. #14 KASAPIAN NG MALAYANG MANGGAGAWA SA COCA-COLA (KASAMMA-CCO) V CA FACTS: On 30 June 1998, the CBA for the years 1995-1998 executed between petitioner union and private respondent company expired. Petitioner submitted its demands to the company foranother round of collective bargaining negotiations. Said negotiations came to a gridlock as the parties failed to reach a mutually acceptable agreement with respect to certain economic and non-economic issues. Thereafter, petitioner filed a notice of strike on 11 November1998 with the National Conciliation and Mediation Board on theground of CBA negotiation deadlock. Several conciliationconferences were conducted but the parties failed to reach a settlement. On 19 December 1998, petitioner held the strike in private respondent’s Manila and Antipolo plants.- Subsequently, both parties came to an agreement settling thelabor dispute. Thus, on 26 December 1998, both partiesexecuted and signed a MOA providing for salary increases and other economic and non-economic benefits. It likewise contained a provision for the regularization of contractual, casual and/or agency workers who have been working with private respondent for more than one year. Said MOA was later incorporated to form part of the 1998-2001 CBA and was thereafter ratified by the employees of the company.- Consequently, petitioner demanded the payment of salary and other benefits to the newly regularized employees retroactive to1 December 1998, in accord with the MOA. However, the private respondent refused to yield to said demands contending that the date of effectivity of the regularization of said employees were 1May 1999 and 1 October 1999. Meanwhile, a certificationelection was conducted on 17 Aug ust 1999 wherein theKASAMMA-CCO Independent surfaced as the winning union and
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was then certified by the DOLE as the sole and exclusivebargaining agent of the rank-andfile employees of privaterespondent’s Manila and Antipolo plants for a period of five years from 1 July 1999 to 30 June 2004. On 23 August 1999, the KASAMMA-CCO Independent demanded the renegotiation of the CBA which expired on 30 June 1998. Such request was denied by private respondent as there was already an existing CBA which was negotiated and concluded between petitioner and private respondent which was yet to expire on 30 June 2001.- On 9 December 1999, despite the pendency of petitioner’s complaint before the NLRC, private respondent closed its Manila and Antipolo plants resulting in the termination of employment of 646 employees. About 500 workers were given a notice of termination effective 1 March 2000 on the ground of redundancy. The affected employees were considered on paid leave from 9 December 1999 to 29 February 2000 and were paid their corresponding salaries. On 13 December 1999, four daysafter its closure of the Manila and Antipolo plants, privaterespondent served a notice of closure to the DOLE.- Petitioner contends that respondent violated the MOA by notrecognizing the regularization of the 61 employees as of December 1, 1998 and giving them full benefits retroactive to that date. Petitioner likewise claims the closure of the plants was in bad faith, done in order to avoid renegotiations of the CBA, and therefore illegal. ISSUES: WON the regularization of the 61 employees was effective December 1, 19982. WON the closure of the plants was legal.
havebeen with the company for one year by said date mustautomatically be considered regular employees by operation of law. YES. The characterization of the employee’s service as no longer necessary or sustainable, and therefore properly terminable, is an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterizing or decision is not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. The private respondent’s decision to close the plant was a result of a study conducted which established that the most prudent course of action for the private respondent was to stop operations in said plants and transfer production to other more modern and technologically advanced plants of private respondent. The subject closure and the resulting termination of the 639employees weredue to legitimate busi ness considerations, as evidenced by the technical study conducted by private respondent. The assailed Decisions are hereby AFFIRMED with MODIFICATION. The 61 subject employees are hereby declared regular employees as of 1 December 1998 and are entitled to the benefits provided for in the Memorandum of Agreement. #15 DOLE Philippines Inc. vs. Pawis ng Makabayang Obrero, 2003 Post under case digests, labor law at Friday, February 03, 2012 Posted by Schizophrenic Mind Facts: The petitioner and the respondent executed a CBA for the period starting February 1996 to February 2001. Under the bonusesand allowances section of the said CBA, a P10 meal allowance shall be given to employees who render at least 2 hrs of overtime work and free meals shall be given after 3 hours of actual overtime work.
HELD: YES. It must be noted that both parties admit the existence of said MOA and that they have voluntarily entered into said agreement. Furthermore, neither of the parties denied that the 61employees have indeed been regularized by private respondent. The MOA, being a contract freely entered into by the parties, now constitutes as the law between them, and the interpretation of its contents purely involves an evaluation of the law as applied to the facts herein. It is the contention of petitioner that the date 1 December 1998 refers to the effective date of regularization of said employees, while private respondent maintains that said date is merely the reckoning date from which the one year employment requirement shall be computed. We agree with petitioner. It is logically absurd that the company will only begin to extend priority to these employees on a date that has already passed, when in fact they have already extended priority to these employees by agreeing to the contents of the MOA and signing said agreement. It is erroneous for the NLRC to conclude that extending to them the benefits of the MOA would violate the principle of "no-work-no-pay" as they are actuallyrendering service to the company even before 1 December1998, and continued to do so thereafter. Moreover, under Article280 of the Labor Code, any employee who has rendered at least one year of service, shall be considered a regular employee withrespect to the activity in which he is employed and hisemployment shall continue while such activity exists. Also, under the law, a casual employee is only casual for one year, and it is the passage of time that gives him a regular status. Even if we were to follow private respondent’s contention that the date 1 December 1998 provided in the MOA is merely a reckoning dateto determine who among the non-regular employees haverendered one year of service as of said date, all those who
Pursuant to this provision, some departments of granted free meals after exactly 3 ours of work. However, other departments granted free meals only after more than 3 hours of overtime work. The respondent filed a complaint against Dole, saying that free meals should be granted after exactly 3 hrs of overtime work, not after more than 3 hrs. The parties agreed to settle the dispute to voluntary arbitration. It was decided in favor of the respondent, directing the petitioner to grant free meals after exactly 3 hrs of overtime work. CA affirmed. Issues:(1) Whether or not free meals should be granted after exactly 3 hrs of work (2) Whether or not the petitioner has the right to determine when to grant free meals and its conditions Held: (1) YES. The same meal allowance provision is found in their previous CBAs, the 1985-1988 CBA and the 1990-1995 CBA. However, it was amended in the 1993-1995 CBA, by changing the phrase “after 3 hrs of overtime work” to “after more than 3 hrs of overtime work”. In the 1996-2001 CBA, the parties had to negotiate the deletion of the said phrase in order to revert to the old provision. Clearly, both parties had intended that free meals should be given after exactly 3 hrs of overtime work. The disputed provision is clear and unambiguous, hence the literal meaning shall prevail. No amount of legal semantics can convince the Court that “after more than” means the same as
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“after”.
(2) NO. The exercise of management prerogative is not unlimited. It is subject to the limitations provided by law. In this case, there was a CBA, and compliance therewith is mandated by the express policy ofthe law. #16 Davao Fruits Corporation vs Associated Labor Unions, G.R. No. 85073, August 24, 1993; 225 SCRA 562 th (Labor Standards – Fringe benefits not included in 13 month pay) Facts: Respondent ALU for and in behalf of all the rank-and-file workers and employees of th petitioner sought to recover from the latter the 13 month pay differential for 1982 of said employees, equivalent to their sick, vacation and maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which petitioner, allegedly in th disregard of company practice since 1975, excluded from the computation of the 13 month pay for 1982. th
Issue: WON in the computation of the 13 month pay under PD No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays may be excluded in the computation and payment thereof. Held: Yes. Basic salary does not merely exclude the benefits expressly mentioned but all payments which may be in the form of fringe benefits or allowances. Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 provides that “overtime pay, earnings and other remunerations which are not part of the basic salary shall not be included th in the computation of the 13 month pay. Whatever compensation an employee receives for an 8 hour work daily or the daily wage rate is the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It follows therefore, that payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic th salary for the purpose of determining the 13 month pay. #17 AMERICAN WIRE AND CABLE DAILY RATEDEMPLOYEES UNION V AMERICAN WIRE AND CABLECO., INC. CHICO-NAZARIO: April 29, 2005 FACTS - American Wire and Cable Co., is a corporation engaged in themanufacture of wires and cables. On Feb.16, 2001, an originalaction was filed before the NCMB of the DOLE by the two unions(American Wire and Cable Daily Rated Employees and AmericanWire and Cable Monthly Rated Employees) for voluntaryarbitration. They alleged that respondent company, without validcause, suddenly and unilaterally withdrew and denied certainbenefits which they have long enjoyed. These are:a) Service Awardb) 35% premium pay of an e mployee’s basic pay for the workrendered during Holy Monday, Holy Tuesday, Holy Wednesday,December 23, 26, 27, 28 and 29c) Christmas partyd) Promotional increase.- A promotional increase was sought by 15 of its members whowere given new job classifications. These new hob classificationsaccording to the union are in the form of a promotion. Increasewas not given. Petitioner’s contention
- withdrawal of the 35% premium pay for selected days duringHoly Week and Christmas season, the holding of a Christmasparty, and its incidental benefits, and the giving of serviceawards was a customary p ractice that can no longer beunilaterally withdrawn by respondent without consent of thepeti tioner. The benefits in question were given by respondentconsistently, deliberately and unconditionally since timeimmemorial. The benefits given by the respondent cannot beconsidered as a “bonus” as they are not founded on profit. Evenassuming that it can be treated as a bonus, the grant of thesame, by reason of its ling and regular concession, may beregarded as part of regular compensation. Respondent’s contention -The grant of all subject benefits has not ripened into practicethat the employees concerned can claim a demandable rightover them. The grant of these benefits was conditional basedupon the financial conditions that existed before have indeedsubstantially changed thereby justifying the discontinuance of said grants. ISSUE WON respondent is guilty of violating article 100 of the LaborCode, when the benefits/entitlements given to the members of petitioner union were withdrawn HELD *preliminary issue raised by respondent was the error in themode of appeal by the petitioners. Respondent contends thatpetitioner should have raised a petition for review on certiorariunder Rule 45, and not through a special civil action for certiorariunder Rule 65 of the Rules on Civil Procedure. Thus, case shouldbe dismissed outright.NO- Court ruled that the SC may brush aside the procedural barrierand take cognizance of the petition as it raises an issue of paramount importance.- ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTIONOF BENEFITS. Nothing in this Book shall be construed toeliminate or in any way diminish supplements, or ot heremployee benefits being enjoyed at the time of promulgation of this Code.- a determination must first be made on whether the benefits arein the nature of a bonus or no, and assuming they are so,whether they are demandable and enforceable obligations.Definition of bonus ( Producers Bank of the Philippines v. NLRC )‘a bonus is an amount granted and p aid to an employee for hisindustry and loyalty… it is an act of generosity granted by anenlightened employer to spur the employee to greater efforts…the granting of a bonus is a management prerogative… thus abonus is not a demandable and enforceable obligation exceptwhen it is made part of the wage, salary or compensation of theemployee.’ - Court ruled that the benefits /entitlements subjects of theinstant case are all bonuses given by respondent out of itsgenerosity and munificence. Benefits/entitlements are all inexcess of what the law requires each employer to give itsemployees. Since they are above what is strictly due, thegranting of the same was a management prerogative, which,whenever management sees necessary, may be withdrawn.the consequential question therefore that needs to be settled isif the subject benefits, which are bonuses, are demandable ornot.- the Court does not believe so. For a bonus to be enforceable, ithas to be promised by the employer and expressly agreed uponby the parties or it must have a fixed amount and had been along and regular practice on the part of the employer. To beconsidered “regular practice” the giving of the bonus shouldhave been done
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over a long period of time and must be shownto have been consistent and deliberate.- the benefits in question were never part of any expressagreement. They were never even incorporated in the CollectiveBargaining Agreement. The Christmas party and its incidentalbenefits and the giving of cash incentive together with theservice award cannot be said to have fixed amounts. There wasa downtrend in the amount given for service awards. There wasalso a downtrend with respect to the holding of Christmasparties as the locations were changed from paid venues to freeones. -The additional 35% premium pay for work during HolyWeek and Christmas season cannot be held to have ripened intoa company practice that the petitioners have a right to demand. This practice was only granted for two years and with theexpress reservation from respondent corporation’s owner that itcannot continue the same in view of the company’s currentfinancial condition. #18 Suico vs NLRC 513 SCRA 375 (2007)FACTS: Culver B. Suico, Teresa D. Ceniza, Ronald R. Dacut (complainants were regular employees of Philippine Long Distance Telephone Company (PLDT) Cebu Jones Exchange and members of Manggagawa ng Komunikasyon ng Pilipinas (MKP). September 1997, MKP launched a strike against PLDT. Complainants participated in the strike by picketing the PLDT. PLDT sent 2 notice to explanation to Suico et.al, for the acts of violation that happen during the strike. But the complainant failed to provide the required written explanation the acts charged to them. They replied informing, that they opt to exercise their rights to due process and request to furnish a copy of the formal written complaint filed them, statement of witness/es and preliminary investigations and/or report/s conducted on the aforesaid incident, if any. PLDT findings based on the available evidence found the complainants guilty and were subsequently terminated. Suico et.al filed a complaint for illegal dismissal and damages. It is the view of PLDT that in the dismissal of employees for strike-related violence, it is sufficient to merely declare the latter to have lost their employment without having to comply with any procedure for their termination. PLDT, refused to implement said policy, contending that it applies to administrative cases only and not to strike-related cases such as the ones involving Suico, et al.
based. These two notices would have sufficed had it not been for the existence of Systems Practice No.94-016. Under Systems Practice No. 94-016, PLDT granted its employee the alternative of either filing a written answer to the charges or requesting for opportunity to be heard and defend himself with the assistance of his counsel or union representative, if he so desires. Suico, et al. exercised their option under Systems Practice No. 94-016 by requesting that a formal hearing be conducted and that they be given copies of sworn statements and other pertinent documents to enable them to prepare for the hearin g. This option is part of their right to due process. PLDT is bound to comply with the Systems Practice. Company policies or practices are binding on the parties. Some can ripen into an obligation on the part of the employer, such as those which confer benefits on employees or regulate the procedures and requirements for their termination Art. 277 (b) in relation to Art. 264 (a) and (e) recognizes the right to due process of all workers, without distinction as to the cause of their termination. Where no distinction is given, none is construed. Hence, the foregoing standards of due process apply to the termination of employment of Suico, et al. even if the cause therefore was their supposed involvement in strike-related violence prohibited under Art. 264 (a) and (e). Moreover, the procedure for termination prescribed under Art. 277(b) and Rule XXII of the Implementing Rules of Book V is supplemented by existing company policy. Art. 277(b) provides that the procedure for termination prescribed therein is without prejudice to the adoption by the employer of company policy on the matter, provided this conforms with the guidelines set by the DOLE such as Rule XXII of the Implementing Rules of Book V. This is consistent with the established principle that employers are allowed, under the broad concept of management prerogative, to adopt company policies that regulate all aspects of personnel administration including the dismissal and recall of workers. #19 DEALCO FARMS vs. NLRC DEALCO FARMS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION (5th DIVISION), CHIQUITO BASTIDA, and ALBERT CABAN GR No. 153192 January 30, 2009 FACTS:
ISSUE: Whether PLDT violated the requirements of due process under the Labor Code when it dismissed said employees without heeding their request for the conduct of a formal hearing as provided for under PLDT Systems Practice No. 94-016 and prior to submission of their respective answers to the charges against them. HELD: The procedure adopted by PLDT in dismissing Suico, et al. fell short of the requirements of due process. The requirements of due process by which to test the validity of the procedure adopted by PLDT in dismissing Suico, et al. are those embodied in Art. 277 (b) of the Labor Code, Rule XXII of the Implementing Rules of Book V and Systems Practice No. 94-016.PLDT complied with the two-notice requirement of due process. The first notices sent to Suico, et al. set out in detail the nature and circumstances of the violations imputed to them, required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. The last notices informed Suico, et al. of the decision to terminate their employment and cited the evidence upon which the decision was
Petitioner Dealco Farms is a corporation engaged in the business of importation, production, fattening and distribution of live cattle for sale to meat dealers, meat traders, meat processors, canned good manufacturers and other dealers in Mindanao and in Metro Manila. Petitioner imports cattle by the boatload from Australia into the ports of General Santos City, Subic, Batangas, or Manila. In turn, these imported cattle are transported to, and housed in, petitioner’s farms in Polomolok, South Cotabato, or in Magalang, Pampanga, for fattening until the cattle individually reach the market weight of 430 to 450 kilograms. Respondents Albert Caban and Chiquito Bastida were hired by petitioner on June 25, 1993 and October 29, 1994, respectively, as escorts or "comboys" for the transit of live cattle from General Santos City to Manila. Respondents’ work entailed tending to the cattle during transportation. It included feeding and frequently showering the cattle to prevent dehydration and to develop heat resistance. On the whole, respondents ensured that the cattle would be safe from harm or death caused by a cattle fight or any such similar incident.
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Upon arrival in Manila, the cattle are turned over to and received by the duly acknowledged buyers or customers of petitioner, at which point, respondents’ work ceases. For every round trip travel which lasted an average of 12 days, respondents were each paid P1,500.00. The 12day period is occasionally extended when petitioner’s customers are delayed in receiving the cattle. In a month, respondents usually made two trips. On August 19, 1999, respondents were told by Dealco’s hepe de viaje that their replacement had been effected immediately, but no reason was given for their replacement. Respondents attempted to meet with petitioner but failed. Petitioner denies the existence of an employer-employee relationship with respondents, claiming that: (a) respondents are independent contractors who offer "comboy" services to various shippers and traders of cattle, not only to petitioner; (b) in the performance of work on board the ship, respondents are free from the control and supervision of the cattle owner since the latter is interested only in the result thereof; (c) in the alternative, respondents can only be considered as casual employees performing work not necessary and desirable to the usual business or trade of petitioner, i.e., cattle fattening to market weight and production; and (d) respondents likewise failed to complete the one-year service period, whether continuous or broken, set forth in Article 280 of the Labor Code, as petitioner’s shipments were substantially reduced in 1998-1999, thereby limiting the escort or "comboy" activity for which respondents were employed.
necessarily the exercise thereof. The presence of the four (4) elements in the determination of an employer-employee relationship has been clearly established by the facts and evidence on record, starting with the admissions of petitioner who acknowledged the engagement of respondents as escorts of their cattles shipped from General Santos to Manila, and the compensation of the latter at a fee of P1,500.00 per trip. The element of control, jurisprudentially considered the most essential element of the four, has not been demolished by any evidence to the contrary. The branch has noticed that the preparation of the shipment of cattle, manning and feeding them while in transit, and making a report upon their return to General Santos that the cattle shipped and which reached Manila actually tallied were all indicators of instructions, supervision and control by *petitioner+ on *respondents’+ performance of work as escorts for which they were hired. This we agree on all fours. The livestock shipment would cost thousands of pesos and the certainty of it reaching its destination would be the only thing any operator would consider at all time and under all circumstances. It is illogical for [petitioner] to argue that the shipment was not necessary or desirable to their business, as their business was mainly livestock production, because they were undeniably the owners of the cattle escorted by respondents. Should losses of a shipment occur due to respondents’ neglect these would still be petitioners’ loss, and nobody else’s.
ISSUE: Whether or not an employer-employee relationship existed between petitioner and respondents and therefore the latter’ s termination was illegal. HELD: Complainant’s task of escorting the livestock shipped to Manila, taking care of the livestock in transit, is an activity which is necessary and desirable in the usual business or trade of respondent. It is of judicial notice that the bulk of the market for livestock of big livestock raisers such as respondent is in Manila. Hogs do not swim, they are shipped. The caretaker is a component of the business, a part of the scheme of the operation.
More, it also appears that respondents had rendered service for more than one year doing the same task repeatedly, thus, even assuming they were casual employees they may be considered regular employees with respect to the activity in which they were employed and their employment shall continue while such activity exists (last par. of Art. 280). In the case at bench, both the Labor Arbiter and the NLRC were one in their conclusion that respondents were not independent contractors, but employees of petitioner. In determining the existence of an employer-employee relationship between the parties, both the Labor Arbiter and the NLRC examined and weighed the circumstances against the four-fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to contro l the employees’ conduct, or the so-called "control test." Of the four, the power of control is the most important element. More importantly, the control test merely calls for the existence of the right to control, and not
Considering that we have sustained the Labor Arbiter’s and the NLRC’s finding of an employer-employee relationship between the parties, we likewise sustain the administrative bodies’ finding of respondents’ illegal dismissal. Accordingly, we are not wont to disturb the award of separation pay, claims for COLA and union service fees fixed at 10% of the total monetary award, as these were based on the finding that respondents were dismissed without just or authorized cause.
#20 DEL VALLE, JR. and ALEMANIA vs. DY Facts: 6 In May 2001, a complaint for illegal dismissal and monetary benefits was filed by Clea 7 Deocariza against L.C. Big Mak Burger, Inc. and its Human Resources Officer for Bicol, Teresa 8 Israel. In said labor case, it appears that despite many opportunities given to L.C. Big Mak and Israel, the two did not file their position papers. In November 2001, Labor Arbiter Del 10 Valle rendered a Decision in favor of Deocariza, thus, ordered her reinstatement to former position without loss of seniority right[s], with payment of backwages and other claims. Since no appeal was made, the decision became final and executory. Consequently, a Writ of 13 Execution was issued relative to the said decision. In February 2002, L.C. Big Mak and Israel 14 filed a Motion to Quash Writ of Execution . They claimed that they were completely unaware of the decision and the writ of execution. The Labor Arbiter denied the the said motion and ruled that L.C. Big Mak and Israel waived their opportunity to submit their position paper by their continued inaction on the lawful orders and notices sent to them. The Labor Arbiter Del Valle directed all parties to appear on May 12, 2003 for a pre-execution conference. However, only Deocariza attended the conference. The following day, NLRC Sheriff Alemania went to the premises of BIG MA[K] BURGER for the execution of the writ. L.C. Big Mak and Dy filed a
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complaint for injunction and damages. They questioned the order for Dy to reinstate Deocariza despite the fact that she is not his employee and despite her resignation and the release or quitclaim she executed. They alleged that Israel is a franchisee of L.C. Big Mak and Deocariza was one of her employees in the L.C. Big Mak Naga branch which negates the existence of an employer-employee relationship between Dy and Deocariza. The trial court dismissed the complaint on the ground of lack of jurisdiction. Dy, without including L.C. Big Mak as petitioner, then filed a petition for certiorari with the Court of Appeals. The Court of Appeals granted the petition. It found Dy a stranger to the labor case. It held that the power of the NLRC to execute its judgment extends only to properties unquestionably belonging to the judgment debtor. On appeal to the CA, Del Valle and Alemania’s petition was denied. Hence, the case was elevated to the SC. Issues: WON Dy is a party to the illegal dismissal case filed by Deocariza against L.C. Big Mak Burger, Inc. and its Human Resources Officer, Teresa Israel. Held: Yes. Dy failed to substantiate his allegation that Israel is a mere franchisee and that Israel is Deocariza’s real employer. On the contrary, it was established that Israel is also an employee of L.C. Big Mak. Also, contrary to Dy’s claims, he is not a stranger to the illegal dismissal case. He is a party in his capacity as owner of L.C. Big Mak, the employer sued in the illegal dismissal case. Moreover, Dy cannot claim sole ownership of the properties levied upon by simply dropping L.C. Big Mak as petitioner. In his complaint filed before the RTC, he categorically admitted under oath that the levied properties belong to L.C. Big Mak and not to him. Thus, he is now estopped from contending otherwise. Even assuming that Dy is a stranger or third party to the labor case, jurisdiction over his claim still lies with the labor arbiter. Therefore, the Orders issued by the Regional Trial Court, Branch 55 of Lucena City dismissing the complaint filed by L.C. Big Mak Burger, Inc. and respondent Francis Dy were REINSTATED. #21 Huntington vs. NLRC 08/15/2013 G.R. No. 158311. November 17, 2004 Facts: This case stemmed from the illegal dismissal complaint with claim for damages initiated by respondent Jaime Orbase and eleven others against petitioners Huntington Steel Products, Inc. and its President, Serafi n Ng. Private respondents filed an amended complaint to include Everson Metal Works as a party, being the original employer of private respondents before it changed its business name to Huntington Steel Products, Inc. Thereafter , private respondents filed their position paper. Petitioner in their position paper seeks the dismissal of the complaint filed by the private respondents since the complaint they filed in the NLRC Arbitration branch does not have a certification of Non-Forum Shopping. U nder a Supreme Court's circular, all initiatory pleadings filed in courts and other quasi-judicial agencies must contain a Certificate of Nonforum Shopping.
In this case the complaint was filed in the NLRC, a quasi-judicial body hence it must comply with directives of the circular. Thus, the LA dismissed the complaint on the ground that there was no Certificate of Nonforum Shopping. The NLRC reversed the decision of LA. It ratiocinated that rules of procedure must be liberally applied in labor cases pursuant to Article 221 of the Labor Code, which provides that- decisions in labor cases must be supported by substantial evidence, and disregarding technical rules of procedure, will not sacrifice the fundamental requisites of due process. The Ca affirmed the decision of NLRC. Issue: whether the case should be dismissed for failure to comply with Supreme Court Administrative Circular No. 04-94 on certification of non-forum shopping.
Held: No As a rule, the certificate of non-forum shopping as provided by this Court Circular 04-94 is mandatory and should accompany pleadings filed before the NLRC. Court Circular No. 04-94 is clear and needs no further interpretation. However, in the case of Melo v. Court of Appeals, the court said that in those cases where it excused non-compliance with the requirements of Supreme Court Administrative Circular No. 04-94, there were special circumstances or compelling reasons that made the strict application of said Circular clearly unjustified. The rule is crystal clear and plainly unambiguous that the certification is a mandatory part of an initiatory pleading, i.e. , the complaint, and its omission may be excused only upon manifest equitable grounds proving substantial compliance therewith. In the present case, the respondents reasoned that they failed to comply with the Circular because the complaint form supplied by the Labor Arbiter did not contain the required undertaking. They simply filled up the blanks therein. Hence, we agree with the Court of Appeals’ conclusion that respondents should not be faulted for not having the certification of non-forum shopping in their complaint. The strict application of the Circular in the instant case, in our view, would be contrary to the goals of the Rules of Civil Procedure – that is, “just, speedy and inexpensive disposition of every action and proceeding.” Technical rules of procedure in labor cases are not to be strictly applied if the result would be detrimental to the working-man .[24] Thus, the NLRC did not err in ordering that the corrections be made at the Arbitration Branch, since the NLRC has also the power to order corrections in case of irregularities in the proceedings before it. #22 Lirio v. Genovia (Peralta, J. /November 2011) Facts: Resp. Genovia was hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonic mix Recording Studio (Celkor) particularly, to manage and operate Celkor and to promote and sell the recording studio's services to music enthusiasts and other prospective clients. He was to
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receive a monthly salary of P7,000 and an additional commission of P100.00 per hour as recording technician. His work was from Monday to Friday, 9am-6pm. A few days after he started working as a studio manager, petitioner approached him and told him about hisproject to produce an album for his 15-year-old daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a contract to assure respondent of his compensation for such services. The album was completed and the carrier single Genovia composed and arranged was finally aired but he was denied his compensation by Lirio despite several demands. Lirio told Genovia that: a. He was practically a nobody and had proven nothing yet in the music industry, respondent did not deserve a high compensation, and he should be thankful that he was given a job to feed his family. b. Genovia was entitled only to 20% of the net profit, and not of the gross sales of the album, and that the salaries he received and would continue to receive as studio manager of Celkor would be deducted from the said 20% net profit share Lirio then verbally dismissed Genovia from work. Genovia filed a complaint for illegal dismissal and prayed for his reinstatement without loss of seniority rights, or, in the alternative, that he be paid separation pay, backwages and overtime pay; and that he be awarded unpaid commission in the amount of P2,000.00 for services rendered as a studio technician as well as moral and exemplary damages. Lirio’s defense: Respondent could not have been hired as a studio manager, since the recording studio has no personnel except petitioner. Respondent verbally agreed with petitioner to co-produce the album based on the following terms and conditions: (1) petitioner shall provide all the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent shall act as composer and arranger of all the lyrics and the music of the five songs he already composed and the revival songs; (4) petitioner shall have exclusive right to market the album; (5) petitioner was entitled to 60% of the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of the net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a month, which shall be deductible from his share of the net profits and only until such time that the album has been produced. Accordingly, their relationship was an informal partnership under Article 1767 of the Civil Code because: They agreed to contribute money, property or industry to a common fund with the intention of dividing the profits among themselves Petitioner had no control over the time and manner by which respondent composed or arranged the songs, except on the result thereof. Labor Arbiter ruled that there was an employee-employer relationship and not partnership and that Genovia was illegally dismissed. NLRC reversed: Genovia failed to prove with substantial evidence that he was selected and en gaged bypetitioner, that petitioner had the power to dismiss him, and that they had the power to control him not only as to the result of his work, but also as to the means and methods of accomplishing his work. CA set aside the ruling of the NLRC. ISSUE: Whether or not the relationship between Lirio and Genovia was an informal partnership. HELD: No. It was not partnership but an employer-employee relationship. CA decision affirmed. The elements to determine the existence of an employment relationship are: (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's conduct. The
most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. All the aforesaid elements are present and was proven by Genovia through documentary evidence: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner which showed that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15thof the month and another P3,500.00 every 30th of the month) with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash vouchers, showing the amounts here received and signed for in the payrolls. Petitioner wielded the power to dismiss as respondent stated that he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal against petitioner. Petitioner certainly had the power to check on the progress and work of respondent as stated in his Position Paper and that it was agreed that he would help and teach respondent how to use the studio equipment. Lirio failed to prove that his relationship with respondent was one of partnership. Such claim was not supported by any written agreement: In the payroll dated July 31, 2001 to March 15, 2002, there were deductions from the wages of respondent for his absence from work, which negates petitioner's claim that the wages pai d were advances for respondent’s work in the partnership. It is a well-settled doctrine, that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence or in the interpretation of agreements and writing should be resolved in the former’s favor.
#23 Marticio Semblante and Dubrick Pilar vs. CA G.R. No. 196426, Aug. 15, 2011 PETITIONERS Marticio Semblante and Dubrick Pilar were hired by private respondents Vicente and Maria Luisa Loot as official masiador and sentenciador, respectively, of their Gallera de Mandaue, a cockpit. As the masiador, Semblante would call and take the bets from the gamecock owners and other bettors and order the start of the cockfight. He would also distribute the winnings after deducting the arriba, or the commission for the cockpit. As the sentenciador, Pilar would oversee the proper gaffing of fighting cocks determine the fighting cocks’ physical condition and capabilities to continue the cockfight, and eventually declare the result of the cockfight. For their services as masiador and sentenciador, Semblante was paid P2,000 per week or P8,000 per month, while Pilar was paid P3,500 a week or P14,000 a month. They worked every Tuesday, Wednesday, Saturday and Sunday every week, excluding monthly derbies and cockfights held on special holidays. In a complaint for illegal dismissal, the Labor Arbiter found petitioners to be regular employees of respondents. In their appeal to the National Labor Relations Commission (NLRC), respondents belatedly put up an appeal bond. The NLRC after a Motion for Reconsideration by respondents, entertained the appeal and found that there was no employer-employee relationship between petitioners and respondents. The Court of Appeals (CA) upheld the decision of the NLRC. Can the decision be justified? Ruling: Yes.
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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 employee’s 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 free from the direction and control of respondents. In the conduct of their work, petitioners relied mainly on their “expertise that is characteristic of the cockfight gambling,” and were never given by respondents any tool needed for the performance of their work. 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. #24 Orozco vs. Fifth Division of the Court of Appeals Facts:PDI engaged the services of Orozco to write a weeklycolumn for its Lifestyle section. She religiously submitted her articles except for a 6-month stint when she went to NY City.Nevertheless, she continued to send her articles through mail.She also received compensation for every column that waspublished.When Orozco’s column appeared in the newspaper for the last time, her editor, Logarta, told her that the PDI’s editor-in-chief, Magsanoc, wanted to stop publishing her columns for noreason at all and advised her to talk to the editor-in-chief. WhenOrozco talked to Magsanoc, the latter told her that it was the PDIchairperson who wanted to stop the publication of her column.However, when Orozco talked to Apostol, the latter told her thatMagsanoc informed her that the Lifestyle section had alreadymany columnists.PDI claims that Magsanoc met with the editor of theLifestyle section to discuss how to improve said section. Theyagreed to cut down the number of columnists by keeping onlythose whose columns were well-written, with regular feedbackand following. In their judgment, petitioner’s column failed toimprove, continued to be superficially and poorly written, andfailed to meet the high standards of the newspaper. Hence, theydecided to terminate petitioner’s column.Orozco filed a complaint for illegal dismissal. The LAdecided in favor of petitioner. On appeal, the NLRC dismissedthe appeal and affirmed the LA’s decision. The CA on the other hand, set aside the NLRC’s decision and dismissed Orozco’scomplaint.Iss ue:Whether petitioner is an employee of PDI.Whether petitioner was illegally dismissed.Decision:Petition dismissed. Judgment and Resolution affirmed.Applying the four-fold test, the Court held that PDIlacked control over the petitioner. Though PDI issued guidelinesfor the petitioner to follow in the course of writing her columns,careful examination reveals that the factors enumerated by thepetitioner are inherent conditions in running a newspaper. Inother words, the socalled control as to time, space, anddiscipline are dictated by the very nature of the newspaper business itself. Aside from the constraints prese nted by thespace allocation of her column, there were no restraints on her creativity;
petitioner was free to write her column in the manner and style she was accustomed to and to use whatever researchmethod she deemed suitable for her purpose. The apparentlimitation that she had to write only on subjects that befitted theLifestyle section did not translate to control, but was simply alogical consequence of the fact that her column appeared in thatsection and therefore had to cater to the preference of thereaders of that section.Orozco in this case is considered as an independentcontractor. As stated in the case of Sonza vs. ABS-CBN,independent contractors often present themselves to possessunique skills, expertise or talent to distinguish them from ordinaryemployees. Like the petitioner in the cited case, Petitioner wasengaged as a columnist for her talent, skill, experience, and herunique viewpoint as a feminist advocate. How she utilized allthese in writing her column was not subject to dictation byrespondent. As in Sonza , respondent PDI was not involved inthe actual performance that produced the finished product. Itonly reserved the right to shorten petitioner’s articles based onthe newspaper’s capacity to accommodate the same. This factwas not unique to petitioner’s column. It is a reality in thenewspaper business that space constraints often dictate thelength of articles and columns, even those that regularly appear therein.Furthermore, respondent PDI did not supply petitioner withthe tools and instrumentalities she needed to perform her work.Petitioner only needed her talent and skill to come up with acolumn every week. As such, she had all the tools she needed toperform her work. Hence, since Orozco is not an employee of PDI, the latter cannot be held guilty of illegally dismissing thepetitioner. #25 Bitoy Javier vs. Fly Ace Corporation G.R. No. 192558 February 15, 2012 Who has the burden of proof to prove employer-employee relationship? 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 NLRC 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. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Hence, “when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received, subject only to the requirement that their decision must be supported by substantial evidence.” Ac cordingly, the petitioner needs to show by substantial evidence that he was indeed an employee of the company against which he claims illegal dismissal. Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It is, therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was able to hurdle the same. “No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence, while no particular form of evidence is required, a finding that such relationship exists must still rest on
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some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects.” Although substantial evidence is not a function of quantity but rather of quality, the x x x circumstances of the instant case demand that something more should have been proffered. Had there been other proofs of employment, such as x x x inclusion in petitioner’s payroll, or a clear exercise of control, the Court would have affirmed the finding of employer- employee relationship.” 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 x x x.” Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief. In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities as an employee of Fly Ace. Clea rly, Javier failed to pass the substantialit y requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA. #26 Timoteo H. Sarona vs. NLRC, et al. G.R. No. 185280 Jan. 18, 2012 THE National La bor Relations Commission (NLRC) partially affirmed the labor arbiter’s decision in the case filed by security guard Timoteo H. Sarona against the Royale Security Agency (formerly the Sceptre Security Agency). It concurred with the finding that the petitioner was illegally dismissed and the manner by which the separation pay was computed, but reduced the award of backwages. The petitioner moved for the execution of the NLRC’s decision, and respondents paid him the full amount of the monetary award. The peti tioner’s motion for release of the award contains a reservation that it is without prejudice to the outcome of the petition with the Court of Appeals (CA). Is the petitioner barred from questioning the manner by which his backwages and separation pay were computed? Ruling: No. The finality of the NLRC’s decision does not preclude the filing of a petition for certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of judgment after the lapse of ten (10) days from the parties’ receipt of its decision will only give rise to the prevailing party’s right to move for the execution thereof but will not prevent the CA from taking cognizance of a petition for certiorari on jurisdictional and due process considerations. In turn, the decision rendered by the CA on a petition for certiorari may be appealed to this Court by way of a petition for review on certiorari under Rule 45 of the Rules of Court. Under Section 5, Article VIII of the Constitution, this C ourt has the power to “review, revise, reverse, modify, or affirm on appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders of lower courts in x x x all cases in which only an error or question of law is involved.” Consistent with this constitutional mandate, Rule 45 of the Rules of Court provides the remedy of an appeal by certiorari from decisions, final orders or resolutions of the CA in any
case, i.e., regardless of the nature of the action or proceedings involved, which would be but a continuation of the appellate process over the original case. Since an appeal to this Court is not an original and independent action but a continuation of the proceedings before the CA, the filing of a petition for review under Rule 45 cannot be barred by the finality of the NLRC’s decision in the same way that a p etition for certiorari under Rule 65 with the CA cannot. Furthermore, if the NLRC’s decision or resolution was reversed and set aside for being issued with grave abuse of discretion by way of a petition for certiorari to the CA or to this Court by way of an appeal from the decision of the CA, it is considered void ab initio and, thus, had never become final and executor. #27 Philippine Bank of Communications vs. National Labor Relations CommissionGR No. L66598 December 19, 1986 Facts:Petitioner Philippine Bank of Communications and the Corporate Executive Search, Inc. (CESI) enteredinto an agreement under which CESI would provide “Temporary Services” to petitioner consisting of eleven (11) messengers, one of them was Orpiada. The contract period was described as “fromJanuary 1976 – although it appeared that Orpiada had been assigned to the bank since June 1975.He rendered messengerial services to the bank, within its promises, together with other the othersdoing a similar job. In or about October 1976, the bank requested CESI to withdraw Orpiada’sassignment because Orpiada’s services “were no longer needed.” Orpiada filed a complaint against the bank for illegal dismissal and failure to pay the 13th- month pay.The bank impleaded CESI as an additional respondent. The Labor Arbiter ruled in favor of Orpiada.Hence, this petition for certiorari filed by the bank.Issue:Whether or not an employer-employee relationship existed between the bank and privaterespondent Orpiada.Ruling:Yes. There is an employer-employee relationship that existed between the bank and Orpiada. The factthat Orpiada worked or rendered services to the bank for a period of about sixteen (16) months madehim an employee of the bank. Under the Labor Code, any employee who has rendered at least one (1)year of service, whether such service is continuous or not, shall be considered a regular employee.Thus, Orpiada’s services may not be terminated by the bank except for a just cause or whenauthorized under the Labor Code. CESI was engaged in labor-only contracting. Therefore, thepetitioner bank is liable to Orpiada as if Orpiada had been directly employed, not only by CESI but alsoby the bank. #28 Aliviado v. Procter & Gamble Philippines, Inc. GR No. 160506,9 March 2010 Facts: P&G is principally engaged in the manufacture and production of differentconsumer and health products, which it sells on a wholesale basis to varioussuperma rkets and distributors. To enhance consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and SAPS for thepromotion and merchandising of its products.Aliviado and other petitioners worked as P&G’s merchandisers, andindividually sign ed employment contracts with either Promm-Gem or SAPS forperiods of more or less five months at a time. They were assigned at differentoutlets, supermarkets, and stores where they handled all the products of P&G, andreceived their wages from Promm-Gem or SAPS.
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Promm-Gem and SAPS imposeddisciplinary measures on erring merchandisers.In December 1991, petitioners filed a complaint against P&G forregularization, service incentive leave pay, and other benefits, with damages. LA dismissed the case for lack of merit and ruled that there was no employer-employee relationship between the petitioners and P&G. He found that the selectionand engagement of the petitioners, the payment of their wages, the power of dismissal and control with respect to the means and methods by which their workwas accomplished, were all done by PrommGem/SAPS. He further found thatPromm-Gem and SAPS were legitimate independent job contractors. The NLRC andthe CA subsequently affirmed the LA’s findings. Issue: W/N Promm-Gem and SAPS are legitimate job contractors. Ruling: Promm-Gem is a legitimate job contractor, while SAPS is a laboronlycontractor. Therefore, the employees of SAPS are the employees of P&G, SAPSbeing merely the agent of P&G.Promm-Gem has shown evidence that it has substantial investment whichrelates to the work to be performed, such as authorized stock of P1M and a paidincapital, or capital available for operations, of P500k; it has long-term assets worthover P400k and current assets worth over P700k; it maintained its own warehouseand office space with a floor area of 870 square meters; it had under its name threeregistered vehicles which were used for its promotional/merchandising business;and it has clients aside from P&G. Promm-Gem also supplied its complainantworkers with the relevant materials, such as markers, tapes, liners, and cutters,necessary for them to perform their work. Promm-Gem also issued them uniforms.Also, PrommGem already considered the complainants working under it as itsregular, not merely contractual or project, employees. This negates, on the part of Promm-Gem, bad faith and intent to circumvent labor laws which factors have oftenbeen tipping points that lead the Court to strike down the employment practice oragreement concerned as contrary to public policy, morals, good customs, or publ icorder.On the other hand, SAPS’ Articles of Incorporation shows that it has a paid-incapital of only little over P31k. There is no other evidence presented to show howmuch its working capital and assets are. Furthermore, there is no showing of substantial investment in tools, equipment, or other assets. It failed to show that itspaid-in capital is sufficient for its 6-month contract period with P&G to generate itsneeded revenue to sustain its operations independently. Instead, it could be readilyseen that its capital is not even sufficient for one month’s payroll, which is peggedat little over P44k. Furthermore, petitioners have been charged with themerchandisin g and promotion of the products of P&G, an activity that has alreadybeen considered by the Court as doubtlessly directly related to the manufacturingbusiness, which is the principal business of P&G. Considering that SAPS has nosubstantial capital or investment and the workers it recruited are performingactivities whic h are directly related to the principal business of P&G, SAPS isengaged in “labor -only” contracting. Petition granted. • Labor laws expressly prohibit “laboronly” contracting. To prevent itscircumvention, the Labor Code establishes an employeremployeerelationship between the employer and the employees of the labor-onlycontractor.
• There is labor-only contracting when the contractor or sub-contractor merelyrecruits, supplies, or places workers to perform a job, work, or service for aprincipal and any of the following elements are present:(i)The contractor or subcontractor does not have substantial capital orinvestment which relates to the job, work, or service to be performedand the employees recruited, supplied, or placed by such contractor orsubcontractor are performing activities which are directly related tothe main business of the principal; or(ii)The contractor does not exercise the right to control over theperformance of the work of the contractual employee. • Where labor-only contracting exists, the Labor Code itself establishes anemployer-employee relationship between the employer and the employees of the laboronly contractor. The statute establishes this relationship for acomprehensive purpose: to prev ent a circumvention of labor laws. Thecontractor is considered merely an agent of the principal employer and thelatter is responsible to the employees of the labor-only contractor as if suchemployees had been directly employed by the principal employer. • In termination cases, the burden of proof rests upon the employer to showthat the dismissal is for just and valid cause.
#29 Eparwa vs. Liceo de Cagayan University G.R. No. 150402 November 28, 2006 Facts: Eparwa and Liceo de Cagayan University [LDCU], through their representatives, entered into a Contract for Security Services. Thereafter, 11 security guards whom Eparwa assigned to LDCU from filed a complaint before the NLRC. The complaint was filed against both Eparwa and LDCU for underpayment of salary, legal holiday pay, 13th month pay, rest day, service incentive leave, night shift differential, overtime pay, and payment for attorney’s fees. To protect its interest LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any payment to the security guards. The LA found that claim of the Security guards meritorious and order the same to be paid by Eparwa and LDCU. LDCU Issue: Whether or not LDCU alone ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay. Held: No. Adopting the ruling in Eagle Security Agency vs. NLRC which has the same facts in this case, the SC ruled- this joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. The principal, on the other hand, is made the indirect employer of the
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contractor’s employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers’ performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution [See Article II Sec. 18 and Article XIII Sec. 3].
xxxx However, in the instant case, the contract for security services had already expired without being amended consonant with the Wage Orders. It is also apparent from a reading of a record that EAGLE does not now demand from PTSI any adjustment in the contract price and its main concern is freeing itself from liability. Given these peculiar circumstances, if PTSI pays the security guards, it cannot claim reimbursement from EAGLE. But in case it is EAGLE that pays them, the latter can claim reimbursement from PTSI in lieu of an adjustment, considering that the contract, [sic] had expired and had not been renewed. For the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. This is the import of Eparwa and LDCU’s solidary liability. Creditors, such as the security guards, may collect from anyone of the solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors are liable for only half of the payment. LDCU’s ultimate liability comes into play because of the expiration of the Contract for Security Services. There is no privity of contract between the security guards and LDCU, but LDCU’s liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwa’s liability to the security guards remains because of their employer-employee rela tionship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any reimbursement from Eparwa for any payment it may make to the security guards.
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